Sustaining China's Economic Growth in the Twenty-first Century (review)

As is well known, the People's Republic of China has experienced rapid economic development since liberalization began almost twenty-five years ago. In fact, the broadest measure of its economy, GDP, has increased by almost 10 percent a year since 1980, the fastest multi-decade rate of economic growth of any country in the last hundred years.¹ But can China's rapid pace of economic development continue? This book attempts to provide a partial answer to this question by focusing on a related question, "How should economic reforms and openings-up be further enhanced so that high economic growth could be maintained?" (p. 1).

Sustaining China's Economic Growth in the Twenty-first Century originated in a conference of the same name sponsored by the Chinese Economic Association (UK) in 2000. The editors are Shujie Yao, professor and chair of economics at the Middlesex University Business School as well as consultant for the World Bank, and Xiaming Liu, senior lecturer in international business at the University of Aston Business School and managing editor of the Journal of Chinese Economics and Business Studies. The twenty-three contributors are mostly academics with extensive research interests in China. The editors make it clear that the intention of the book is not to provide a complete overview of China's reforms but rather to bring together a series of studies related to the sustainability of China's economic growth. These studies are organized around three topics: general economic development; industry, agriculture, and the financial market; and openness and social issues. There are eighteen figures, sixty-six tables, and an index.

The first chapter in the section on general economic development, "Confronting Restructuring and Stability" (pp. 13-40), by Wing Thye Woo of UCLA, focuses on the 1996-1999 downturn in the Chinese economy. The author seeks to determine not only the causes of the downturn but also the long-term implications of the policies adopted by the authorities to deal with it. This very interesting study concludes that the downturn was caused not by China's structural problems, such as the increases in SOE losses and in the nonperforming loans of the state banks, but rather by the combined effects of the government's austerity program and a collapse in export markets as a result of the Asian financial crisis. However, the author does believe that failure to correct China's structural problems will cause a slowdown in the near future.

John Wong, from the National University of Singapore, compares China's development to that of the other East-Asian economies and analyzes the impact of the growth of China's international trade on its neighbors in his chapter, "China's Economic Reform and Development: The Impact on the Asia-Pacific Region" (pp. 41-54). While noting that the growth of total factor productivity appears to be a more important component of economic growth in China than for other countries in the region, the author emphasizes the similarities, especially the adoption of an export-oriented development strategy. What will be the impact of continued Chinese economic growth on the other developing countries of the region? The author argues that China's large domestic market and labor force will make it an increasingly powerful competitor with respect to labor-intensive manufactures such as apparel, shoes, and household products. East-Asian economies that concentrate on exports that are complementary to those of China should do well; those that seek to compete directly in labor-intensive manufactures will face steadily increasing competition in price and quality.

The final chapter in the initial section is "China's Economic Growth and the Development of Popular Understanding and Knowledge" (pp. 55-73) by Xiao-bai Shen of the University of Edinburgh. Shen argues that most of the analysis of China's economic future is simultaneously...