China’s High Economic Growth and the Emergence of Structural Contradictions

Abstract

China has realized “high economic growth” since the introduction of reform and “opening up” policy in 1979. We define “high economic growth” as real economic (GDP) growth rate of 6 percent or more, sustained for more than three years. This chapter has the following three objectives. The first is to analyze China’s economic performance since 1979 by comparing it with earlier economic growth experiences of Japan, Taiwan, and Korea, which also realized high economic growth during the latter half of the twentieth century. In this regard, the focus will be on the main players and factors that caused the high economic growth. In particular, we will consider the question of how long China’s high growth will continue, and whether or not the length of China’s high growth period can match that of Taiwan and Korea. The second objective of the chapter is to identify the emerging contradictions that China faces. Failure to resolve these contradictions in a timely manner will lead to social and political difficulties, which in turn may put an end to China’s high growth period. Third, the chapter will discuss the new economic issues that China is likely to face in the coming decade. Finally, the chapter will combine the analysis of emerging contradictions with discussion of new issues in order to point to steps and policies that are necessary for China to maintain its high economic growth and attain healthy economic development.