NAB Group Economics: China Economic Update
Turning 40: Charting the rise of China since reform and opening up
Mid-December marks the fortieth anniversary of a critical change in China’s economy. The Third Plenum in 1978 saw China’s economic planning change course, transforming the country over four decades from a small, closed and still heavily agrarian society to a global powerhouse – and in the process, fundamentally changing the shape of the global economy and international relations as well.
- Some of the key changes included agricultural reforms (which drastically improved output), along with market based reforms, including the introduction of private sector firms in the industrial sector, opening the economy to international trade and foreign investment and the creation of Special Economic Zones (which have been key engines for growth over recent decades).
- Despite having the world’s largest population in 1978, China was a very small economy – ranked thirteenth overall, it accounted for around 2.0% of the global economy. Today, China is the world’s largest economy, accounting for just over 18% of the global total. However on a per capita basis, China is close to the global average, which highlights the fact that China is only part way through its long term economic development, as it still lags well behind advanced economies.
- Although China is now a large global economy, its still low per capita income highlights the long way it has to go in terms of economic development. It remains to be seen whether China can overcome longer term policy and demographic constraints to reach advanced economy levels.
For further details, please see the attached document:
China Economic Update December 2018