Embed Size (px)
Citation preview
Progress of China’s Economic Reform and Opening Up
MA XIAOFANG
PhD, Associate Professor
Department of Economics
Chinese Academy of Governance
03/09/2013
Curriculum VitaeEducation Background:
• 2005- 2008 Phd in Economics , China Renmin University• 2001-2002 Msc. in International Banking and Finance Studies, Southampton
University in UK
Work experience:
• 2006- Associate professor, Economics Department, Chinese Academy of Governance
• 1999-2006 lecturer, Economics Department, Chinese Academy of Governance
• Research Focus:
• Macro-economy, Financial markets, risk management, banking regulation.
Contents China’s economic achievements from 1978
• Three stages of China’s R&O
• Current situation of economy
• Guiding concept of the 12th five-year plan
• Targets of the 12th five-year plan
GDP growth (1978-2011) (100M Yuan)
05, 000
10, 00015, 000
20, 00025, 000
30, 00035, 000
40, 00045, 000
50, 000
The second biggest economy in the world
• The annual average growth rate
of GDP is 9.7% after 1978
• GDP of 2010 is 39800 billion
yuan, which is 109 times of 1978
• The second biggest economy by
the end of 2010
• The growth rate is 2.5 times of
that of the world
Fiscal revenue (1978-2011) (1M Yuan)
01, 000, 0002, 000, 0003, 000, 0004, 000, 0005, 000, 0006, 000, 0007, 000, 0008, 000, 0009, 000, 000
10, 000, 000
1978年
1980年
1982年
1984年
1986年
1988年
1990年
1992年
1994年
1996年
1998年
2000年
2002年
2004年
2006年
2008年
2010年
Fiscal revenue (1978-2011)
• The annual average growth rate of FR is 13.45%
after 1978
• FR of 2011 is 10374 billion yuan, which is 78
times of 1978
Export and import (1978-2011) (1M Yuan)
0
2, 000, 000
4, 000, 000
6, 000, 000
8, 000, 000
10, 000, 000
12, 000, 000
14, 000, 000
: FOB出口: CI F进口
Export and import (1978-2011)
• The trade volume of export and import was 2974
billion US dollar in 2010, ranked second in the world
• The annual average growth rate of E&I is 16.8%
after 1978, the trade volume of 2010 was 143 times
of 1978
• Chinese export ranked 32th in the world in 1978
• Chinese export ranked first in the world in 2010
China’s export commodities structure (1980-2010)
Products made in China account for the share in international market
China’s ten big trade partners
Foreign Exchange Reserves• The annual average growth rate of FER is
36.74% after 1978
• 3200 billion US dollars reserve by the end of
2011, ranks first in the world
improvement of people's living conditions unit: yuan
yearIncome of
farmer
Income of
urban residentThe ratio
Consumption of
farmer
Consumption of
urban residentratio
1985 397.6 739.1 1.86 317.4 673.2 2.12
1990 686.3 1510.2 2.2 538.1 1278.9 2.4
1995 1577.7 4283.0 2.71 1310.4 3537.6 2.7
2000 2253.4 6280.0 2.79 1670.0 4998.0 2.99
2002 2475.6 7702.8 3.1 1834.3 6029.9 3.29
2004 2936.4 9421.6 3.21 2184.7 7182.1 3.29
20053255.0 10493 3.22 2555.4 7942.9 3.11
2010 5919 19109 3.23 4382 13471 3.07
Comprehensive reform model on national income distribution form (after 2003)
Abolishing agriculture taxes
• Abolishing 4 kinds of taxes of agriculture, including
agriculture tax, slaughter tax, animal husbandry tax and
special tax
• Abolishment of all these taxes releasing 133.5 billion
yuan of farmers’ burden
• Government increasing 60 billion yuan direct subsidies
Mr li, A farmer , planted 5 acres of rice. Every year he can get 350 yuan subsidies for planting from government and net income of 2000 yuan from cultivating. He said, after attending the countryside cooperation medical treatment, he got 50% to 75% of reimbursement from medical fee, but every year he only needs to deliver 10yuan. In addition, all the study incidental expenses and book expenses are exempted during the students’ compulsory education period. Reading rooms are built in the villages. Drinking system and public transportation are more convenient.
