People's Republic of China

Nov 24, 2020


China has experienced a remarkable period of rapid growth spanning three decades, shifting from a centrally planned to a market based economy with reforms begun in 1978. During this time, it grew at an average rate of about 9.7% per year, with exceptionally strong growth between 2003-2007 averaging about 11% per year. Growth remained strong during the recent global financial crisis, reflecting massive stimulus and strong underlying growth drivers.

China became the world’s second largest economy in 2010; increasingly, it is playing an important and influential role in the global economy. The discussion now tends to focus on how China can avoid “the middle-income trap,” as experience shows that transitioning from middle-income to high-income status can be more difficult than moving up from low to middle income.

Yet, with a per capita gross national income of about US$4,260 (2010), China is an upper middle-income country that has complex development needs. With the second largest number of consumption-poor in the world after India, poverty reduction remains a fundamental challenge. Rapid economic ascendance has brought on many challenges as well, including demographics – issues related to an aging population as well as the internal migration of labor; high inequality; rapid urbanization; challenges to environmental sustainability; and external imbalances. Significant policy adjustments are required in order for China’s growth to be sustainable. 

In its 11th Five Year Plan (2006 - 2010), the Government of China set forth a “people centered” strategy aiming to achieve a “harmonious society” that balances economic growth with distributional and ecological concerns. Under this plan, considerable progress was made in improving basic public services in social protection, education and health, but structural issues remain under the strong momentum of China’s traditional pattern of growth.

The 12th Five Year Plan (2011 - 2015), recently approved by the National People’s Congress, comes at a time when the need to rebalance toward a more domestic demand-led, service sector-oriented pattern of growth is stronger than before, partly due to the less favorable global outlook.  The Plan has set five main objectives:
Maintaining stable and fast economic growth, with a focus on price stabilization, more job creation, improved balance of payment, and higher quality of growth.

Achieving major progress in economic restructuring, with higher share of household consumption and the service sector, further urbanization, more balanced rural-urban development, lower energy intensity and carbon emissions, and better environment.

Increasing people's incomes, reducing poverty and improving the living standards and quality of life.
Expanding access to basic public services, increasing the educational level of the population, developing a sound legal system, and ensuring a stable and harmonious society.

Deepening the reforms in the fiscal, financial, pricing and other key sectors, changing the role of the state, improving governance and efficiency, and further integrating into the world economy.









GDP growth






 Source: World Bank