china: stylized facts presentation by richard herd head asian non-members unit oecd economics...
TRANSCRIPT
China: stylized facts
PRESENTATION By Richard Herd
Head Asian non-members Unit OECD Economics Department
March 2006
OECD Development Centre Conference“China, India and Africa”
Growth has been very rapid GDP growth at constant prices
0
2
4
6
8
10
12
14
16
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Three factors have boosted growth:
• Reform of the economic environment
• Capital formation
• Structural change
Major reforms are very recent
Year Policy change
1978 "Open door" policy initiated, allowing foreign trade and investment to begin
1979 Decision to turn collective farms over to households
1979 Township and village enterprises (TVEs) given stronger encouragement
1980 Special economic zones created
1984 Self-proprietorships (getihu) encouraged, of less than 8 persons
1990 Stock exchange started in Shenzhen
1993 Decision to establish a "socialist market economic system"
1994 Company law first introduced
1994 Multiple exchange rates ended
1995 Shift to contractual terms for state owned enterprise staff
1996 Full convertibility for current account transactions
1997 Plan to restructure many state-owned enterprises begins
1999 Constitutional amendment passed that explicitly recognizes private ownership
2001 China accedes to the World Trade Organisation (WTO)
2002 Communist party endorses role of the private sector, inviting entrepreneurs to join
2003 Decision to "perfect" the socialist market economic system
2004 Constitution amended to guarantee private property rights
Prices are now market determined
0
20
40
60
80
100
120
1978 1985 1991 1995 1999 2003
Market prices State guided State fixed
Share of price regulated transactions for industrial products
The economy has opened to foreign trade
0
5
10
15
20
25
30
35
1978 1981 1984 1987 1990 1993 1996 1999 2002
Average of exports and imports as % of GDP
Chinese imports a growing source of demand
% of region’s GDP
China
0.0
0.5
1.0
1.5
2.0
2.5
1999 2000 2001 2002 2003 2004
Latin America Africa World (ex China)
The number of state firms has fallen rapidly
Share of Industrial sector Firms
Direct state
Indirect state
Indirect state
Collective
Collective
Private
Private
Direct state0
10
20
30
40
50
60
70
80
90
100
1998 2003
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1998 1999 2000 2001 2002 2003
state
domestic
foreign
The private sector output skyrockets ….
Constant prices gross output
…… and is more productive …
Excess productivity of firm types relative to direct state ownership
0 50 100 150
Direct state
Indirect state
Collective
Private company
Private individual
Non mainland
Other private
….. dominating exports …
(Share of exports by controlling interest)
0 10 20 30 40 50 60 70 80 90 100
Plastics
Machinery
Chemicals
Transport equipment
Metal products
Leather products
Garments
Electric equipment
Textiles
Electronics/Telecom
Private, foreign Private, domestic Collective State
Note: These industries represent 75% of export value in 2003.
Source: NBS industrial microdata
… and is now bigger than public sectorPrivate sector value added as per cent of sector
GDP
40
45
50
55
60
65
1998 1999 2000 2001 2002 2003
Non-farm business sector Business sectorEconomy-wide
Rapid growth of capital
• Fixed capital formation has accounted for half of growth
• Human capital expanding rapidly
6
8
10
12
14
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
The capital stock has grown fast
Annual Per cent change in estimated capital stock
Financed by high private sector savingPer Cent of GDP
Source: National Bureau of Statistics, Statistical Yearbook and Modigliani and Cao (2004).
05
101520253035404550
1978 1983 1988 1993 1998 2003
National
Household
Business and state
State
Business
Fiscal policy has been prudent Budget balance % of GDP
-3.0
-2.0
-1.0
0.0
Per cent of GDP
0
10
20
30
40
50
60
70
80
1992 1994 1996 1998 2000 2002 2004
OECDChina
With little recourse to public debt
Budget balance as Per Cent of GDP
Factors behind the growth in real income Share of growth attributable to each factor
0
10
20
30
40
50
60
70
Activity anddependency rate
Capital perworker
Total factorproductivity
1983-2003
2003
Educational output has surged
•Primary education almost complete
•Junior high very good
•University intake tripled
And is likely to continue growing
Source: Ministry of Education
2001 2010 2020 2050
Primary 100 100 100 100Junior High 85 95 99 100Senior High 54 73 85 100Tertiary 13 23 40 55
Average years 8.0 9.6 10.0 13.5OECD 12.8
Proportion of age group receiving given education level
Third factor: structural change
•Move from agriculture
•Source of productivity growth
Significant growth from sectoral change Productivity growth from structural change, five year
average Per Cent per year
% per year
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Important micro-economic structural
reforms needed
• Financial markets
• Basic economic laws need improvement
• Labour markets need to be freer
Better basic laws for the private sector needed
• A new company law is needed
• A new bankruptcy law
• A better anti-monopoly law also required
• Laws to implement Constitutional Amendments
•
Enforcement of commercial laws
needs improving
• Difficult to obtain and enforce IPR judgements
• Evidence of local prejudice in judgements
• Creates barriers to innovation and expansion
• Move to more central funding of judiciary
• Separate courts for commercial law
Reducing regional inequalities
• Urbanisation is a positive factor for development
•
• Migration has been restricted
•
• Boosts spatial income inequality
•
• Complex group of policies needs changing
