China’s Transition to a New Phase of Development

356 Pages·2022·7.552 MB·English

by  Ligang Song, Yixiao Zhou

CHINA’S TRANSITION TO A NEW
PHASE OF DEVELOPMENT
Other titles in the China Update Book Series include:
1999 China: Twenty Years of Economic Reform
2002 China: WTO Entry and World Recession
2003 China: New Engine of World Growth
2004 China: Is Rapid Growth Sustainable?
2005 The China Boom and its Discontents
2006 China: The Turning Point in China’s Economic Development
2007 China: Linking Markets for Growth
2008 China’s Dilemma: Economic Growth, the Environment and Climate Change
2009 China’s New Place in a World of Crisis
2010 China: The Next Twenty Years of Reform and Development
2011 Rising China: Global Challenges and Opportunities
2012 Rebalancing and Sustaining Growth in China
2013 China: A New Model for Growth and Development
2014 Deepening Reform for China’s Long-Term Growth and Development
2015 China’s Domestic Transformation in a Global Context
2016 China’s New Sources of Economic Growth: Vol. 1
2017 China’s New Sources of Economic Growth: Vol. 2
2018 China’s 40 Years of Reform and Development: 1978–2018
2019 The Chinese Economic Transformation
2021 China’s Challenges in Moving towards a High-income Economy
The titles are available online at press.anu.edu.au/publications/series/china-update
CHINA’S TRANSITION TO A NEW
PHASE OF DEVELOPMENT
EDITED BY LIGANG SONG AND YIXIAO ZHOU
SOCIAL SCIENCES ACADEMIC PRESS (CHINA)
Published by ANU Press
The Australian National University
Canberra ACT 2600, Australia
Email: [email protected]
Available to download for free at press.anu.edu.au
A catalogue record for this book is available from the National Library of Australia
ISBN (print): 9781760465575
ISBN (online): 9781760465582
WorldCat (print): 1350161737
WorldCat (online): 1350161736
DOI: 10.22459/CTNPD.2022
This title is published under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International (CC BY-NC-ND 4.0) licence.
The full licence terms are available at
creativecommons.org/licenses/by-nc-nd/4.0/legalcode
Cover design and layout by ANU Press
This edition © 2022 ANU Press
Contents
List of figures vii
List of tables xi
Abbreviations xiii
List of contributors xv
Acknowledgements xvii
1. Managing China’s transition to a new phase of economic growth 
and development 1
Ligang Song and Yixiao Zhou
2. China’s new development paradigm and future development 25
Justin Yifu Lin
3. China in the twenty‑first century: A national balance sheet
perspective 41
Xiaojing Zhang and Cheng Li
4. The platform economy in China: Innovation and regulation 73
Yiping Huang
5. Global industrial chain restructuring and China’s choice 89
Qiyuan Xu
6. Challenges and opportunities for China to move towards
consumption-led growth 105
Wang Wei
7. China’s hukou system reform: Endogenous evolution
and adaptive efficiency 137
Kunling Zhang
8. Changes in income inequality and poverty early in the Covid-19
pandemic: Findings from a mixed data analysis 165
Li Shi and Zhan Peng
9. The impact of Covid lockdowns on China’s labour market outcomes
in 2020: Evidence based on an employee tracking survey 193
Dandan Zhang
10. The strategy and pathway towards China’s carbon neutrality 227
Yongsheng Zhang and Xiang Yu
11. The mechanisms and development of emissions-trading markets:
A comparison of the European Union and China 239
Haocheng Shang and Fang-Fang Tang
12. The transition to carbon neutrality in China and its impacts
on Australia 257
Xiujian Peng, Xunpeng Shi, Shenghao Feng and James Laurenceson
13. Cooperation, conflict and ‘Quad’ exports to China 287
Vishesh Agarwal, Jane Golley and Tunye Qiu
14. US–China relations: How to stop the economic damage from
de-globalisation 309
Wing Thye Woo
Index 329
List of figures
Figure 1.1 Quarterly real GDP growth rate of China, year on year, 1992Q1–2022Q2 3
Figure 1.2 Annual installation of industrial robots, 15 largest markets, 2020 6
Figure 1.3 China leads the world in experimental development spending 7
Figure 1.4 Top 10 countries for number of unicorn firms, 2019 7
Figure 1.5 China’s internal debt 8
Figure 1.6 Gini coefficient in China, 1981–2018 9
Figure 1.7 The world’s top five bond markets (market size in US$ trillion) 11
Figure 1.8 The government is the largest issuer of onshore bonds in China 11
Figure 3.1 China’s national wealth accumulation, 2000–19 (RMB trillion) 43
Figure 3.2 Comparison of national wealth growth and GDP growth (annual rate
in nominal terms) 45
Figure 3.3 Gross savings rate of major economies (per cent) 46
Figure 3.4 Net worth of general government sector, 2000–19 (RMB trillion) 48
Figure 3.5 Net worth of household sector, 2000–19 (RMB trillion) 48
Figure 3.6 China–United States comparison: Flow versus stock 49
Figure 3.7 International comparison of national wealth/GDP 52
Figure 3.8 Household–government wealth distribution in China, 2000–19 53
Figure 3.9 Net assets of the government sector as a share of total national wealth 54
Figure 3.10 Share of government net assets in GDP, 2016 (per cent) 55
Figure 3.11 Net production tax as a share of GDP in primary distribution 56
Figure 3.12 Labour compensation as a share of GDP in primary distribution 56
Figure 3.13 Government liabilities as a share of GDP, 2016 (per cent) 57
