Table of contents

This book can be used in different ways, depending on your purpose. You can read it straight through, to understand the full sweep of China’s economic development since 1979 and its future prospects. Or you can dip in to an individual chapter, to explore a special area of interest. Each chapter is a self-contained unit that can stand on its own, although there are plenty of cross-references linking to explanations of key concepts or historical background in other chapters.

The material is also grouped thematically, so you can read a set of chapters together to see a cross-section of China’s economic history. The first chapter lays out the broad outlines of the country’s political economy. Chapters 2-4 discuss the production sectors that have been successively the most important growth drivers (agriculture, in the 1980s; industry and exports, in the 1990s and early 2000s; and housing and infrastructure, since the early 2000s). Chapters 5-8 explain the economy’s “nervous systems”: enterprise ownership, fiscal, financial and energy. Chapters 9-11 deal with the consumer economy and social issues. The last two chapters look ahead into the future, analyzing the reforms the country must undertake to sustain its rapid growth, and what impact China is likely to have on the rest of the world.

Two other features make the book especially suitable for classroom use.  Each chapter is written in question-and-answer format, making it easy to organize class discussions. And the “For Further Reading” section contains a chapter-by-chapter list of the most important books and articles to read for a deeper understanding.

Open the link below to read the Preface, or browse through the table of contents. Click a chapter title to jump to a detailed description.


Preface: Why This Book?


1. Overview: China’s Political Economy

2. Agriculture, Land and the Rural Economy

3. Industry and the Rise of the Export Economy

4. Urbanization and Infrastructure

5. The Enterprise System

6. The Fiscal System and Central-Local Government Relations

7. The Financial System

8. Energy and the Environment

9. Demographics and the Labor Market

10. The Emerging Consumer Economy

11. The Social Compact: Inequality and Corruption

12. Changing the Growth Model

13. Conclusion: China and the World

Appendix: Are China’s Economic Statistics Reliable?

For Further Reading




1. Overview: China’s Political Economy

What is China’s political system and how does it affect the economy?

What has China learned from the failures of other communist countries?

What has China learned from the successes of its East Asian neighbors?

Who runs economic policy?

What influence do China’s size and population have on economic development?

When leaders must choose between boosting economic growth and maximizing political control, which do they choose?


2. Agriculture, Land, and the Rural Economy

Why did the end of agricultural communes jump-state China’s growth in the 1980s?

What role did township and village enterprises play in China’s economic development?

Why did rural-urban inequality grow after 1989?

How did the government address the rural-urban inequality problem in the 2000s?

Do Chinese farmers own their land?

What is being done to improve rural land rights?

Can China feed itself?


3. Industry and the Rise of the Export Economy

Why did China become such a big manufacturer and exporter?

What has been China’s strategy for developing industry?

What was Deng Xiaoping’s industrial policy?

How did industrial policy change under Jiang Zemin and Zhu Rongji?

Why did industrial policy become more statist under Hu Jintao?

How will Chinese industrial policy evolve over the next decade?

Why did investment by foreign companies play such a big role?

Where has industrial policy succeeded, and where has it failed?

Does China “cheat”?

How big a role did a low exchange rate play in China’s export boom?

Did ultralow interest rates subsidize heavy industrial growth?

Did China keep energy prices too low?

How big a role did violation of intellectual property rights play in China’s industrial development?

Can Chinese industry become more innovative?


4. Urbanization and Infrastructure

How fast has China urbanized?

How does urbanization relate to economic growth?

Why do Chinese often say they have only “partially” urbanized?

What is the hukou system and what impact does it have?

How is the hukou system being reformed?

What was the impact of urban housing privatization?

Is China in the midst of a housing bubble like that of the US?

What problems does China’s two-tier housing market create?

Why does China build so much infrastructure?

How much of this infrastructure is useful, and how much is wasteful?

What is China’s plan for “new-style urbanization”?


5. The Enterprise System

Which are more important: state-owned enterprises or private firms?

What are the aims of SOE reform?

Do China’s SOEs resemble Japan’s keiretsu or Korea’s chaebol?

How are SOEs organized?

