Iris Claus is a Senior Fellow, Department of Economics, Waikato University, New Zealand. Her current research interests are in unconventional monetary policy, taxation, financial intermediation, open economy macroeconomics and general equilibrium modeling. She is the Managing Editor for Journal Economic Surveys and Associate Editor of Asian Economic Papers . Les Oxley is Professor in Economics, University of Waikato, New Zealand, and Adjunct Professor, School of Economics and Finance, Curtin University of Technology, Australia. He is the editor of, amongst others, Innovation, Entrepreneurship, Geography and Growth ( with P. McCann, Wiley-Blackwell, 2012), Economics and History: Surveys in Cliometrics (with D. Greasley, Wiley-Blackwell, 2011), and the author of China's Energy Economy : Reforms, Market Development, Factor Substitution and the Determinants of Energy Intensity (with Hengyun Ma, 2012).
THE CHINESE ECONOMY, PAST, PRESENT AND FUTURE
Iris Claus and Les Oxley
University of Waikato
Since initiating reforms in 1978 China has experienced an unprecedented rate of economic growth and development to become the second largest economy in the world after the United States. Yet there is so much that we do not know about the internal workings and operations of the Chinese economy, in part, because the available English-language literature is but a fraction of the scholarly work on China. English-speaking scholars, business people, analysts and policy makers are typically excluded from Chinese-language scholarship, analysis and commentary, or are often limited to 'executive summary-type' articles from 'business-literature' outlets. We hope to fill at least part of the gap in the story of China, past, present and future with nine up-to-date surveys on some of the critical issues facing China, which have been written by leaders in the relevant fields of scholarship.
China's rapid economic growth and development was reinforced by industrialization, mainly driven by export-oriented and labor-intensive industries in Eastern China's coastal cities, and urbanization. Between 1990 and 2011, urban areas expanded 3.4 times and the urban population increased 2.3 times (CSY, 2012). 1 This fast urbanization proceeded despite stringent constraints imposed by a household registration system, the Hukou system. A survey by Wang (2009) and PTSPLT (2011) discovered that approximately 220 million people of the urban population are rural migrants living in cities without having obtained the formal status of urban household registration. Migrants without urban registration only have limited access to most welfare entitlements and basic public services, like education for their children, and are excluded from many urban jobs. This differentiation between migrants and native urbanites is creating serious social problems and contributing to China's rising inequality. Many argue (e.g. Xia and Liu, 2012) that China's current urbanization exhibits a relatively low quality of life, fails to fully play its role in creating market demand and supply and, due in part to the effects of the Hukou system, creates an environment that is not well integrated with national social and economic goals and responsibilities (Ba, 2013). Moreover, industrialization and urbanization have proceeded without agricultural modernization, which is contributing to a large and growing urban-rural income gap (Wang, 2011). For example, by a comprehensive evaluation based on eight indicators (e.g. labor productivity, land output and mechanization), Yin (2011) finds that China's agricultural modernization ranks 51st in the world.
China's industrialization has also occurred in an economy with a relatively low level and growth rate of informatization and the extent to which China is becoming information based lags behind other countries. Since 2003, China's industrial value added has accounted for over 45% of total gross domestic product (GDP), which by Chenery's (1979) criterion suggests that China has entered the middle and late industrialization phases. China's course of industrialization exhibits quantitative expansion with excess productive capacity (Xu and Zheng, 2011), while informatization is still in its growth phase, mainly limited to investment, and its effective integration with industrialization is impeded by technological bottlenecks and interregional barriers (Guo, 2013). Furthermore, according to a survey by Akamai Technologies US, in the fourth quarter of 2011, the world average Internet speed was 2.7 Mbps, while in China it was 1.4 Mbps, leaving China ranked 90th in the world.
The nine papers presented here discuss in detail some key aspects of the Chinese economy, past, present and future . They survey the present and future challenges of