Economy in China - Mémoire

Contenu

1. Introduction.....................................................................................................................11

II.     Methodology......................................................................................................................11

III.        China’s industry-based economy since 1978: An economic structural unbalanced, producer but not consumer…......................................................................................................12

1.     From the production perspective.....................................................................................12

2.     Uneven income distribution ............................................................................................15

IV.        Challenge concerning the production apparatus: time to change? ................................16

1.     Overproduction ...............................................................................................................16

2.     Diminution of profitability..............................................................................................16

3.     Development of the pattern of growth into an intensive one? ........................................16

V.     China’s development to a consuming-based economy .....................................................17

1.                Willingness to rebalance the growth with a consumption recovery plan .......................18

a.                Salary evolution ..............................................................................................................18

 b.                Public sector evolution: a new social protection system .............................................18

 c.                “Hukou” plan and the urbanization plan.....................................................................19

2.     Development of a the pretty rich social class and evolution in consumption

 preferences .............................................................................................................................19

VI.        Conclusion ....................................................................................................................20

VII.       Discussion .....................................................................................................................21

VIII.      Sources .........................................................................................................................22

I.     Introduction

Since its opening-up in 1978, China has been registering an incredible growth, exceeding 10% for some years. The country represents a main player in the world economy, furnishing 33% of the world growth in absolute value between 2000 and 2010. With its 1.364 billion of residents, China has an incredible workforce, with a very great potential in terms of economic evolution. The country has been exploiting this potential for many years, but with the size of its population, its relation with the world, and its “world industry” status, the Middle Kingdom still has a lot to do. After many years spent on concentrating on exports and production, but leaving the population situation, the powerful country is facing some limits, and the government needs to apply new economic structure. The concentration on the commercial balance is no longer enough, and the country needs now to focus on its domestic characteristics, and to relaunch the growth rate which has been decreasing since 2010. In this context, I will try to answer a question concerning the Chinese economy evolution; how is China aiming to evolve from an industry-based economy to a consumption-based one?

I will try to answer to this question with three parts. The first one will explain he industry-based economy that China used to have for a long time, and the structural economic unbalanced it provoked. In the second part, we will see that the production apparatus is not efficient anymore, and that the production factor of the country need to be restructured. In the third and last part, I will analyse the evolution of China into a consumption-based economy, with the development of a consumption recovery plan.

II.     Methodology

First of all, I didn’t find any articles/academic report or research paper really speaking about our subject. Most of them approach a part of the study, most of the time the Chinese “industry of the world” period. The main report used during this exercise is « China’s Growth Model and Structural Imbalance in the Open Economy », Li Wenpu and Gong Min, Selected Papers of Beijing Forum 2009, Procedia – Social and Behavioral Sciences, 2013. As the policies –that I will describe further in the paper- decided to relaunch the domestic consumption are quite new, there is no real debate for the moment. The only question approached in the reports I studies was concerning the future of those policies, and their possible fail/success.[pic 1]

The methodology used during this exercise was divided in two parts. The first one was the quantitative one, which enabled to find many data concerning China, and its development. I mainly use that quantitative information for the introduction, to give an overview of China’s economic situation. I found them mainly in the World Bank website, which proposes main figures for any countries. The second part, and most important one, of the methodology is qualitative. This part was information research-oriented. I knew some information concerning China’s growth, and well-known “world industry” image, but I needed to find more theory and explanations for this status. The subject chosen includes many characteristics and is large. The main challenge was to build a structure with selected information, and the analysis of that information. In order to achieve this goal, as said before, I used a research-oriented method, based on key-words research. I started doing researches with the key words, and reading some articles/reports found. That new information support gave us more and more key words, and included more researches. I also wanted to give an objective point of view to enrich my analysis during this report, especially concerning the last part, the emergence of a new social class in China, and the change in consumption goods preferences. To reach this goal, I wanted to interview Cedric, a French man living in China, who does many videos related to China lifestyle, Chinese language learning, history, ways of doing business in China, and “surviving” there. Unfortunately, he didn’t answer to my email, and I had to find a new source of  information. Another possibility was to interview the Chinese students doing the master China-Europe business studies. I asked Xiaoying Yin (Zoe), as she has lived in Shanghai for many years, and has experienced the life of urban resident, with an immersion in a huge consumption market. Her experiences and points of view concerning the Chinese society seemed to be the best we could find.

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