How are SOE business groups structured?

What impact did the SOE reform program of the 1990s have?

How big is the state sector today?

Are SOEs monopolies?

Are SOEs independent actors, or agents of a government “master plan”?

How important is the private sector?

How has the private sector evolved?

Is it true that “the state advances and the private sector retreats”?

Is it true that private firms can’t get access to bank loans?

How is the balance of power between the state and the private sector evolving?


6. The Fiscal System and Central-Local Government Relations

How powerful are local governments compared to the central government?

What impact does decentralized government have on economic development?

What was the significance of the 1994 tax reform?

How does the land-based local finance system work?

How big is the government debt problem?

What are the biggest problems of the fiscal system today?

How does the fiscal reform program aim to solve these problems?

How will fiscal reform affect central-local relations and the pattern of economic development?

Why doesn’t personal income tax play a bigger role in tax reform?


7. The Financial System

What role do China’s banks play in financing growth?

What is “financial repression” and how has it affected China’s growth?

What is the risk that China will hit a financial crisis?

How worried should we be about the rise of “shadow banking”?

How did China liberalize its interest rates?

Why has China controlled its exchange rate so tightly?

Why is China trying to make the renminbi an international currency?

How  likely is the renminbi to become a major global currency, or to replace the US dollar?


8. Energy and the Environment

How much energy does China use?

Why is China’s energy intensity so high?

What kinds of energy does China use, and how is the mix changing?

How much does China rely on imported energy?

What impact does China’s energy use have on climate change?

How bad are China’s environmental problems?

How likely is China to address its environmental problems?

Can top-down pollution control work?


9. Demographics and the Labor Market

What is the “demographic dividend”?

How has the demographic dividend worked in China?

What about China’s “demographic transition” to an older population?

What does the aging population mean for the labor force and economic growth?

What is the importance of the “one-child policy”?

Why did Chinese workers start moving from the countryside to the city?

What was the impact of SOE reform on the labor market?

How big an unemployment problem does China have?

Are wages rising?

What is the “Lewis turning point” and what does it mean for China?

How many more workers can move from the countryside to the cities?

How bad are conditions for Chinese workers, and is there hope they will get better?


10. The Emerging Consumer Economy

Is China’s growth “unbalanced,” and how much does it matter?

Has China’s “unbalanced” growth been bad for consumers?

Why is the consumption share of China’s economy so low?

What is China’s “middle class”?

How big is the middle class?

What do China’s consumers buy?

How good is China’s social safety net, and would making it stronger help consumption?

What sort of safety net is the government weaving?

What steps should the government take to promote consumption?


11. The Social Compact: Inequality and Corruption

How bad is income inequality?

Why hasn’t widening inequality caused more social unrest?

What are the sources of income inequality?

Is there any hope that inequality will start to decrease?

How bad is China’s corruption problem?

Why hasn’t corruption stopped economic growth?

Is Xi Jinping’s anti-corruption campaign a real solution to the problem?


12. Changing the Growth Model

Why do people say China must change its growth model?

Why do people say China’s growth model was “imbalanced”?

What was the impact of the 2008 global financial crisis?

Why is the return on capital falling?

What is Xi Jinping’s plan to reform the economy?

What is the anti-corruption campaign all about?

Why is the ideological campaign important?

What are the specifics of Xi’s economic reform agenda?

What reforms have occurred since the Third Plenum?

Is China’s growth model changing?

Can economic reforms succeed without political reforms?


13. Conclusion: China and the World

What is the nature of the present global political-economic order?

What will happen when (and if) China becomes the world’s biggest economy?

How close is China to becoming a global technological leader?

How does China’s economic strength translate into geopolitical influence?

Is China’s success the result of “cheating” on global trade and investment rules?

What kind of political leverage does China gain from its economic strength?

Is China trying to replace existing global institutions with new ones?

Can China’s growth model be replicated in other countries?

What is the impact of Chinese trade, investment and aid in the rest of the world?

What challenges does China’s economic rise pose for the rest of the world?

How should other countries in Asia respond to China’s rise?

How should the United States respond to China’s rise?