2 China's recent economic growth
The first part of this section traces China's development over the past three decades in terms of the components of expenditure GDP and a growth accounting framework. Over that period, China's expansion has been primarily dependent on export and investment growth, and investment currently accounts for a larger share of GDP than it did at its peak in other emerging Asian economies. The second part of the section suggests that China's economic growth has become more stable in the second half of the period and inflation lower, possibly reflecting the authorities' emphasis on growth and better macroeconomic management.
2.1 Composition of China's growth
- Figure 2 - Components of China's GDP
- Source: Haver Analytics
Since the start of China's economic liberalisation in 1978, its development strategy has been based on exports and investment.[16] Initially investment accounted for less than 30% of nominal GDP, but three decades later investment's share of output reached 46% (Figure 2). The surge in investment's share of GDP in the past four years is the result of the large fiscal stimulus and credit expansion directed at infrastructure in the wake of the GFC. The value of goods exports has increased from less than 10% of GDP at the time of liberalisation to peak at around 35% in 2006 and 2007, prior to the GFC. Net exports' contribution to GDP increased from around zero in the early years of the expansion to peak at 8.8% in 2007. The proportion of nominal expenditure GDP accounted for by private consumption has declined over this period from just above 50% in the early 1980s to only 35% recently.[17]
