Chapter 17: The Rise of China
17. The rise of China RAPID GROWTH In its 30 years of reforms and open door strategy from 1979–2009, China achieved and maintained a spectacular real annual growth rate of GDP of nearly 10 per cent according to official statistics. However, official statistics overstate the growth rate because the gross domestic product (GDP) deflator used by China underestimates the actual rate of inflation for the period (Maddison 2007). On the other hand it is possible that the official growth rate is too low because it does not sufficiently take into account the service sector and product quality improvement (Perkins and Rawski 2008). Table 17.1 presents the official growth data and compares them with other estimates. It shows that the official data and estimates are fairly consistent, with the single exception of those by Maddison. However, with a growth rate between 9 and 10 per cent in the reform period China has achieved double the growth of the period from 1952 to 1978 (Perkins and Rawski 2008). And the comparison with China’s East Asian neighbours in their rapid growth periods shows that it outdid them all, as Table 17.2 shows. One of the reasons for this was, of course, China’s relative backwardness at the starting point of modern economic growth. The greater this is – measured in terms of GDP per capita as percentage of that of the world’s most advanced country, the USA – the faster latecomers can grow because they are able to borrow and adopt advanced technologies. Table 17.3...
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