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China in the Global Economy

Edited by P. J. Lloyd and Xiao-guang Zhang

China in the Global Economy focuses on the theme of twin transitions occurring in the Chinese economy: the transition from a centrally planned economic system to a market oriented one, and from an agrarian to a modern industrialised society. China’s exporters face unprecedented competition in the world market and the flow of foreign direct investment has fallen restraining the growth of the domestic economy. These new challenges have fuelled debate on the perspective of the Chinese economy and its role in the global economy.
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Chapter 3: The political economy of China's declining growth

Thomas G. Rawski


3. The political economy of China’s declining growth Thomas G. Rawski China’s long economic boom, now entering its third decade, is a major event in world economic history. During the past 20 years, China has achieved immense growth in every dimension of material well-being. Never before have so many emerged from deep poverty so rapidly. The impact of China’s stunning growth is clearly visible in a wide array of world markets ranging from garments and toys to grain, steel, stocks and bonds. Comparison with other transition economies underscores the magnitude of China’s economic accomplishments. Per capita incomes in nations of the former Soviet Union and its East European satellites have certainly not grown, and may well have declined during the past two decades. In China, by contrast, yearbook figures show that average real incomes rose by over 130 per cent between 1978 and 1989, then doubled again during 1989–97. Whatever the deficiencies of the data, the contrast is beyond dispute: the most laggard Chinese regions have outperformed the most dynamic regions of the former Soviet Union and its ex-socialist neighbours by an immense margin. China’s long boom, although widely remarked upon, is not well understood. Why did explosive growth occur in China – rather than in India or Egypt? Why in the 1980s – rather than the 1970s or 1990s? We have barely begun to address these issues. If we think back to the literature on Great Britain’s eighteenth-century industrial revolution, we find researchers championing four areas as the principal...

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