1.

8 Using This Book

The chapters of this book are organized in a bottom-up fashion. Chapters 2 through

6 cover endowments, legacies, and economic systems and their evolution through

the present. Chapters 7 through 10 approach the developmental process through

four complementary perspectives: structural change, population, labor, and living

stan- dards. This is followed by seven chapters that cover specific sectors,

beginning with agriculture and progressing through industry and technology and

foreign trade and investment. Three chapters consider macroeconomic, financial,

and fiscal issues. A final chapter on the environment concludes. The book is

designed to be a platform, covering much of the essential information about the

Chinese economy and thereby serving as a starting point for further in-depth study

of any specific topic. Each chap- ter is a descriptive essay. The chapters are

extensively cross-referenced, but each is designed to stand on its own. Some

chapters have been changed and renumbered since the first edition. Chapter 18 is a

new chapter on macroeconomic policy, dis- cussing the dramatic macro events of

the past decade and introducing three chap- ters on macro and financial issues.

Coverage of macroeconomic and financial issues is much stronger than in the first

edition. The section on energy that was included in a chapter on sectoral change in

the first edition has been moved into chapter 21 on the environment, and the

sectoral chapter (the former chapter 14) has been eliminated.

Because the chapters in the book are intended to stand alone, courses should be

able to assemble the chapters in different sequences to accord with different

approaches to the material.

18 Introduction

Program 1. If the chapters are covered in order, the result is a strong focus on

China, with the opening chapters on China’s geography and history first. The

progression is straightforward and provides in-depth coverage appropriate for a

course specifically on China’s economy or political economy, or as part of a course

on East Asian economies.

Program 2. An alternative approach is to start with the core chapters on China’s

economic transition and contemporary developmental experience. Chapters 5–8

cover this material. Chapter 15 on technology and industrial policy and chapter 20

on the fiscal system would be natural complements.

Program 3. A strong focus on economic systems and socialist transition would

begin with chapters 4 and 5 (the socialist economy and the transition economy),

and then skip to chapters 13 and 14 for treatment of township and village

enterprises and ownership and corporate governance reforms in industry.

Subject clusters. There are three chapter clusters: Chapters 12–14 on the rural

economy, chapters 16–17 on international trade and investment, and chapters 18–

20 on macroeconomics and the financial and fiscal systems.

Chapter 21 covers energy, the environment, and environmental policy. This can

also be used as a policy case study, combined with the coverage of the political

econ- omy of local governments in section 5.6 and chapter 20. Chapters 12 and 20

raise the policy implications of increased welfare spending for rural and urban

local govern- ments and the central government.

The choice has been made throughout to present as much China-specific content as

possible. Inevitably, the space spent on economic principles is limited, and this

creates opportunities to combine text readings with in-class discussion. For

example, a discussion of the relation among the current account, capital account,

and the bal- ance of payments identity will enrich chapter 17 on foreign

investment. Similarly, in-depth discussion of the aggregate production function

would enrich chapter 7 on growth. Since this material is familiar to trained

economists, it should be straight- forward to introduce supplemental materials in

class and integrate it with the China-specific material from the text.

The book presents many charts and graphs. The data for these graphics, regularly

updated, are available at the book’s website, chinaeconomicoutlook.com. Supple-

mentary materials and occasional opinion pieces and blog posts also appear there

from time to time.

Bibliography

Suggestions for Further Reading

Kroeber (2016) is a brisk and insightful introduction to many of the topics covered

in this text. Johnson (2004) manages to capture much of the realistic feel of

19 Introduction

contemporary China in three detailed and moving accounts. Lin, Cai, and Li (1996)

is especially good on the socialist era. Feng and Yao (2014) is a realistic but

optimis- tic take on China’s current challenges.

Sources for Data and Figures

The majority of the data in this text are drawn from official Chinese sources. By

far the most accessible source is data in the Statistical Yearbook of China (SYC)

and the Statistical Abstract of China (SAC), published annually by the National

Bureau of Statistics. The SYC has the additional advantage of having English

headings for all tables. Chinese GDP figures have been repeatedly revised; this text
uses data from the 2017 revision exclusively, given in SAC (2017, 21–37). These

adopt the international convention of reclassifying research and development

expenditures as investment, rather than an intermediate input, so they increase

GDP slightly.

In table 1.1, for consistency, all data are taken from World Bank, World Develop-

ment Indicators, last revision, June 1, 2017.

References

Brandt, Loren, Johannes Van Biesebroeck, and Yifan Zhang (2012). “Creative

Accounting or Creative Destruction? Firm-Level Productivity Growth in Chinese

Manufacturing.” Journal of Development Eco- nomics 97:339–351.

Commission on Growth and Development (2008). The Growth Report: Strategies

for Sustained Growth and Inclusive Development. Washington, DC: The World

Bank.

Feng, Yingjie, and Yang Yao (2014). “The Middle-Income Trap and China’s

Growth Prospects.” In Ligang Song, Ross Garnaut, and Cai Fang, eds., Deepening

Reform for China’s Long-Term Growth and Devel- opment, 133–158. Canberra:

Australian National University Press. http://press.anu.edu.au/titles/china -update-

series/deepening-reform-for-chinas-long-term-growth-and-development/pdf-

download/.

Johnson, Ian (2004). Wild Grass: Three Stories of Change in Modern China. New

York: Pantheon Books. Kroeber, Arthur (2016). China’s Economy: What Everyone

Needs to Know. New York: Oxford Univer-

sity Press.

Lin, Justin Yifu, Fang Cai, and Zhou Li (1996). The China Miracle: Development

Strategy and Eco-

nomic Reform. Hong Kong: Chinese University Press.

SAC (Annual). Zhongguo Tongji Zhaiyao [Statistical abstract of China]. Beijing:

Zhongguo Tongji.

LEGACIES AND SETTING

Plowing with traditional tools in Dengfeng, Henan 1982.