There are only a few countries in the world such as Japan or the Asian Tigers, which achieved spectacular economic progress within a very short period. China is on the way to becoming such a country.At the moment, the miracle of China is in the making and economic analysts and observers, the world over, are busy calculating what the size and stature of China’s economy would be after 10 to 20 years, if it continued to grow at the present rate.
China, with a population of 1.27 billion, had a Gross National Income (GNI) of $1,131 billion in 2001, as reported in the World Development Report, 2003. It would be interesting to note that the World Bank reports the GNI of respective countries in its World Development Report, in two ways. First, the GNI is worked out according to ordinary calculations, on the basis of exchange rates of respective countries’ currencies vis-a-vis the US dollars.
Secondly, the World Bank has recently started calculating the GNI of respective countries, also, on the basis of purchasing power parity vis-a-vis the US dollars, showing the basket of commodities it would be able to purchase in the US. When calculated on this latter basis, China’s GNI worked out (as shown in the World Development Report, 2003) to $5,415 billion, which was second only to the GNI of the US at $9,902 billion.
Calculating on this very basis, Japan’s GNI stood at $3,487 billion, whereas Germany’s GNI stood at $2,098 billion for 2001. However, the population of China being more than one billion, its per capita income worked out to be considerably lower than that of both Japan and Germany.
Not very long ago, China was categorised as a low income country (LIC) in the World Bank documents, just like India and Pakistan. However, today, it is included among the lower middle income countries (LMC) with a per capita income of $890, whereas India and Pakistan are still shown among the low income countries (LIC), with per capita GNI of $460 and $420 respectively.
China was able to march ahead and leave both India and Pakistan behind, by virtue of its rapid and sustained economic growth. During 1990-2001, China’s average annual GDP growth rate was recorded at 10 per cent, as against 5.9 per cent of India and 3.7 per cent of Pakistan.
While China’s overall economic performance had, also, been remarkable, its performance in the exports sector was particularly impressive. In 2001, merchandize exports from china stood at $266 billion, as shown in the World Development Report, 2003.
This performance had been better than that of even some of the members of the Group of Seven (G-7). For instance, exports from Canada were recorded at $262 billion and exports from Italy were recorded at $241 billion, for the same year, which were lower than the exports from China.
The Foreign Direct Investment (FDI) had played a significant part in the economic progress of China. For year 2000, the FDI into China stood at $38.4 billion, as compared to $9.3 billion of Korea Republic, $6.4 billion of Singapore, $3.4 billion of Thailand, $1.7 billion of Malaysia and $2.3 billion of India, during the same year.
China had, also, paid due attention to its social sector. It had succeeded in reducing its illiteracy rate (as of 2000) to 16 per cent of population of 15 years and above.
Considering that China had a population of 1.27 billion, this was no mean achievement. In the same way, China had succeeded in bringing down its level of poverty to a remarkable extent. As per national poverty standards, only 4.6 per cent people in China were reported to be below the poverty line (according to a national survey conducted in 1998).
However, according to the international poverty standards, 18.8 per cent of China’s population was reported to be below $1 a day during the same year, as compared to 44.2 per cent in India and 31 per cent in Pakistan.
China has, also, been able to manage its external sector in a remarkable way. Its external debt ($149.8 billion in 2000) worked out to only a fraction of its exports ($266 billion in 2001) and the same constituted only 13 per cent of the China’s Gross National Income.
Thus, China had been able to keep its external debt at a manageable level. As a result, China’s credit-worthiness remained excellent and it was able to attract foreign investment in a big way, as already stated in the preceding paragraphs.
What is the secret of China’s economic progress? Apart from hard work and determination, China’s rapid and sustained economic growth was attributable, also, to its political stability and its foreign policy which was based inter-alia on the principle of peaceful co-existence.
China had managed to maintain good relations not only with its neighbours but with the entire world community. As a result, China’s economy had been able to make unhindered progress during the last so many years.
The other countries of the region like Pakistan and India would have to emulate the model of China if they, also, wanted to achieve rapid and sustained economic progress like China and wanted to bring prosperity and happiness to their down-trodden people.