Sustained Development Leads to Higher Living Standards
By HU JIANGYUN
Commercial housing sales rose by 59.8 percent year-on-year in the first four months of 2013.
CHINA’s economy has significantly advanced over the past 35 years of reform and opening-up. Chinese people’s incomes have risen and their living standards have improved, from barely having enough to eat and adequate clothing to today’s generally better-off lifestyle.
Higher Incomes and Better Lives
China’s GDP per capita grew from RMB 381 in 1978 to RMB 38,420 in 2012, according to the National Bureau of Statistics of China, and based on current prices. In 1987 this figure surpassed RMB 1,000 to hit RMB 1,112. Five years later in 1992, GDP per capita exceeded RMB 2,000 to reach RMB 2,311. In 2003 this figure rose to RMB 10,542; in 2007 to RMB 20,169; and in 2010 to RMB 30,015. Breaking down the price factor, China’s GDP per capita in 2012 grew 16.2 times that of 1978, with an average annual growth of 8.7 percent.
China’s gross national income (GNI) per capita rose from US $190 in 1978 to US $5,680 in 2012, according to World Bank statistics and based on current prices. Judging from Chinese and international statistics, both China’s GDP per capita and GNI per capita sustained steady year-on-year growth, and China moved from a low-income to an upper-middle income country.
There was in the process a massive growth in per capita disposable income. In 2012, Chinese urban residents’ average disposable income hit RMB 24,565 – a 71-fold leap compared with the RMB 343 of 1978. This constituted an average annual growth of 13.4 percent, or 7.4 percent after deducting the price factor. Net per capita income among rural Chinese was RMB 7,917 in 2012, a 58-fold growth and 12.8 percent average annual growth, or 7.5 percent when deducting the price factor.
At the end of 2012, Chinese urban and rural residents’ deposits totaled RMB 39.96 trillion, a 1,896-fold rise compared with that at the end of 1978, and a 24.9 percent average annual growth. Urban Chinese residents hence started to rake in property income, which accounted for 2.6 percent of the per capita total in 2012, according to statistics.
All these figures show that there has been substantial improvement in Chinese people’s living standards and quality of life. In 2012, the per capita cash expenditure of China’s urban residents was RMB 16,674 – 52.6 times that of 1978 – an annual growth of 12.4 percent. Chinese rural residents’ per capita cash expenditure in 2012 was RMB 5,908 – 49.9 times that in 1978, so showing annual growth of 12.3 percent. Also, in 2012, the per capita living area of urban residents was 32.9 square meters, 26.2 square meters more than in 1978, while that of rural residents expanded to 37.1 square meters from 29 square meters of 1978.
Chinese citizens are also spending their money on more diverse products. TVs, fridges, air-conditioners and telephones are relatively commonplace, and the ownership rate of private cars and computers has substantially risen. At the end of 2012, every 100 urban households owned 212.6 cell phones – 193.1 more than at the end of the year 2,000; also 87 computers – 77.3 more over the same period; and 21.5 private cars – 21 more than 12 years earlier. The same number of urban households also owned 126.81 air-conditioners – 126.47 more than in 1990; also 98.48 fridges – 56.15 more over the same period; and 136.07 TVs – 77.03 more than 22 years ago.
Meanwhile China’s impoverished population has dramatically declined. From 1978 to 2012, China adopted different standards to define the poverty line in rural areas. According to that in 1978, the number of people living in absolute poverty in rural areas was 250 million that year, accounting for about one fourth of the total population. This figure fell to 14.79 million in 2007, implying that an average 8.11 million people each year had risen from poverty. Consistent with the 2008 poverty line, China’s poverty-stricken rural population fell from 43.2 million in 2007 to 26.88 million in 2010. This means that an average 5.44 million people each year escaped from poverty. And gauged by the 2010 poverty line, China’s poverty-stricken rural population fell from 165.67 million in 2010 to 98.99 million in 2012, about 10 percent of total rural population. Around 33.34 million people each year hence overcome poverty.
Moreover, China’s consumption structure has been obviously optimized. In 2012, the Engel coefficient, the proportion of total family income spent on food, of Chinese urban residents was 36.2 percent, 21.3 percentage points lower than in 1978. The Engel coefficient of rural residents, meanwhile, was 39.3 percent in 2012, 28.4 percentage points lower than in 1978.
Key Factors in Rising Living Standards
Since 1978, China has stuck to the basic national policy of reform and opening-up, which is why its economy has maintained and sustained rapid growth. From 1979 to 2012, China’s average annual GDP growth hit 9.8 percent, about seven percentage points higher than that of the entire world over the same period. China’s GDP soared to RMB 51,894.2 billion from RMB 364.5 billion in 1978, in which year China was the world’s 10th largest economy. By 2012, the country had become the world’s second largest, next only to the U.S., the proportion of its economic output in the world total that year having risen to 11.5 percent from 1.8 percent in 1978.
China’s reform and opening-up has optimized the allocation of resources and vastly improved economic efficiency. China’s development is similar to that of certain other countries and regions in the world. The development history of the U.S., the U.K. and Japan show that those countries maintained high economic growth for 10 or more years. From the 1960s to the 1980s, the “Asian Dragons” – Hong Kong, Singapore, South Korea and Taiwan – maintained high growth rates for more than a decade. All of these countries and regions realized fast economic development and none got stuck in the “middle-income trap” because they let the market play its role in optimizing the allocation of resources.
China, in addition, has fully developed its comparative advantages. Compared to more developed countries, China enjoys the obvious advantages of labor resources and industry chain. The Chinese government, based on conditions of socioeconomic development, has steadily improved the trade and investment environment and brought proactive policies and measures into effect. For example, China’s entry into the WTO at the end of 2001 further advanced reform and opening-up in various fields, so enabling the country to integrate into the global economy.
After the international financial crisis broke out, the Chinese government adopted an expansionary fiscal policy and monetary policy, so guaranteeing economic growth and also promoting global economic recovery. Since the second half of 2008, China has become an important engine for the world economy’s recovery. From 2008 to 2012, China’s average annual contribution to world economic growth was more than 20 percent.
China is still at an important stage of development, and about to embrace an era of new-type urbanization. Although the world’s most populous country, China’s demographic dividend is gradually weakening, to the point of disappearing. Pushing forward the development of new-type urbanization, therefore, conforms to the historical trend of the times. A higher urbanization level promotes coordinated development of the urban and rural economy; it is conducive to upgrading residents’ consumption structure and continuously generating new economic growth points. Urbanization will moreover promote economic, social and cultural vigor, hence raising people’s living standards even higher.
The average life expectancy of Chinese people in 2011 was 75-year-old. That in developed countries such as Japan and in Europe, however, exceeds 80. This disparity implies that China still needs to raise its citizens’ living standards. Chinese people’s lives have obviously improved. But were it not for heavy financial pressure, their life quality could be higher. Similar to the situation in Japan in the 1960s, there have been instances of people dying from overwork. Too few Chinese people, therefore, truly enjoy and savor their lives.