A story
Contents China’s economic achievements from 1978
Three stages of China’s R&O
• Current situation of economy
• Guideline of the 12th five-year plan(2011-2015)
• Targets of the 12th five-year plan (2011-2015)
Three stages of China’s R&O
From planed economy to socialist market economy
• Stage 1: 1978 to 1992. Primary stage
• Stage 2: 1992 to 2001. Deepening stage
• Stage 3: 2001 to present. Opening up stage
Stage 1: 1978 to 1992. Primary stage
• Started from 1978, primary and experimental stage of R&O
• Features of first stage:
Loosening and activating the economy
Clarifying different ideologies
Reform of commodity prices
Put the countryside reform first
Conflicting opinion• Socialism or capitalism?
• Deng’s answers:
No arguments about S&C. Market economy
does not stand for capitalism
No matter white or black cat, the one who
catches the rats are good cats
Cross the river by groping the stone
Reform of prices
• Under planed economy, most commodity prices are
under control, even a match
• Then changed to two-track price mechanism
• Nowadays more than 90% prices are determined by
the market
• Some important prices are still under control
Electricity, petroleum, coal, interest rate,
etc
Put the countryside reform first 1.1 The household contract responsibility system
• Inspiring the enthusiasm of Chinese farmers
• Making tremendous achievements in the rural economy
• Combining family income with production investment
• Decreasing the cost of supervision and management
• The peasants getting decision-making power for their production
Put the countryside reform first
• From1978 to1984, the annual average growth rate of agriculture
output was 7.7%
• From 1978 to1984, the total value of agriculture output
increased 42.23%, half of which from the high efficiency of
household contract responsibility system
A story
Thirty years ago, Mr Li, an old
farmer in Jiangxi Province, used a
tractor to take his bride home.
When his son got married a couple
of years ago, he rented ten
luxurious cars on his wedding day.
The old farmer said: “it is really like
a dream”.
Put the countryside reform first
1.2 Developing the role of local governments
• Loosening the regulation of the household registration system
• Guiding the orderly flow of the labor force between urban and
rural areas or between regions
• Promoting the transfer of surplus agricultural labor
• City expansion enhancing development of property
Stage 2: 1992 to 2001. Deepening stage
• In 1992, Deng Xiaoping pointed out the direction of China: socialist market economy . The reform and opening up deepened
Case of SOEs reform
• Initially give more freedom, rights and profits to SOEs
• Keeping big enterprises and sell shares of mid and small firms, more than 90% are partly or completely
private owned
Reform of big enterprises
• Only big SOEs are kept, aiming at maintaining national
pillar industries. Trying to support internationally
competitive big enterprises. Now 43 enterprises in
world top 500
• Change from state-owned to multi ownership:
private capital, foreign capital, etc
• 159 big enterprises are under control of central
government, aiming at restructuring them into 80-100
Reform of big enterprises
• Only big SOEs are kept, aiming at maintaining national
pillar industries. Trying to support internationally
competitive big enterprises. Now 18 enterprises in
world top 500
• Change from state-owned to multi ownership:
private capital, foreign capital, etc
• 159 big enterprises are under control of central
government, aiming at restructuring them into 80-100
Development of private economy
• The ratio of private economy to GDP was only 42.8% in
2000, increased to 65% by the end of 2005.
• The employment of private economy in urban areas
increased from 65% in 2000 to 75% in 2005
• Private economy is more flexible and innovative,
occupies the competitive fields
Main products: manufacturing,light industry
products
Stage 3: 2001 to present. Opening up stage• In November 2001, entry WTO; in November 2006, 5-year
transitional period ended. China is fully opened up, a new era comes
• China is now an inseparable part of global economy. It is like a swimmer swimming from a pool to the sea. Challenges and opportunities are coming together
Challenges: competition from global competitors
Opportunities: bigger market, more profit, and risk diversifying
Legislative build-upLegislative build-up
Review of over 2500 laws and regulations, abolished Review of over 2500 laws and regulations, abolished 840, amended nearly 400, to keep in line with WTO 840, amended nearly 400, to keep in line with WTO rules;rules;
Over 40 new legislations on opening up sectors in Over 40 new legislations on opening up sectors in service trade sector covering: banking, accounting, service trade sector covering: banking, accounting, legal service, insurance, logistics, commerce, legal service, insurance, logistics, commerce, telecommunications, architecture, tourist, telecommunications, architecture, tourist, transportation, etc.;transportation, etc.;
More transparency, simplification on administrative More transparency, simplification on administrative procedures;procedures;
62.5% of service areas, extend of openness 62.5% of service areas, extend of openness close to that of developed countries.close to that of developed countries.
Areas commented: banking, insurance, Areas commented: banking, insurance, securities, telecom service, distribution, etc. securities, telecom service, distribution, etc. A few limitations in telecommunication, A few limitations in telecommunication, audio-video, construction, financial and legal audio-video, construction, financial and legal services.services.
