Lardy GICMA April 14,2204

INSTITUTE FOR INTERNATIONAL ECONOMICS

China in the World Economy Nicholas R. Lardy, Senior Fellow Institute for International Economics

1

Global Issues and the U.S. Outlook Global Interdependence Center and Macroeconomic Advisors Philadelphia, April 14, 2004

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

China's GDP Growth, 1992-2003 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1992

2

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

The Growth of China Trade vs. World Trade 1977-2003 7000 6000

4000 3000 2000 1000 0 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 E

1977 = 100

5000

China Merchandise Trade

3

World Total Trade

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Domestic Investment and Saving Share of GDP, 1979-2003 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Gross Domestic Investment

4

Gross National Saving

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

People (Millions)

Agricultural Employment, 1978-2002 450

90%

400

80%

350

70%

300

60%

250

50%

200

40%

150

30%

100

20%

50

10% 0%

0

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Agricultural Employment (LHS)

5

Percent of Total (RHS)

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Scope of Import Quotas and Licenses, 1978-2005 50 45 40

30 25 20 15 10 5

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

19 96

19 95

19 94

19 93

19 92

19 91

19 90

19 89

0 19 88

Percent (%)

35

Encumbered Tariff Lines 6

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

China's Average Import Tariff Rate, 1982-2005 60

50

30

20

10

0 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05

Percent (%)

40

Tariff rate

7

Tariff rate (WTO)

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Openness of the Chinese Economy: Imports as a Share of GDP, 1990-2003 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1990

1991

1992

1993

1994 Imports

8

1995

1996

1997

1998

1999

2000

2001

2002

2003E

Imports & Foreign Affiliates' Domestic Sales

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

M2 Growth, 1999-2003 22%

20%

18%

16%

14%

12%

10% 1999

9

2000

2001

2002

2003

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Increase in the Stock of Domestic and Foreign Currency Loans Outstanding 3.5 3.0

RMB Trillions

2.5 2.0 1.5 1.0 0.5 0.0 1998

1999

2000 Domestic Currency

10

2001

2002

2003

Domestic and Foreign Currency

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Increase in Loans Outstanding Relative to GDP, 1989-2003 25%

20%

15%

10%

5%

20 03

20 02

20 01

20 00

19 99

19 98

19 97

19 96

19 95

19 94

19 93

19 92

19 91

19 90

19 89

0%

Change in Loans Outstanding/GDP

11

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Investment as a Share of GDP, 1979-2003 48% 46% 44% 42% 40% 38% 36% 34% 32%

19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03

19 80

19 79

30%

Gross Domestic Investment Rate

12

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Implicit GDP Deflator, 2000-2003 2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

-0.5% 2000

13

2001

2002

2003

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

M2 Growth, January 2003-February 2004 24%

22%

20%

18%

16%

14%

12%

14

Fe b04

Ja n04

De c03

No v03

O ct -0 3

Se p03

Au g03

Ju l-0 3

03 Ju n-

-0 3 M ay

Ap r-0 3

-0 3 M ar

03 Fe b-

Ja n03

10%

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

Real Lending Rate, 2002-2004 10% 8% 6% 4% 2% 0% -2%

20 02 .0 20 2 02 .0 20 3 02 .0 20 4 02 .0 20 5 02 .0 20 6 02 .0 20 7 02 .0 20 8 02 .0 20 9 02 .1 20 0 02 .1 20 1 02 .1 20 2 03 .0 20 1 03 .0 20 2 03 .0 20 3 03 .0 20 4 03 .0 20 5 03 .0 20 6 03 .0 20 7 03 .0 20 8 03 .0 20 9 03 .1 20 0 03 .1 20 1 03 .1 20 2 04 .0 20 1 04 .0 20 2 04 .0 3

-4%

1-Year Loan Interest Rate - Change in Overall Corporate Goods Price Index

15

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

PRC Official Foreign Exchange Reserves 1991-2003 500 450 400

US$ billion

350 300 250 200 150 100 50 0 1991

16

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Nicholas R. Lardy Institute for International Economics

INSTITUTE FOR INTERNATIONAL ECONOMICS

China's Foreign Exchange Reserves and Total RMB Loans Outstanding, 2001-February 2004 20

500

19

*

450

18

350

15 300

14 13

250

12 200

11

17

4 20 0

20 0

20 0

RMB Loans (LHS)

3

150 2

10 20 01

RMB Trillion

16

US$ Billion

400

17

Foreign Exchange Reserves (RHS)

* From 12/2003 on, foreign exchange figures are adjusted to reflect $45 bn transfer to SOCB.

Nicholas R. Lardy Institute for International Economics