China’s economic growth and development since 1978 has been known as the rise of the “dragon”. It is the world’s second-largest economy.
According to the World Bank, the US holds the top position with a GDP of $US25.46 trillion, making it the world’s largest economy in 2022. China follows the US, with a GDP of $US17.96 trillion. Between 1978 and 2009, China’s economy grew at an average annual rate of 10 percent. Double-digit growth rates characterised Chinese economic development as it was very aggressive in production and exports. China became known as the “the world’s factory” and officially joined the World Trade Organisation in 2001. The World Bank presents a classification system whereby a country is annually ranked by its level of gross national income (GNI) per capita.
There are four categories into which a country can fall: low income; lower-middle income; upper-middle income; and high income.
China was classified as a low-income economy in 1990, a lower-middle income country in 2000, and an upper-middle income country in 2010.
The Chinese economy grew by 10.6 percent in 2010, and since then, growth has been slowing down. Covid-19 hit China hard, resulting in a growth rate of only 2.2 percent in 2020.
From 2018 and 2022, China recorded an annual growth rate of 5.3 percent.
In 2022, the world’s second-largest economy experienced a growth of 3 percent.
On March 5, 2023, Premier Li Keqiang presented a government work report that delineates the overarching guidelines for this year’s policies. The report sets out the projected targets for this year, encompassing 10 main goals. These include achieving GDP growth of around 5 percent, generating 12 million new urban jobs and curbing the discharge of major pollutants. How has China’s growth performance been in 2023 so far? Chinese officials are expressing optimism. In the first quarter, China’s economy recorded a growth of 4.5 percent compared to the previous year, marking the highest rate since the first quarter of the preceding year when it expanded by 4.8 percent. Subsequently, in the second quarter, China’s economy experienced even stronger growth, reaching 6.3 percent compared to the same period last year. Recently, the National Bureau of Statistics of China released a statement titled “National Economy Shows Good Momentum of Recovery in the First Half of the Year.” In its April World Economic Outlook (WEO) report, the International Monetary Fund (IMF) stated its growth forecast for China at 5.2 percent for this year. The World Bank’s June Global Economic Prospects forecasts China’s growth rate as 5.6 percent for 2023. In its July WEO Update, the IMF has maintained its 2023 growth projection for China, which is 5.2 percent. China’s potential to achieve 5 percent growth for 2023 is evident. Nevertheless, it is crucial to shift our focus beyond this realisation when seeking to comprehend China’s current economic growth and development. China’s economic progress has reached a relatively mature stage, making it unrealistic to anticipate double-digit growth rates. For such high growth rates, one should look towards countries like Vietnam or Bangladesh, which have emerged as potential Asian “tigers” in terms of economic growth and prospects. The nation has been undergoing a transformation from “assembled in China” to “created in China”. Launched in 2015, Made in China 2025 is the government’s ten-year plan, aimed at upgrading China’s manufacturing and innovation capabilities to align with technological advancements. China faces numerous social and democratic challenges, and it remains a focal point of geopolitical tensions. However, it is essential to recognise that China is undergoing significant transformations, and these changes will undoubtedly have an impact on the global landscape.
To comprehend the evolving dynamics, we must strive to understand these developments better.
■ Dr Murat Ungor is a senior lecturer in the University of Otago’s Department of Economics.