Market Market AccessAccess
国有企业43%
民营企业等 6%
外资企业51%
国有企业20%
外资企业55%
民营企业等25%
2001年 2010年
the contribution of Different enterprises in trade volume
From 1980’s to 1990’s,
the open policy focused on coastal
regions
In the 1990’s, China opened and developed Shanghai Pudong New Area
In 2000, the 10th “Five Year Plan” , the strategy of “developing the western region”
In 2001, China became a member of WTO
Experience 1. Socialist market economy
• Breaking the doctrine of socialism conflicted
with market economy
• From planned economy to market economy
• Inspiring everyone’ s potential
Experience 2.Put countryside reform first
• Countryside population accounting for the
majority
• From traditional agricultural society to
industrial society
• Three stages of reform: land system reform,
price reform, and comprehensive reform
Experience 3. Opening up
• Taking the chance of globalization
• From close economy to open economy
• Making up for insufficiency of capital
• Alleviating the employment burden
• Enhancing reform pace
Experience 4. Gradual reform
• Keeping good balance in reform,
development and stability
• From the bottom to the top
• From the point to the line , then to the wide
area
• From the experimental area to the whole
country
Contents China’s economic achievements from 1978
Three stages of China’s R&O
Current situation of economy
• Guiding concept of the 12th five-year plan
• Targets of the 12th five-year plan
Current situation of economy1. Economic strength has improved a lot, however,
there is no dramatic change in structural imbalance
and extensive mode of growth
• Economic growth mainly depends on industry, agriculture as the
foundation of the economy is still very weak. Living on the
nature in some places is still very common. Contribution made
by agricultural science is still very low.
• Economic growth depends heavily on physical resource investment and cheap labour.
• Weak in independent innovation , lack of core technology, insufficient famous brands.
The ratio of the three industries from 1978 to 2008 年（ % ）
Energy consumption ration in 3 industries from 1980 to 2008
Innovationand R&D
Processing and assembling Branding
According to the statistics, in ten big textile products in the world ,
the cost of china’s labor is 0.62 $/hour, this figure is only ¼ of
Korea, 1/13 of USA, 1/16 of Italy, and 1/20 of Japan
Current situation of economy
2. Imbalance between urban and rural areas
• Since the opening-up policy, China’s urbanization increased from
17.9% to 46.6%,10 million rural residents become urban residents per
year. however, the level of China’s urbanization is far behind the world
average level.
• The annual average net income per capita for rural residents is 5153
yuan, which is less than one third of urban residents.
The progress of China’s urbanization
2005 2006 2007 2008 2009 2015 2035
中国 40.4% 41.3% 42.2% 43.1% 46.6% 52.0% 65.0%
美国 80.8% 81.1% 81.4% 81.7% 英国 89.7% 89.8% 89.9% 89.9%
法国 76.7% 76.9% 77.1% 77.4%
德国 73.4% 73.5% 73.6% 73.6%
日本 66.0% 66.2% 66.3% 66.5%
澳洲 88.2% 88.4% 88.6% 88.7%
俄罗斯 72.9% 72.9% 72.9% 72.8%
巴西 84.2% 84.7% 85.1% 85.6%
印度 28.7% 29.0% 29.3% 29.5%
Current situation of economy
3. Regional differences
• Since the national strategy to develop the western part of
China was implemented in 2000, western provinces has had an
average annual GDP growth of 12%. Although this figure is
1.8% higher than the whole country ‘s average level, GDP per
capita in the most undeveloped areas in the west is only one
tenth of that in the coastal area.
• In 2008, urbanization reached 56% in eastern area, but in
central and western area it was 43% and 38% respectively.
