China's Economy Quotes

“the advantage of backwardness.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know®

“urban policy is one area in which the desire to maintain social control has trumped the ambition of maximizing economic growth.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“all countries eventually reach the point where they have built most of the infrastructure they need, and start focusing on using it better.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Over the past fifteen years China has had one of the most extraordinary housing booms in history, with monumental increases in both the volume of housing construction and housing prices. Between 1996 and 2012, annual construction of new housing tripled, from 600 million to nearly 1.8 billion square meters. From 2003 to 2013, the average price of urban housing rose 167 percent. Average house prices in the most desirable cities, Beijing and Shanghai, nearly tripled.17”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Housing privatization in China was one of the greatest wealth transfers in history, and it laid the foundations for the extraordinary housing boom of the following decade. Urban households got to buy valuable property for far less than its market value. The difference between what they paid their SOE landlords for this property, and the higher price they were ultimately able to sell it for, represented a transfer of wealth from the state to households. The total value of that wealth transfer was about $540 billion, or one-third of China’s GDP in 2003, the year when housing privatization was largely complete.14”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“The challenge for China today is that the building-binge stage of urbanization has reached a permanent plateau. Annual completion of new housing tripled between 1998 and 2013. Housing construction has now peaked, and while it might remain at the present high level for a few more years, it will almost certainly begin to decline after 2020 if not earlier (see Figure 4.2 ). Broadly the same story holds for urban infrastructure: much more needs to be built, but the annual amount of construction no longer needs to increase. So China is not going to get any more growth simply by building houses and infrastructure. Instead, it must enable its cities to move into the “smart city” phase, in which specialization and innovation become the main economic growth drivers.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“After 1998, urbanization moved into its second, building-binge, phase for several reasons. First, economic reforms and tacit relaxations of the rules governing migrant labor accelerated the pace of rural-to-urban migration, with the result that the average annual increase in the urban population leaped from 12 million people in 1978–1998 to 21 million in 1998–2013. Second, the urban housing market was privatized in the late 1990s, leading to perhaps the biggest housing boom in world history. Finally, government policy after 1998 increasingly supported the building of infrastructure. Some of this infrastructure—such as intercity highways and railroads—made it easier for people to move to cities in search of work. And some of it—such as urban roads, subways, and water treatment plants—directly contributed to the physical growth of cities.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Most companies have built China’s “Wild West” IPR environment into their business plans, and figured out how to prosper.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Tolerance for copying and IPR theft is a tactic commonly used by technologically backward nations to catch up on the technological frontier. The development of the European porcelain industry in the early eighteenth century depended substantially on reports by Jesuit missionaries on Chinese ceramic techniques, which the Chinese state considered trade secrets. Theft of tea plants whose export was prohibited by China enabled the British to establish a tea industry in India. In the early nineteenth century, the United States was cavalier in its treatment of European intellectual property, and its first great textile complex in Lowell, Massachusetts, was founded essentially on industrial espionage.20 After World War II, Japan, South Korea, and Taiwan relied in part on reverse engineering and copying of Western technologies, in violation of Western patent rules. Before China became the main target, the US government engaged in constant IPR skirmishes with Japanese and Taiwanese firms. The point is not that IPR violations are morally defensible, but simply that they are routine and last until a country has enough IPR of its own to decide that protection produces more benefit than stealing. This shift occurred in the United States in the mid-nineteenth century and in the East Asian states in the 1980s and 1990s. It has begun in China with the establishment of specialized IPR courts and the use of criminal penalties for some violations.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“At the end of 2014, the average industrial power price in China was nearly 13 cents per kilowatt hour, about double the US average.18”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“For most of the past two decades the central goal of energy pricing has been to reduce volatility. Policymakers want to ensure that businesses face a predictable environment, with relatively stable prices for electricity and fuels; in a more predictable environment, businesses are more likely to make large-scale capital investments. The government’s main tools in achieving this stability are state-run firms that convert raw fuel into usable energy: power-generating firms and oil refiners. When fuel prices are high, these companies suffer depressed profits or even losses, because they cannot pass on the full cost increase to their customers. But when prices are low, their profits soar, because they are not required to pass on their full cost savings either. These industries can be thought of as “shock absorbers” that enable the economic car to drive relatively smoothly even when the road is full of potholes.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“The charge is sometimes leveled—usually by manufacturing firms in the developed world, or their political allies—that China has achieved its industrial and export success by “cheating.” That is, it showered its firms with subsidies; manipulated interest rates, the exchange rate, and energy prices; and created barriers to foreign competition in China, all for the purpose of creating an unfair advantage for Chinese firms. These claims are essentially political, not economic.