China's Big Eco-transformation Within Decade

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Last updated at: (Beijing Time) Friday, September 06, 2002

China's Big Eco-transformation Within Decade

China's economic structure has experienced profound changes during the past ten years. Of all the components of China's GDP, the weight of the primary industry, generally including agricultural and resources-based sectors, is going down.

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China's economic structure has experienced profound changes during the past ten years, according to a research published in the Beijing-based Economic Daily.

The most salient change occurs in Chinese people's consumption propensity.

First, households' expectation of their living in the coming years is getting more stable, with their consumption more rational.

The Chinese Government's efforts in knitting a stronger social security network, especially for the urban unemployed and retired, has obviously paid off, according to the report by the Development Research Center under the State Council, the government think tank.

Second, as the per capita gross domestic product (GDP) is approaching US$1,000, a widely-recognized threshold of household consumption upgrade, most Chinese are putting apartments and private cars onto their purchase note. This will trigger off a sustained consumption spree and ensure a steady economic growth in a considerably long time period.

Third, centered on apartments and cars, Chinese people's purchase power is spreading out to education, entertainment, sports, tourism and health care, shifting from satisfying the basic sheltering and feeding to pursuing the comfort and quality of life.

Geographical disparity enlarging

But the economic growth is not in a good tandem among China's eastern, central and western provinces. With eastern China running faster, the central and western provinces are lagging behind farther.

In 1990, the per capital GDP of the coastal provinces exceeded the middle and western parts of China by 898 yuan (US$108.59) and 1,079 yuan (US$130.47) respectively. By 2000, however, the difference enlarged to 5,352 yuan (US$647.16) and 6,647 yuan (US$803.75), up respectively 496 and 516 percent.

During the same period, the difference between the per capita net income of city dwellers in coastal provinces and those in middle and western provinces increased respectively by 5.39 and 6.07 times; while the corresponding gap of farmers' net income between eastern provinces and central and western China rose by 3.58 and 3.94 times.

The report attributed the enlarging difference to two factors: First, the better natural environment of the eastern provinces plus the relatively higher profitability for both capital and labor has attracted a sustained inflow of capital, intellectuals and technology; second, the coastal provinces have moved much more swiftly in restructuring their state-owned enterprises (SOEs), leaving more room to accommodate the advancing momentum of non-state businesses, which are substituting those emaciating SOEs as another source of local fiscal revenues and employment.

But the report thinks the geological development disparity will narrow down with the implementation of Chinese Government's ambitious strategy to develop the extensive western land during the Tenth Five-year plan period (2001-05) and the following years.

Industrial structure in shift

Of all the components of China's GDP, the weight of the primary industry, generally including agricultural and resources-based sectors, is going down.

In 2001, the contribution of the primary industry to China's GDP dropped by 0.7 percentage point, compared with that of the previous year, and 3 percentage points lower than the average during 1996-2000.

With more foreign agro-produce entering China following China's World Trade Organization (WTO) accession and the sped-up pace of urbanization, the percentage of the primary industry in China's economic output will further shrink, according to the report.

As a contrast, the secondary, or manufacturing and processing, industry is taking a slightly bigger portion out of the total GDP.

Last year, the proportion of the secondary industrial output in China's GDP inched up by 0.3 percent, compared with the previous year, upper 1.4 per cent than the average of the time period from 1996 to 2000.

Quite inconsistent with the wild prediction that China is setting itself as the manufacturing center of the world, the report does not think the secondary industry will surge too high.

The main challenge before the secondary industry is yet to restructure and upgrade itself so as to increase its global competitiveness rather than a simple quantitative expansion.

The percentage of the tertiary industry, or the service sector, in the total GDP of China is going up steadily.

2001 saw the share of the service sectors in China's GDP ascending by 0.4 percent, compared with that in the year of 2000, or 1.6 percent if compared with its average during 1996-2000.

Different from the secondary industry, the service sector has got a promising prospect, according to the report.

The accelerating rate of urbanization, Chinese people's better-off living and the competition coming with foreign service suppliers in the wake of China's WTO entry will combine to spur further development of the tertiary industry, the report said.

Slower urbanization

Relative to industrialization, China's urbanization process is incommensurately slow.

By 2001, the added value turned out by the secondary industry has shot up to 51.2 percent of China's GDP, but the percentage of urban residents in China's population is merely 37.7.

The existing household registration system which has divided Chinese into urban and rural categories with starkly different treatment in education, social security and welfare is one of the important hurdles impeding farmers' immigration and settlement in cities.

Another reason for China's slower gait of urbanization is farmers' nearly stagnant income growth. Ever since 1996, the growth rate of the income of Chinese farmers has been slowing down, despite a slightly stronger rising momentum in 2001, according to the report.

The central government should reduce farmers' taxes, cancel the illegal fees levied upon them, allocate special capital to improve the infrastructure in rural area, roll back the actual discriminations against farmers, and help them to better their farming structure to increase their income, said the report.

By PD Online staff Forest Lee

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