CHAPTER 1
Introduction
China’s Shift from Economic Growth to “Balanced Development” Since 1978, when it embarked on sweeping agricultural and industrial reforms, China’s economic transformation has been remarkable. Its success in transforming itself within just three decades from a very poor lowincome country to a successful middle-income country is unparalleled. In 1980, among the 130 countries for which consistent data on income per capita at constant purchasing power parity exchange rates are available, China ranked 127.1 Over the period 1980–2007, China averaged an annual average growth rate of per capita income of around 8.5 percent.2 No other country came close to this achievement.3 By 2007, China ranked 73 among these 130 countries. In 2007, China’s income per head in real terms was almost 10 times what it was in 1980. Comparisons with the Organisation for Economic Co-operation and Development (OECD) countries also help to underscore the scale of China’s transformation. In 1980, China’s per capita income was just 3 percent of the average of the OECD countries. By 2007, it was 15 percent (Figure 1.1). China’s rapid and sustained growth has heralded substantial improvements in living standards for the Chinese people. Between 1981 and 2005, economic growth lifted around 640 million people above the World 1