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Reviewed by:
  • China: Is Rapid Growth Sustainable?
  • Sarah Y. Tong
China: Is Rapid Growth Sustainable? Edited by Ross Garnaut and Ligang Song. Canberra: Asia Pacific Press at the Australian National University, 2004. Pp. 249.

This publication is partly based on papers presented at the China Update Annual Conference held in Canberra, in October 2004, organized by China Economy and Business Program and the Asia Pacific School of Economics and Government of the Australian National University. The book discusses some important issues surrounding China's economic growth and transition, especially after China's post-WTO era. These include domestic marketization and market integration, further reform of state-owned enterprises (SOEs), regional disparity and poverty [End Page 271] reduction, financial market development, employment situation, and international trade.

It is increasingly clear that the sustainability of its rapid economic growth has become a central concern for China. As shown in the book, economic growth has contributed significantly to the rising average standard of living and the reduction of poverty in the country. Continued economic growth is, therefore, essential to maintain social stability in China while the economy has been undergoing fundamental transformation. Moreover, China's rapid economic growth has been an important factor in recent years in the positive economic dynamism in Asia and in the world. As a result, the sustainability of China's economic growth has captured increasing attention from both within and outside China. The book is a much-welcome addition to the literature on China's growth and its sustainability.

The opening chapter starts with a useful discussion on the origins of China's economic reform and the pressing challenges that China faces, including a flawed financial system, growing development gap, macroeconomic fluctuations, and problems with the international trading system. This provides readers with a general overview of not only China's past reform and performance but also the issues that needs to be addressed. The chapter also introduces and links the remaining chapters together. The following chapters focus on various issues considered central for China's sustainable growth.

The first issue, China's market development, is discussed from various aspects in three chapters. Chapter 4 focuses on the grain market, Chapter 8 on the labour market, and Chapter 7 on marketization in general. Chapter 4 gives a thorough and insightful overview of China's domestic grain market development. It concludes that after twenty-five years of effort, reforming China's grain market has been reformed with a substantial degree of success. However, many features of the centrally planned system have survived till today, which suggests the difficulties still facing full marketization of the sector. On the labour market, Chapter 8 finds some evidence of increasing labour market integration and that the non-state sector played a major role in facilitating the process. The chapter suggests that China's gradualist approach, where the state sector was gradually liberalized and restructured, and non-state sector greatly encouraged, helped to develop a unified labour market. Chapter 7 depicts a positive general assessment of China's overall marketization process, while recognizing areas for further improvement. One valuable insight is that regional development and the degree of marketization were positively correlated across provinces. Overall, though, there are plenty of room for further improvement.

Another area of emphasis is the growing gaps in development and in income, both inter-regional and inter-personal. Chapter 9 takes the issue of regional policy and economic growth, giving particular attention to the recent campaign to develop China's western inland region. The chapter discusses the policy dilemma the Chinese government faces to narrow regional gaps while maintaining the growth dynamism of the east coast. It concludes that increased government investment and policies favouring the West are important but so far the impact has been limited. Chapter 7 discusses a relatively new phenomenon of poverty and income inequality in urban China. First, it concludes that economic growth is a crucial element to combat urban poverty. Moreover, it also examines the impact on urban poverty, of recent reforms in housing, healthcare, and education. It finds that uncertainty in income and expenditure patterns, due to the above-mentioned reforms and SOEs reforms, has led to higher savings and put more...

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