'Moderately prosperous society' is key goal for China

By John Ross
0 Comment(s)Print E-mail China.org.cn, November 14, 2012
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The goal set in the 18th Congress report is to double, i.e. increase by 100 percent, GDP between 2010 and 2011. Doubling income per person in the same period is a derivative flowing from an assumption that the division between investment and consumption remains essentially constant.

China's GDP grew by 9.3 percent in 2011, and growth this year will not be below 7.5 percent. Therefore to achieve the goal of the 18th Congress report, average annual GDP growth has to be at least 7.0 percent in 2013-2020. This is not only well below China's growth in the last 30 years but even below the 7.5 percent in the current five year plan. It is therefore entirely possible to meet – it is even possible to slightly exceed this growth target.

A "moderately prosperous society" however relates to GDP per capita, not total GDP. It is also a specifically Chinese term which is not identical to international terminology. To help make international comparisons it is useful to relate it to World Bank definitions.

To calculate China's growth of GDP per capita requires making an assumption about population growth. At present this is annually 0.5 percent, although this may fall slightly. If 0.5 percent population growth is assumed, together with 7.0 percent GDP growth, then by 2020 China's annual GDP per capita will be US$8,500. This is 69 percent of the level necessary to qualify for the World Bank's classification of a High Income Economy (HIE). Continuing the same trends China would become an HIE in 2026 – i.e. 14 years time. Small and realistic changes in assumptions – 0.4 percent population increase and 8.0 percent GDP growth – would mean China becoming an HIE in 2024. This may be summarized as 12-15 years.

For China to become an HIE would dramatically change the world economy – China's 1.3 billion population is larger than the entire 1.1 billion living in such economies at present. It would also transform Chinese population's housing, quality of domestic goods, leisure times, health and culture. It would equally transform the world market in the industries supplying these needs. Yet, as can be seen, not only can such goals be achieved but they are moderately conservative.

Whether China wishes to refer the level of GDP per capita and living standards which can be reached by 2020 as a "moderately prosperous society" is for it to decide. Perhaps for international comparison it is more comprehensible to say that within 15 years China can enter the ranks of advanced i.e. high income, economies.

However that is a quibble. The most important thing is that the goal of China entering the ranks of High Income Economies within 15 years, of achieving a "moderately prosperous society", is entirely realistic. The skillful projection of that goal, and understanding of its realism, both within and outside China can substantially change for the better both China's internal cohesion and global "soft power".

A great deal of thought clearly went into preparing the economic policy projections for the 18th Congress. It was clearly time well spent.

The author is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/johnross.htm

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.


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