China’s Economic Miracle Is Ending

Ofcom Revokes Broadcast License Of Chinese State-Owned TV Channel CGTN

President Xi Jinping of China is seen on a program from the CGTN. (Photo by Leon Neal/Getty Images)

 GETTY IMAGES

The China miracle is ending. That miracle consisted of very exceptionally strong growth of the economy. By 2010, GDP per capita, adjusted for inflation, was 17 times higher than it had been in 1980. Consider that if living standards doubled in a generation, that would be pretty cool. But a 17 times increase? That can be called a miracle.

China’s growth has slowed in recent years, partly due to maturity. Extremely poor countries have the potential to grow rapidly. As they approach the level of developed countries, growth is harder and thus slows. See, for example, China Is Too Mature For Rapid Economic Growth.

Maturity is not the only issue. We need to delve into the source of the growth to evaluate whether it can continue.

Michael Schuman writes in the Atlantic, “China’s economic ‘miracle’ wasn’t that miraculous. The country’s high-octane ascent over the past 40 years is, in reality, a triumph of basic economic principles: As the state gave way to the market, private enterprise and trade flourished, growth quickened, and incomes soared.”

Chart of China GDP growth 2000-2020.

China's economic growth has decline in recent years.

 DR. BILL CONERLY USING DATA FROM INTERNATIONAL MONETARY FUND

The recent efforts by Xi Jinping to control the economy more tightly will diminish future growth, according to Schuman. And he’s right.

Prior to Deng Xiaoping’s economic reforms in the early 1980s, most Chinese lived in poor, rural communities where job opportunities were limited to very inefficient agriculture. This inefficient, small-scale, unmechanized agriculture produced very little earnings. Poverty was the norm, not the exception.

With Deng’s reforms, factories blossomed in the cities. Poor rural people moved to take jobs in cities. Incomes soared. Early success led to follow-on reforms that further grew the economy.

1 2 3
View single page >> |

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.