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China’s Development

China’s Development. Trends, Issues and Progress. China’s Economic Nodes. Development Background. Even before economic reform began in 1970s, China’s economy had large share of industrial output—almost 50% of GDP Unusual because vast majority of people work land

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China’s Development

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  1. China’s Development Trends, Issues and Progress

  2. China’s Economic Nodes

  3. Development Background • Even before economic reform began in 1970s, China’s economy had large share of industrial output—almost 50% of GDP • Unusual because vast majority of people work land • Share of agriculture has gradually fallen from 33% in 1985 to 15% in 2002 • Structure of China’s secondary industry changed fundamentally during 1980s

  4. Growing Role of Private and Collective Enterprises • Until 1978 industry dominated by large state-owned enterprises (SOEs) • Since then manufacturing output has been produced by “collective” enterprises under aegis of local governments-particularly township and village enterprises (TVEs) • But increasingly by private entrepreneurs or foreign investors—either wholly owned or in joint ventures

  5. Value of Chinese Exports and Received FDI, 1983-2002 (Billions of $US)

  6. Hungry Dragon: China’s Demand for Raw Materials • China’s booming economy driving up prices minerals and metals • Oil imports rose by 30% in 2003 exceeding those of Japan • Raises problems of supply bottlenecks and encourages local growth of needed resources

  7. Transport Logjam • Strained by rapid growth China’s transport system has bogged down • Railroads are so overburdened that power plants in southern China have trouble getting coal from the north • This has caused ‘brownouts’ forcing factories to operate on limited schedules • Overloaded heavy duty trucks are breaking down roads and enforcement of weight limits forcing trucks to make more trips

  8. Shipping Growth • Huge need for raw materials and production of finished goods has fueled a new demand for the world’s shipping industry • This has produced a major pressure on China’s port system • Shortages of trucks and rail cars are preventing distribution of shipments from overseas • Imported iron ore and steel clog docks and new arrivals are forced to wait as long as a month at a cost of up to $100K a day per vessel

  9. Other Impacts of Transport Congestion • But exports of shoes to furniture have not been affected. Because these goods are containerized and loaded on different trucks to different specialized ports • China’s boom has pushed up global commodity prices and freight rates all over the world • Rising freight rates have hurt competitiveness of some US agricultural exports to China: grain from Gulf Coast to China now costs $70/ton as opposed to $18/ton in last two years • Collision between China’s booming private sector benefiting from foreign investment and older, less prosperous aspects of economy • Much recent investment in China has gone to roads and not railways. Chinese railways are in public sector and form monopoly

  10. The Role of Ports • The cargo port in Zhanjiang, a southern city in China. Foreign investment in China for the first 11 months of last year totaled $47 billion; Chinese officials had predicted $57 billion for the entire year.

  11. Huge Need for External Resources • Despite the deep energy resources, such as coal, which are available in Shansi province, the rapid economic growth has forced China to import coal. A power plant in Guangdong Province in southern China is importing coal from as far as Australia

  12. Shanghai’s Visionary Thinking • Grand vision- build it and they will come! • 1990 plan successful to turn marsh and old factories into new financial district-Pudong • Major financial and retail complexes • World’s tallest hotel- 54 floors

  13. Shanghai’s Maglev System • German produced mass transit- magnetic levitation • World’s first in commercial service • Reaching 270 mph • 20 mile, 8 minute journey to airport from center of Shanghai • Cost of one way ticket is $10 but only 4,000 passengers on a typical day less than 1/6th of capacity

  14. Problems of the Boom • Critics, even some Chinese leaders, are saying that heavy state investment has led to waste and has not improved incomes of vast majority of Chinese people • Promise to overhaul urban and rural welfare payments, improve grain production, reduce rural taxes and improve education • Perhaps simply clever public relations for CP but many of 800 million outside wealthy coastal nodes have stagnant incomes

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