China's Pattern of Growth: Moving to Sustainability and Reducing Inequality

Abstract

This paper uses both macro level and sectoral data to study the sources and pattern of China's impressive economic growth over the last 25 years. Extending the growth accounting framework, we show that widening inequality, rural poverty, and resource intensity are to a large extent rooted in China's growth strategy, and resolving them requires a rebalancing of policies. We find that growth of investment in the industrial sector has been the single most important factor driving gross domestic product and overall labor productivity growth since the early 1990s. The shift of labor from low-productivity agriculture has been limited. The productivity gap between agriculture and the rest of the economy has continued to widen, leading to increased rural-urban income inequality. Continuing with the current growth pattern would further increase already high investment and saving needs to unsustainable levels, lower urban employment growth, and widen the rural-urban income gap. However, reducing subsidies to industry and investment, encouraging the development of the services industry, and reducing barriers to labor mobility would result in a more balanced growth and a substantial reduction in the income gap between rural and urban residents. Copyright Institute of World Economics and Politics, Chinese Academy of Social Sciences 2006.

The China Health and Nutrition Survey, 1989–2011

“…Further dynamics include population aging , continued changes in highly decentralized family planning policies , and health and health care . Rates of poverty have declined significantly , and the educational, healthcare and insurance systems have been revamped repeatedly (e.g. rural village schools were closed and children moved to town schools) during this period.…”

Rebalancing China's Economic Growth: Some Insights from Japan's Experience

“…Investment-driven economic growth has made China's industries increasingly capital-intensive. As pointed out by Kuijs and Wang (2006), capital-intensive industries create fewer jobs than labor-intensive industries, such as service industries. To boost employment, the development of the service sector, which is supported by the growth of consumption, is necessary.…”

Resilience of Social-ecological Systems to Human Perturbation: Assessing Dongting Lake in China

“…Note 4. As thresholds for the urban-rural gaps (Kuijs & Wang, 2006), we use 3 to 2.5, 2.5 to 2, and 2 to 1.5, where the systems' resilience is low, medium, and high, respectively. A smaller gap means that the people from rural areas (the lakeshore areas in our case are classified as the rural areas) have relative high ability to generate income when there is loss of economic values due to changes in natural resources.…”