In the 11th Five Year Plan, economy in eastern areas in China accounts for a big proportion in China
中國經濟規模區域佔比
66.966.566.868.969.1
33.533.230.9 31.1 33.1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
05
20
06
20
07
20
08
20
09
東部佔比 中西部佔比
FDI distribution among areas FDI distribution among areas （（ by the end of 2008by the end of 2008 ））
Share of each area innumber of projects
Eastern area 83%Central area 11%Western area 6%
Share of each area inContractual capital
Eastern area 87%Central area 8%Western area 5%
Share of each area in actualforeign investment
Eastern area 86%Central area 9%Western area 5%
Eastern area 86%Central area 9%Western area 5%
Current situation of economy4. People’s living standards are high, but there is still
huge poverty and low income
• GDP per capita ranks the 99th in the world
• There are still 150 million people who live on less than 1 US dollar a day, 40 million rural residents still have not solved the basic problems of food and clothing, 23 million urban residents live at minimum subsistence level
Current situation of economyThree advantages
1.Great potential for urbanization
Current situation of society and economy
Three advantages
2. Huge domestic consumer market
Current situation of society and economy
Three advantages
3. Strong in capital, labor and technology
GDP : 5879.1 billion US$ in 2010
Total volume of export and import :2972.7 billion US$ in 2010
Foreign exchange reserves: 3000 billion US$
The total output of grain : over 546 million tons
Contents China’s economic achievements from 1978
Three stages of China’s R&O
Current situation of economy
Guiding concept of the 12th five-year plan
• Targets of the 12th five-year plan
Guiding concept of the 12th five-year plan
• Subject ： scientific development
• Mainstream: improving the transformation of
the mode of economic development
• Highlight : improving people's living standards
Basic requirements for improving the transformation of the mode of economic development
• Strategic adjustment of the economic structure as main thrust
• Advancement and innovation of science and technology as the
important support
• Ensuring well-being of the people and improving their lives as
the means and ends
• Resource-conservation and environment-friendly society as
the acting points
• Reform and opening up as the strong driving force
Strategic adjustment of the economic structure
• Increasing domestic demand , thus, consumption, investment
and export will be coordinated to boost economic growth
• Adjusting industry structure. Improving manufacturing core
competence ,developing emerging industry , picking up the
development of service industry ,thus, agriculture, industry
and service will be coordinated to boost economic growth
• Adjusting regional structure.
Strategic adjustment of the economic structure
Savings and investment rate in China (1978－ 2005)
0
10
20
30
40
50
60
19
78
年
19
80
年
19
82
年
19
84
年
19
86
年
19
88
年
19
90
年
19
92
年
19
94
年
19
96
年
19
98
年
20
00
年
20
02
年
20
04
年
20
06
年 -6
-4
-2
0
2
4
6
8
10
净出口率
储蓄率
投资率
Surplus in balance of payment
• Surplus of current account ： export >import
• Surplus of capital account ： inviting FDI > outward
investment
• Surplus of current account + Surplus of capital account =
increase in foreign exchange reserves (error
and omissions excepted ）
• Saving-Investment = Export-Import
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
(RMB, R)城鄉人均可支配收入差距 7, 238 8, 132 9, 645 11, 020 12, 021
(RMB, L)城鎮人均可支配收入 10, 493 11, 760 13, 786 15, 781 17, 175
(RMB, L)鄉村人均可支配收入 3, 255 3, 587 4, 140 4, 761 5, 153
2005 2006 2007 2008 2009
Regional adjustment policies are beneficial to shortening income difference
Contents China’s economic achievements from 1978
Three stages of China’s R&O
Current situation of economy
Guiding concept of the 12th five-year plan
Targets of the 12th five-year plan
Economic targets
• GDP to grow by 7 percent annually on average;
• More than 45 million jobs to be created in urban
areas;
• Urban registered unemployment to be kept no higher
than 5 percent;
• Price to remain generally stable.
Economic restructuring
• Increase in domestic consumption;
• Breakthrough in emerging strategic industries;
• Value-added output in the service sector to account
for 47 percent of GDP, up 4 percentage points;
• Urbanization rate to reach 51.5 percent, 4 percent
higher.
Environmentally friendly & clean energy
• Non-fossil fuel to account for 11.4 percent of primary energy
consumption;
• Water consumption per unit of value-added industrial output
to be cut by 30 percent;
• Energy consumption per unit of GDP to be cut by 16 percent;
• Carbon dioxide emission per unit of GDP to be cut by 17
percent;
• Forest coverage rate to rise to 21.66 percent and forest stock to
increase by 600 million cubic meters;
2000年消费总量构成
67. 8%
23. 2% 2. 4%6. 7%
原煤石油天然气水核风电
Comparison in the structure of primary energy consumption
2008年消费总量构成
68. 6%
18% 3. 4% 10%
原煤石油天然气水核风电
Livelihood
• Population to be no larger than 1.39 billion;
• Life expectation to increase by one year, reaching
74.5 years on average;
• Rural cooperative medical service to cover all rural
residents , Basic endowment insurance to cover 357
million urban residents;
• Construction and renovation of 36 million
apartments for low-income families.
2.First stage
• Started from 1978, primary and experimental stage of
R&O
• Features of first stage:
Loosening and activating the economy
Clarifying different ideologies
Reform of commodity prices
Primary steps of SOEs reform
