The Social Evolution of China's Economic Growth

ABSTRACT.The material gathered in this study provides a rich and diverse context for understanding China's high-speed growth performance, the impact of the rising China on the global economic system, the growth and development experiences of China, and China's weak domestic consumption and over-reliance on investment and exports. The theory that I shall seek to elaborate here puts considerable emphasis on China's rural-urban labor migration, the fundamental drivers for the rapid economic growth in China, China's high economic growth in transition, and the deregulation and development of market elements in the Chinese economy.Keywords: China, economic growth, performance, development, market1. IntroductionIn this paper I am particularly interested in exploring the current level of integration of the Chinese economy with the world economy, the growing relative strength of China in the multi-polar world, China's expanding role in the new global economic architecture, and the continued structural transformation of the Chinese economy. The mainstay of the paper is formed by an analysis of the experience of decentralization in China, the impacts of fiscal decentralization on economic performance in China, China's sustained rapid economic growth over the era of its systemic reform, and China's macroeconomic stability. The objective of this paper is to emphasize China's dynamic growth in the current global crises, the increasing competitiveness of Chinese products on global markets, the process of the Chinese economic development, and the exhaustion of China's surplus agricultural labor.2. China's High-speed Growth PerformanceErcolani and Wei identify the phases in China's economic development1 using the marginal productivity of labor in the agricultural sector, deriving China's sectoral data by multiplying the sum of sectoral employment by the percentages of sectoral employment. China's overall economic growth is driven by the rapid development of the non-agricultural sector. Labor reallocation accounts for 1 to 2 percent per annum of GDP growth. The Chinese economy has fully absorbed the redundant agricultural labor. Economic growth in China is largely driven by the non-agricultural sector and less so by that of the agricultural sector (most of China's laborsurplus is engaged in the agricultural sector).The above discussion indicates that the rapid expansion of the nonagricultural sector is mainly affected by capital accumulation and growth fuelled by sectoral labor reallocation. On Ercolani and Wei's account, the reallocation of labor away from agriculture has made a great contribution to China's economic growth. The Chinese economy has entered the Lewis-Ranis-Fei phase two of development. Employment should be promoted to effectively absorb the remaining labor surplus and promote China's economic development by further relaxing the Hukou restrictions on migration, increasing labor market flexibility and improving the allocative efficiency of labor, and by encouraging the development of private enterprise to create more opportunities.2Qi et al. note that prefecture-level regions have played an increasingly significant role in the development of China's economy:3 China's economic development is generally in the state of agglomeration, China's rapid economic growth experienced a spatial shift from the coastal areas to the inland areas, hot spots in China's economy moved northward and westward, the growth rate of cities and prefectures in Central and Western China was much faster than those in coastal areas, and areas rich in resources have become the new hot spots of economic growth in recent years {more attention needs to be paid to their unbalanced industrial structures and the lagging social development against the backdrop of the rapid economic growth).4Chu et al. say that over the period 1987-2008, China's macro stability5 is driven by three key macroeconomic indicators: the budget balance, GDP growth gap and inflation rate. …