In Focus: 60 years of the People’s Republic of China

Author: An Hodgson

Date published: 1 Oct 2009

On 1st October 2009, China will mark 60 years since the founding of the People's Republic of China. During these six decades, the country transformed itself from the “Weak Man of Asia” to a world economic power. Euromonitor International highlights the major achievements as well as challenges facing Chinese society and the economy, particularly over the 30-year period since the announcement of the “open door” policy in 1978.

Key points

In 2001, China surpassed Japan as the world's second-largest economy in terms of GDP, measured in purchasing power parity. However, based on GDP per capita, China is still significantly poorer than Japan;

The Chinese urban population is expected to overtake the rural population in 2015 and top 1.0 billion by 2030;

As a result of the one-child policy implemented since 1979, the Chinese population is ageing rapidly. By 2020, the proportion of people aged 65+ is forecast to reach 13.1% of the Chinese population, accounting for a quarter of the global elderly population;

China leads the world in the number of university students and Internet users, having overtaken the USA in 2005 and 2008 respectively.

Click here for a comparative perspective of China's economy and population.

China's growing pains

Source: Euromonitor International from national statistics/UN/IMF

Economy

Following the shift from a centrally planned mechanism to a market economy in the late 1970s, China has since the early 1980s recorded one of the fastest periods of economic growth in world history. In 2001, China surpassed Japan as the world's second-largest economy in terms of GDP, measured in purchasing power parity (PPP). However, based on GDP per capita, China is still significantly poorer than Japan. In 2008, China's GDP per capita, measured at purchasing power parity, stood at I$5,962 compared with Japan's I$34,627 per capita.

Total GDP and GDP per capita, measured at purchasing power parity, for China and Japan: 1980-2008

I$ billion; I$ per capita

Source: Euromonitor International from International Monetary Fund (IMF), International Financial Statistics and World Economic Outlook/UN/national statistics

Note: Purchasing power parity (PPP) is a method of measuring the relative purchasing power of different countries’ currencies over the same types of goods and services.

Structure of demand

China's economic expansion has been driven by exports, which rose from 10.6% of GDP to 39.9% of GDP during 1980-2008. A large trade surplus also drove the country's foreign exchange reserves, making China the world's largest foreign reserve holder (with over US$2.1 trillion in June 2009). In the face of plunging exports as a consequence of the global economic downturn since late 2008, China is relying on government stimulus measures to boost domestic demand and fixed-asset investment. In the long term, however, the country aims to shift the foundation of economic growth from exports to private consumption, which accounted for 35.2% of GDP in 2008.

China’s government expenditure, private consumption, exports and real GDP growth: 1980-2008

RMB billion; annual % change

Source: Euromonitor International from the IMF, International Financial Statistics

Energy consumption

China's robust economic growth since the early 1980s has been accompanied by a rapid increase in energy consumption. In 2008, total primary energy consumption was 4.8 times higher than 1980. China emerged from being a net oil exporter in the early 1990s to become the world's third-largest net importer of oil in 2006. Amid concerns about energy security and energy efficiency, China has made an effort to diversify its energy supplies. However, coal still supplies the vast majority of China's total energy consumption requirements (70.2% in 2008).

China’s energy consumption by fuel: 1980-2008

Million tonnes of oil equivalent

Source: Euromonitor International from BP Amoco, BP Statistical Review of World Energy

Environmental challenges

The unprecedented pace of economic growth since the early 1980s has put enormous pressure on the environment. As the world's largest polluter, China accounted for 23.4% of the world's carbon dioxide emissions in 2008. In September 2009, China announced that it would curb its carbon intensity, measured as carbon emissions per unit of GDP, by a "notable margin" by 2020 from the 2005 level. It will do so by developing “vigorously” renewable energy and nuclear energy.

China’s carbon dioxide emission from the consumption of coal and natural gases: 1980-2008

Million tonnes

Source: Euromonitor International from Energy Information Administration of the US Government, International Energy Annual

Demographics

The one-child policy implemented since 1979 has reduced China's birth rate (from 22.5 births per 1,000 inhabitants in 1988 to 12.2 births per 1,000 inhabitants in 2008) and slowed population growth. At 1.3 billion people in 2008, however, the Chinese population is still the world's largest, accounting for about one-fifth of the global total. The Chinese population is also ageing rapidly. By 2020, the proportion of people aged 65+ is forecast to reach 13.1% of the population (up from 9.4% in 2008 and 4.5% in 1978) and account for a quarter of the global elderly population;

China’s population age shift: 1978 and 2008

Millions

Source: Euromonitor International from national statistics/UN

With an annual average of 18.7 million people migrating from rural areas to the cities since 2000, China is experiencing mass urbanisation. The Chinese urban population is expected to overtake the rural population in 2015 and top 1.0 billion by 2030. Rapid urbanisation puts strains on urban infrastructure and resources as well as depleting rural areas from sufficient labour supply.

Life and culture

The infamous crushing of student-led pro-democracy demonstrations on Tiananmen Square in 1989 has not diminished the role of Chinese students in helping to bring about social and political change. In 2005, China overtook the USA to be the world leader in the number of university students, with 15.6 million students. China is also leading the world in Internet usage, having overtaken the USA in 2008 with 298 million users. Despite the government's tight supervision of web contents, the growing student population will be an important driver of Internet usage in China, as students are the most active group of Internet users in the country.

China’s Internet users and university students: 1988-2008

Million people

Source: Euromonitor International from national statistics/UNESCO/International Telecommunications Union/World Bank/trade sources.

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