Columbia International Affairs Online
CIAO DATE: 8/5/2007
China's Economic Prospects 2006-2020
2007 April
Carnegie Endowment for International Peace
Abstract
China’s economic growth during the past twenty-five years has been remarkable, averaging more than 9 percent a year. While there have been earlier episodes of comparable growth rates in countries such as Japan and South Korea, there is no precedent for such rapid growth in a country the size of China, whose population of 1.3 billion is thirteen times that of Japan when that nation began its rapid growth. The impact on the rest of the world of economic dynamism on this scale is already being felt. If China continues its rapid growth in the coming decades, it will take the global economy into uncharted terrain.
Within China, rapid economic development has brought a welcome lifting of incomes. As recently as 1980, almost 80 percent of the population lived in extreme poverty (defined as less than $1 per day), according to World Bank figures.1 Today, less than 20 percent does. Yet despite unprecedented progress in reducing the most severe poverty, about 70 percent of the population still survives on very low incomes, defined at the World Bank standard of $2 per day. Poverty is concentrated in the rural areas, where the average net income in 2005 was $397 per person, compared with $1,281 for urban residents.2 With about 45 percent of the workforce still engaged in low-productivity agriculture, the Chinese economy needs to create hundreds of millions of jobs in higher-productivity sectors to enable these workers to earn their way out of poverty. Overall, China still faces serious income and employment challenges. It will require a further period of sustained growth to provide even a moderate standard of living for its entire population.
