China’s Economic Prospects 2006 2020 Sandra Polaski Carnegie.pptVIP

China’s Economic Prospects:2006 – 2020Sandra PolaskiCarnegie Endowment for International PeaceApril 17, 2007 Overview of presentation The Evolution of the Chinese Economy from 1980 – 2005 The Impact of China’s Accession to the World Trade Organization China’s Growth Prospects for 2006 – 2020 Conclusions and Key Challenges The Evolution of the Chinese Economy from 1980 – 2005 Over the past 25 years, annual GDP growth has averaged over 9% The Evolution of the Chinese Economy from 1980 – 2005 Capital accumulation has been the most important source of growth The Evolution of the Chinese Economy from 1980 – 2005 Trade’s role in China’s economy has increased However processing trade represents a significant share; value added in China is less than implied The Evolution of the Chinese Economy from 1980 – 2005 Growth has lifted incomes Percentage of population living on $1/day has fallen from 80 percent in 1980 to 20% today Yet 70% of population still lives on $2/day (Source: World Bank) The Evolution of the Chinese Economy from 1980 – 2005 Urban/rural disparities remain pronounced 2005 Rural average net income: $397 2005 Urban average net income: $1281 Sustained growth will require generating higher-productivity and higher-income employment opportunities for the 45% of the population still engaged in low-productivity agriculture Looking Ahead: Two Models Two existing models built by the DRC: One used to model the impact on China of accession to the World Trade Organization—projections to 2010 Simulations updated to include imposition of export restraints by US and EU on Chinese textile and apparel exports Two different labor market assumptions were employed: full employment and surplus labor The second model is the basic national macroeconomic model used by the DRC The Impact of China’s Accession to the World Trade Organization Why use a model to study what has already happened? Model projects impacts to 2010 Investigate impact of textile and a