3 - Measuring the Chinese Economy

Summary

China's great transformation has created a huge middle-income, urbanized and sophisticated economy unrecognizable from 40 years ago. The especially rapid structural change after the 2001 accession to the World Trade Organization was pushed further by the massive stimulus investment to ward off the feared negative effects of the Global Financial Crisis, 2008–09. This chapter will take stock of the state of the Chinese economy, looking at not only the national aggregates for production, population and labour, finance and public spending, and international trade and investment, but also the diversity of economic change and growth across China's provinces. Achievements are impressive, but mask challenges for sustaining future growth in the context of an older population and shrinking workforce.

The world's number two economy after the United States and foremost manufacturing exporter is a challenge to describe. No country has sustained such high levels of economic growth for as long as China; no country has seen as many people lifted out of poverty in a generation; and no country has developed a vibrant market-based economy that seeks to become an innovative leader without throwing off the shackles of authoritarianism, least of all a former planned economy. Scale is a major challenge in measuring the current state of the economy. Many provinces are the equivalent in size of large national economies.

Diversity is the other challenge. The modernity of the eastern cities is a world away from the relative underdevelopment of the interior. Within China we find economies that are advanced, middle income and low income. As Jane Jacobs (1984) once observed, national economies are a convenient fiction. What matters are the cities and the urban conurbations that drive regional growth within different parts of a country. This chapter will therefore where feasible go beneath the national aggregates to look at the sub-national variations, the differences between and within provinces that make the Chinese economy so complex.

During 2018–19 celebrations of the fortieth anniversary of policies to reform and open up to the world (gaige kaifang) and the seventieth anniversary of the PRC's founding there was a lot of drum beating of the success achieved over the previous four decades.