By Ren Zeping & Zhang Liqun, Research Team on "Study on the Urbanization Development Strategies in the Process of the Building of Chinese Modern Rural Areas"

Research Report No 200, 2011

China's economic and social development has advanced by leaps and bounds over the past 30 years since reform and opening up, and the country's comprehensive national strength has improved significantly. China's total GDP volume has increased by 18 times at constant prices from 364.5 billion yuan in 1978 to 40.1 trillion yuan in 2010, with an annual increase of 9.9%, ranking second in the world. With the sustainable and rapid economic development, China has accelerated its economic restructuring, improved the living standard of its people, advanced its institutional reform in good order, remarkably stepped up its international status and its achievements has aroused worldwide attention.

At the same time, since entering the 21st century, a raft of obstacles are in the way of China's all-around, coordinated and sustainable development, the inveterate structural problems and the extensive economic growth have not been changed radically and, imbalanced, uncoordinated and non-sustainable issues still remain the glaring problems in China's economic and social development. During the 12th Five-Year Plan period, China will take scientific development as the keynote, acceleration of the transformation of the mode of economic development as the mainline and the strategic readjustment of the economic structure as the main target in promoting the transformation of the mode of economic development. If China's economic development has been mainly centered on the growth of its aggregate economic volume over 60 years since the founding of New China, China will, in the coming years, enter into a period of great changes with the promotion of aggregate increase and structural reform to develop simultaneously, equal stress laid on quantity and quality and growth and development to run parallel.

I. A Judgment of China's Current Economic and Social Development at Present Stage

The main basis for the judgment of economic development at various stages include per-capita income, consumption structure, industrial structure, level of industrialization and level of urbanization, etc. Overall judgment suggests that China is now advancing from the middle-to-later period of industrialization to the later period and from a middle level income country to an upper and middle level income one. After successfully realizing the first wave of economic growth fuelled by the pattern of "low-cost advantage—middle- and low-end manufacturing industries—investment + production", China is now facing another important opportunity of whether China can successfully stride into the second wave of economic growth fuelled by the pattern of "innovation-based advantage -- high-end manufacturing + service sector -- innovation + consumption", which is a critical moment for the transformation of the mode of economic development and the economic restructuring.

1. China has become one of the middle level income countries

Through more than 50 years of pilot practice, especially since reform and opening up, changes of great historical significance have taken place in Chinese society and economy during this period. Over 59 years from 1952 to 2010, China's total economic volume maintained an annual growth rate of 8.3%. In 2010, China's GDP reached 40.1 trillion yuan, surpassing that of Japan and placing China's economic scale in the second place worldwide. In 2010, China's fiscal revenue reached 8.31 trillion yuan, laying a solid material foundation. In 2010, China's per-capita GDP at the exchange rate of the same year reached 5,880 US dollars, ranking China among one of the middle level income countries.

2．China has realized its economic takeoff for more than two decades

The overview of the modernization history of various countries indicates that major developed countries have all undergone various stages in terms of preparation, takeoff, maturity and mass consumption to realize their economic modernization. China completed its preparation for the takeoff during 1980s and has successfully realized its economic takeoff for more than 20 years. Currently, China has accumulated a raft of favorable conditions for sustaining its rapid economic growth, including change of consumption structure and of intermediate demand to support the accelerating growth of domestic demand；the uneven economic development leading to change of the industrial structure and the restructuring of funds and labor among industries；increase of funds and labor supply; material and technical foundation for sustaining the continuous growth of supply and the institutional and social environments for facilitating the improvement of the total factor productivity; a stable and open international environment and change of the foreign trade structure and of comparative advantages fuelled by import substitution and the export-oriented strategy, and so forth.

3. China is in the middle stage of industrialization

It can be deemed from China's industrial structure, strength of the manufacturing industry and export structure that China has already stepped from the early stage of its industrialization to the middle stage. The main facts include: firstly, against the backdrop of the rapidly increasing total farm produce, the proportion of output value of primary industry has dropped notably to 10.1% recorded in 2010. Secondly, with a population increase of 300 million, the proportion of the rural population has reduced to 50.05% recorded in 2010 and urbanization rate has reached 49.95%. Thirdly, a fairly complete industrial system with a strong manufacturing capacity has been set up. Fourthly, with the rapid increase of the export volume, the proportion of such primary products as farm produce in export commodities has declined drastically, while that of manufactured goods has increased by a wide margin. Fifthly, the focus on meeting basic needs being changed to gradually adapting to consumption upgrading and demand diversification indicates the change of the economic structure, which is a new feature in the acceleration of industrialization.

4. Acceleration of consumption level and export volume speeds up the rapid upgrading of industrial structure

During 1998~2010, China's industrialization and urbanization got accelerated, housing and transport consumption upgrading were promoted, external demand grew at a high speed along with the long-term prosperity of the world economy after China's integration into globalization, the advantages of the resource endowment brought about the transfer of global industries, and the formation of domestic and external demand pushing forward economic growth upgraded the industrial structure rapidly. During this period, the number of fast-growing industries increased considerably and the number of new areas for economic growth grew evidently. The fast-growing industries mainly include the real estate industry, the transportation equipment manufacturing industry, the metallurgical industry, the coal industry, the building material and other nonmetallic mineral industries, the oil industry, the building industry and the financial industry.

Leading Industries for China's Economic Growth During 1981~2010

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