Economic Growth and Income Distribution

Over the past few decades, the Chinese economy has experienced a number of dramatic changes. Specifically, China’s macroeconomic performance experienced steady growth in the first Five-Year Plan (1953–57), a short leap forward followed by a sudden economic disaster in the period 1958–62, a rapid growth period (1963–65), a chaotic period stemming from the “Cultural Revolution” movement (1966–76), and a fast growth period (1977–) during the post-reform era, with a few exceptions in 1981 and 1989–90 (see Figure 6.1). Particularly praiseworthy in the light of all of these developments is that the economic growth of China has been sustained an average annual rate of about 10 percent since 1978, making it one of the most dynamic economies in the world during the same period. This average growth rate is approximately three times that the average of the developed nations, more than double that of India, whose conditions are similar to those of China, and even higher than that of the newly industrialized economies (NIEs) including South Korea, Taiwan, Hong Kong and Singapore. Figure 6.1 China’s economic growth rates Notes: GNP growth rates from 1952 to 1977 are represented by national income growth rates(SSB, 1996; NBS, 2006); the real GDP per capita growth rates are based on Heston et al. (2006).