China’s Economic Growth and Development

Topics: People's Republic of China, Economic growth, Planned economy Pages: 8 (1537 words) Published: October 12, 2014
China’s Economic Growth and Development
China is presently the world’s largest economy in relation to its population of 1.3 billion. The country is currently a socialist economy ruled by a Communist Government, with significant structural changes impacting its economy as a result of the high rate of growth over the past decades. Its economy is in the transition phase, moving from being a centrally planned economy to a system based more on the market. A socialist or market economy can be defined as an economic system based on government ownership of key resources which are crucial to the economy, rather than the individual taking ownership. There are; however, exceptions to this, such as permitting the partial use of markets to exchange dispensable commodities, such as farm products and retail goods. It is hypothesised that China’s economic and social transformation - lead by sustained economic growth – has significantly impacted upon the distribution of wealth and income in China by means of an improved standard of living. This is evident in China’s Human Development Index (HDI), and can be supported by statistics from during this period, data dating from 1978 onwards relating to China’s steady climb, as well as evidence from the Great Leap Forward. China’s economic growth continues today, through the continual developmental process leading to a market based economy, and data from the previous decades serves as a stable economic indicator. The Human Development Index (HDI) is a tool which measures and ranks countries’ level of social and economic development, and places China as the 101st country out of the 187 countries and territories in the HDI (United Nations Development Programme, 2013). The rankings are based on four main criteria: life expectancy at birth, average schooling years, expected years of schooling, and gross national income (GNI) per capita. The HDI makes it possible to compare development levels in various countries, as well as monitor the changes in development over time. Between 1960 and 1978 (before the Chinese government introduced several economic reforms) the mean real GDP growth rate was approximately 5.3% (Sedghi, A 2012). This rose in 1980 to 7.9% annual real GDP growth, along with the commencement of economic change (refer to appendices 1). Between 1980 and 2012, China’s HDI value amplified by 72% rising from 0.407 to 0.699, with an annual increase equivalent to approximately 1.7% (United Nations Development Programme, 2013). During this time frame, the Chinese life expectancy at birth rose by 6.7 years, the expected years of schooling rose from 8.4 to 11.7, the average number of schooling years increased by 3.8 years, and the GNI per capita rose from the equivalent of $524 AUD to $7,945 AUD (refer to appendices 2), providing relevant data to justify the country’s position in the HDI. This data demonstrates that through the sustained rates of economic growth over the past few decades, China’s living standards have improved significantly. These benefits of economic growth have extended to further advantages in China’s development such as increased urbanisation, with the number of cities rising from 193 to 668 between 1979 and 1997, and improved medical facilities, with 310,000 medical institutions registered by the end of 1998, in comparison to just 3,000 in 1949 (Embassy of the People’s Republic of China in the Republic of Iceland, 2012). Most significantly, the number of Chinese citizens below the poverty line dropped from 250 million in 1978 to 42 million in 1998 (Embassy of the People’s Republic of China in the Republic of Iceland, 2012), and declined further to account for 13.1% of the Chinese population in 2008 (refer to appendices 3), demonstrating a immense rise in the standard of living. China’s current HDI position demonstrates a direct link between the movement from the centrally based economy to a more market based one and the improvement of living standards. It may be difficult...

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