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Eco Proj Rough
Eco Proj Rough
the country to become the world's second largest economy. In 1978—when China started the
program of economic reforms—the country ranked ninth in nominal gross domestic product
(GDP) with USD 214 billion; 35 years later it jumped up to second place with a nominal GDP of
USD 9.2 trillion.
Since the introduction of the economic reforms in 1978, China has become the world’s
manufacturing hub, where the secondary sector (comprising industry and construction)
represented the largest share of GDP. However, in recent years, China’s modernization
propelled the tertiary sector, and in 2013, it became the largest category of GDP with a share of
46.1%, while the secondary sector still accounted for a sizeable 45.0% of the country’s total
output. Meanwhile, the primary sector’s weight in GDP has shrunk dramatically since the country
opened to the world.
Today the Chinese economy is the second largest in the world and although it experienced
massive growth in that 35-year span, authorities have taken a new approach to the economy
called the “new normal.” To avoid overheating the economy, authorities are conducting a
managed slowdown, which has seen growth gradually slow year after year since 2010. The
economy is projected to grow 6.4% in 2018, which is nothing to sniff at, but is a far cry from the
over 10% annual growth seen not too long ago.
A. LEADERSHIP
The transition of leadership in China has been remarkably
peaceful and smooth. As can be seen Deng Xiao Ping
adopted market economy in December 1978. Deng Xiaoping
(1978-1987) was instrumental and responsible for
modernization and reform. Premier Zhu RongJi (1988-2003)
paved the way for China’s entry into World Trade
Organization (WTO). President Jiang Zemin (1993-2003),
theory of promoting business and entrepreneurial class into
the country’s one-party system, helped China’s economic
expansion. Current president Xi Jinping launched the
economic development of the silk route countries, clamped
down on corruption by rooting out high party members and
military brass, has launched a rural development program to
close distributional and development gaps, and promote
social equity.
D. MACROECONOMIC MANAGEMENT.
China’s sound macroeconomic management was
demonstrated during the Great Recession (2007-2009) when
its export dropped 15% - 18% causing 23 million to become
unemployed, but 98% found jobs as the economy readily
bounced back and the unemployment rate dropped to 4%.
This performance is in sharp contrast to a number of
countries where the recession is still lingering in 2014. It is
most notable that China escaped three global financial
meltdowns since 1990, including the Japanese severe credit
implosion, the Asian economies foreign reserve meltdown
caused by capital flight due to rigidity of fixed exchange
rate. The Great Recession (2007-2009) which engulfed the
world economy was contagious, and China was subject to
the turbulence and transmittable global meltdown — but
ironically China escaped. China’s experience has drawn re-
examination of the Western neoclassical paradigm
concerning macroeconomic stability, and efficacy, of
countercyclical measures via mini manipulation of the
supply of money by the Federal Reserve Board. A better
alternative for all nation states is to establish social
indicator targets.
E. RENEWABLE ENEGY
China’s 12th five-year plan has placed specific emphasis
upon the targeted development of renewable energy to
satisfy 15% of China’s energy needs by the year 2025. This
policy will contribute to clean air in China and prevent
environmental degradation as the use of fossil fuel is
substituted by renewable energy.
G. POPULATION POLICY.
China’s one-child policy and its recent modification has been
optimal given the absolute number and the possibility of
population trap. Successful control of fertility rate (number
of children per women) is the hallmark of optimal population
and determinant of China’s long-term growth potential and
carrying capacity. China’s prosperity is closely connected to
its population policy although the age distribution of the
population may pose some problems concerning productivity
in the future. Its population is expected to peak to 1.5 billion
by 2040 reaching zero growth rate and avoiding the
population trap dilemma. No doubt, it is known that
population policy in Europe in the 14th century led to the
Industrial Revolution in the 18th century. Technology of
industrialization from 18th century to the present created
the high level of per capita income in the first world. Clearly,
demographic policy affects economic development in all
low- and middle-income countries.
H. POVERTY REDUCTION.
Since 1978, China has uplifted millions of peasants out of
poverty and it has been the most successful country in the
world in poverty reduction. China will deserve very high
marks for its social indictor and distributional objectives.
Other favorable political economy policies that have made
poverty reduction feasible include annexation of Hong Kong.
Three-fifths of China’s foreign direct investment are financed
through Hong Kong, and billions of dollars of China’s assets
are in Hong Kong’s financial institutions. Development of
Growth Zones — such as Shanghai to attract foreign
investment — and investment in human capital including all
levels of education through college are among the hallmarks
of growth policies in China. The above factors have given a
major impetus of high growth to China since 1980, ranging in
an annual growth rate of 7 to 10%. This is an unprecedented
growth rate in the experience of world economy with the
exception of Germany in the ‘20s, largely due to military
buildup.
I. ANTI-CORRUPTION CAMPAIGN
Unfortunately corruption is a universal problem and once it
takes roots it becomes institutionalized and penetrates the
culture. Thus it becomes difficult to undo corruption. It is
keenly prevalent in low- and middle-income countries. China
is no exception in this regard, however, a concerted effort
has been launched to bring corruption under control
beginning with the effort of former president Hu Jinping and
follow-up by the current president Xi Jinping. Beginning in
2012, reportedly imposing punishment occurred upon
182,000 government officials at all ranks through 2014.
Several high level party members have been removed; legal
cases of anti-corruption of high officials in China have been
reported in the Western press with due process. Perhaps
China will succeed to clean up corruption completely. The
anti-corruption drive in China is serious and admirable. It is
certainly instructive for other countries to adopt a policy of
transparency and uproot such criminal activities.