Figure 3.14 Financial sector leverage ratio in China (per cent) 60
Figure 3.15 Leverage ratio of the real economy sector in China (per cent) 61
Figure 4.1 Development of China’s platform economy 78
vii
CHINA’S TRANSITION TO A NEW PHASE OF DEVELOPMENT
Figure 6.1 China’s GDP share of domestic and external demand, 2001–20 107
Figure 6.2 Contribution of domestic and external demand to GDP growth 108
Figure 6.3 Contribution of consumption and investment to GDP growth,
1979–2019 108
Figure 6.4 Shares of household and government consumption, 1978–2020 109
Figure 6.5 Expenditure on goods and service consumption of Chinese citizens,
2013–20 110
Figure 6.6 China’s online retail sales and growth rates, 2008–20 111
Figure 6.7 Retail sales of consumer goods in urban and rural areas, 2011–20 111
Figure 6.8 Fixed asset investment among three industries (RMB100 million) 112
Figure 6.9 Cumulative year-on-year growth rate of completed fixed asset investment
(per cent) 113
Figure 6.10 Cumulative year-on-year growth rate of infrastructure investment
by subsector 113
Figure 6.11 Amount and share of private investment in fixed assets, 2012–20 114
Figure 6.12 Per capita GDP and consumption to GDP ratio 115
Figure 6.13 Average contribution of consumption to economic growth in developed
economies, with per capita GDP from 14,000 to 17,000 Geary-Khamis Dollars 116
Figure 6.14 Per capita GDP and percentage of consumption of services 117
Figure 6.15 Per capita GDP and proportion of durable goods consumption 117
Figure 6.16 Per capita GDP and proportion of food consumption 118
Figure 6.17 Main drivers of China’s domestic demand in the next decade 119
Figure 6.18 Per capita GDP and annual growth of the middle-income group 120
Figure 6.19 China’s young and elderly populations, 2020 120
Figure 6.20 Net growth effect of online consumption across regions 122
Figure 6.21 Grouping of trillion-renminbi growth poles, 2025 123
Figure 6.22 Trillion-renminbi growth poles of domestic demand, 2030 125
Figure 6.23 Added value of service consumption in relation to GDP: A comparison
of China and economies at comparable stage of development 126
Figure 6.24 Share of private investment by sector, 2017 128
Figure 6.25 A comparison of Gini coefficients, 2016 129
Figure 6.26 International comparison of the openness of China’s service sectors 131
Figure 7.1 Conceptual framework of endogenous institutional change 143
Figure 7.2 Path of institutionalisation of the rigid hukou system 147
viii
LIST OF FIGURES
Figure 7.3 Labour–land ratio and agricultural productivity in pre-reform China 149
Figure 7.4 Labour–land ratio and agricultural productivity in reform era 151
Figure 7.5 Adaptive efficiency of China’s hukou system, 1961–2020 158
Figure 8.1 The impact mechanism of pandemic controls on income distribution
and poverty (schematic diagram) 168
Figure 8.2 The impact of the pandemic on the incidence of poverty 180
Figure 8.3 The relative proportion of the impact of the pandemic on different
economic activity objects 182
Figure 8.4 The impact of the pandemic on the incidence of rural income poverty,
absolute poverty standards 184
Figure 9.1 Distribution of lockdown dates for cities covered by the employee
tracking survey 200
Figure 9.2 Event study: Tests for parallel trends assumption 211
Figure 9.3 Heterogeneous analysis for various groups of workers 212
Figure 11.1 A typical carbon emissions futures trading process 242
Figure 11.2 Each country’s share of carbon dioxide emissions in 2020 243
Figure 11.3 EU ETS allowance prices, 2005–22 (€) 247
Figure 11.4 China ETS emissions allowance prices in 2021 250
Figure 12.1 China’s changing energy mix in the carbon-neutrality scenario 267
Figure 12.2 Significant decline in China’s fossil fuel imports 268
Figure 12.3a Declining production of iron ore in China 269
Figure 12.3b China’s demand for imported iron ore 269
Figure 12.4a Declining production of nonferrous ores in China 270
Figure 12.4b China’s increasing demand for imported nonferrous ores 270
Figure 12.5 Australia’s main fossil fuel and mineral exports in the CCNS:
Cumulative deviation from AZES, 2050 (per cent) 271
Figure 12.6 Changes in terms of trade and real devaluation: Cumulative deviation
from AZES (per cent) 272
Figure 12.7 Real GDP and other macro-variables: Cumulative deviation from AZES 
(per cent) 273
Figure 12.8 Real GDP and its components from the expenditure side:
Cumulative deviation from AZES (per cent) 273
Figure 12.9 Changes in Australia’s exports by commodity in CCNS: Cumulative 
deviation from AZES (per cent) 274
ix
CHINA’S TRANSITION TO A NEW PHASE OF DEVELOPMENT
Figure 12.10 Real gross state product: Percentage cumulative deviations from
AZES values 277
Figure 13.1 China’s relative economic growth and trade integration with Quad
economies, 2000–20 291
Figure 13.2 Long-run trends in government political relations with China, 
2001–20 293
Figure 13.3 Average annual government and military trade-filtered political relations
with China, 2001–20 294
Figure 13.4 Doklam standoff 296
Figure 13.5 Short-run effects of government PRI shocks on export growth to China,
2001–20 300
Figure 14.1 China’s industrial priorities, 2015–25 314
Figure 14.2 Selected MIC 2025 domestic content goals 314
x