China's economic miracle

  • 1978

    First economic reforms introduced by Deng Xiaoping

  • 1980s

    Special economic zones set up in five areas, where private firms allowed

  • 1984

    14 coastal cities opened up to foreign investment

  • 1989

    Shanghai stock market reopens for first time in 40 years

  • 1997

    Asian Financial Crisis

  • 2001

    China joins World Trade Organisation

  • 2005

    Private firms contribute more to Chinese economy than state-run sector

  • 2011

    China becomes world's second-biggest economy, with GDP at $7.2tn

China's rising GDP and economic miracle

The seeds of China's rapid economic growth since the 1990s were first planted back in 1978 when the Communist Party started to introduce capitalist market principles, initially in the agricultural sector.

Source: World Bank

Economic expansion accelerated dramatically in the 1990s as a result of mass privatisations, and the opening up of the country to foreign investment. Overseas firms rushed to build factories in China to take advantage of its low labour costs.

China's rising energy consumption and environmental cost

  • China's energy generation, 1971-2005

    Graph showing China’s increasing dependence on coal
  • Economic cost to the environment (2011)

    Graph showing how the cost of environmental resource degradation in China is equivalent to 8.9% of GNI
    China's 8.9% of GNI = $650bn More than GNI of Austria and Portugal combined

China's rapid economic growth has been mirrored by the big increase in its energy consumption. The country has built thousands of extra power stations to provide electricity for all the new factories and growing in cities.

However, this has come with a major environmental impact, as pollution levels have soared, particularly from the country's numerous coal-fired power stations. The economic cost to the environment, shown in the graph above right, is a measure of the financial cost of pollution and the using up of finite natural resources.

China's urban population increase

Number of cities in China, Europe and US of one million people or more

City of one million people or more

  • China:   34 in 2000
  • 102 in 2012
  • 221 in 2025
  • Europe: 35 cities in 2012

    US: 9 cities in 2012

  • China's megacities

    City of 10 million or more

    2005

    2025

Source: World Resources Institute, McKinsey Global Institute

As more and more factories have been built in China, the country has seen mass population transfer, as tens of millions of migrant workers have left the countryside to find higher paid work in the cities. This in turn has created a new domestic retail environment, with greatly increased demand for consumer products further fuelling the development and growth of urbanisation.

China's wealth increase

Annual disposable income - urban and rural households

China's high-speed economic growth has substantially increased the wealth of the country's population. This is particularly the case in cities, where factory workers' wages have risen strongly, giving them more disposable income - measured by someone's income, minus their personal taxes. While earnings in the countryside have lagged behind, people living in rural areas have still seen a marked increase in their disposable income.

Expanding car market

Vehicle sales 2007-2012

A car is a status symbol in developing countries around the world and as incomes have risen strongly, there has been a corresponding rise in car ownership in the country.

Pork consumption

Pigs slaughtered for consumption in China and US

=10 millionSince 1990 the number of pigs slaughtered in China has more than doubled, while that in the US grew only 30%

China

1990310 million
2010666.9 million

US

199085.4 million
2010110.4 million

Pork has long been the most popular meat in China, but consumption was traditionally limited by the weak spending power of most of the population. As people's incomes have risen strongly since the 1990s so the amount of pork purchased has soared.


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