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Like many successful Chinese firms, it is caught at the bottom of what Taiwanese technology baron Stan Shih famously called the “smile.” Shih observed that in the tech industry, high profits are earned at one end by companies that control the design of core technologies (such as Intel), and at the other by companies that control the design and distribution of products to consumers (such as Apple). In between are commodity firms that manufacture and assemble the products, in high volumes but for low profit margins. Taiwan is filled with such low-margin bottom-of-the-smile firms, such as Shih’s own Acer, TSMC (the world’s biggest contract maker of integrated circuits), and Foxconn (the world’s biggest contract assembler of consumer electronics). For the most part, China’s technology companies seem to be heading in the same direction.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“The success stories of the Chinese car industry have all been small, upstart companies, often sponsored by local governments—most notably the private firm Geely, which in 2010 acquired the Volvo passenger-car company.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Moreover, as much as a third of China’s reported FDI may in fact be “round-tripping”—investments by Chinese individuals and companies that are routed through companies in other jurisdictions, especially Hong Kong. Until about 2005, there was a strong incentive for round-tripping in order to capture tax breaks and other benefits reserved for foreign firms. Even as those preferences were phased out, other reasons for round-tripping remained. Some Chinese companies—such as Internet giants Alibaba and Tencent—are classified as “foreign” firms because they have set up offshore holding company structures in order to list on international stock markets. It may be that some investments of these firms wind up counted as “FDI.”11”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Another facet of the FDI strategy was that much “foreign” investment was not really foreign. Nearly half of inbound direct investment has come from Hong Kong, and while much of that may simply reflect the activities of Hong Kong–based subsidiaries of American or European firms, it is clear that Hong Kong firms have been major investors in the mainland.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Between 2001 and 2008, China’s exports grew at an astonishing rate of 27 percent a year, rising sixfold from $266 billion to $1.4 trillion.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“economic policymakers devised an approach with the following elements: •  A shift from capital-intensive heavy industry to labor-intensive light industry. •  A focus on light industrial exports to generate the foreign exchange needed to import capital equipment. •  The establishment of special economic zones (SEZs), allowing foreign companies to set up factories on preferential terms. •  Price reforms, to reduce the power of central planners and increase the role of the market. • Increased tolerance for private enterprises.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Good neighbors: The successful export-driven development of Taiwan, South Korea, and especially Japan gave Chinese policymakers an easy-to-follow template for industrial development. •  Hong Kong: When China started its reforms, Hong Kong was already a world-class port and trading hub with modern legal and financial systems. This gave Chinese manufacturers quick access not only to global trade routes but also to much of the “soft” infrastructure needed for a modern economy.5 •  Timing: China was fortunate to open up to trade just at the moment when the shipping container, invented in the 1950s, was beginning to make possible the creation of global production chains, spanning multiple countries, through steep reductions in long-distance shipping costs. •  A “killer app”: By the late 1980s, culturally similar Taiwan had established a sophisticated electronics industry, which moved en masse to China in the late 1990s, creating a world-class electronics manufacturing base almost overnight.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Economic historians have shown that, as late as 1800, China accounted for about one-third of world GDP, had market-based systems of domestic manufacturing and trade at least as sophisticated as those in Europe, and dominated global trade in premodern manufactures such as silk textiles and ceramics.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“In the late 1970s China accounted for little of the world’s industrial production and less than 1 percent of its trade. By the end of 2014 it was the world’s leading manufacturing nation, and its biggest exporter, accounting for 12 percent of global exports and 18 percent of manufactured exports (see Figure 3.1 ).”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Between 1978 and 1983, the entire basis of the agricultural economy was changed by the adoption of the “household responsibility system.” The origins of this shift lay in a village in Anhui province, where a group of farmers got together in secret and signed an agreement to dissolve their collective and divide up their farmland into individual plots. This innovation rapidly spread, and the province’s party secretary, Wan Li, realized he was facing a powerful popular revolt against an immiserating system. Rather than crush it, he decided to promote this land-to-the-tiller reform. The party secretary of Sichuan province, Zhao Ziyang, made a similar decision. At the national level, the December 1978 party plenum that launched the reform era raised agricultural prices and gave a blessing to rural collectives experimenting with different ways of management, but it still condemned private farming. By 1980, however, Zhao Ziyang had become premier and Wan Li was vice premier in charge of agriculture policy. Together they rammed through a national policy to disband the communes and return to family farming. By the end of 1982 virtually all agricultural collectives were gone, and family farmers had been assigned rights to cultivate individual plots of land. The effect on agricultural output and farm incomes was spectacular. By 1984 grain output was over 400 million tons, a third higher than it had been just six years before; production of oilseeds and cotton sustained annual growth rates of 15 percent; and meat production was growing by 10 percent a year. Rural per capita income more than doubled between 1979 and 1984. Per capita cash savings by rural families rose from essentially zero in 1979 to 300 renminbi (Rmb) by 1989. Rapid gains in agricultural output and incomes continued throughout the 1980s, as farmers continued to diversify their crops and apply new technologies that increased yields. Use of chemical fertilizer, which had risen gradually in the 1970s, tripled between 1978 and 1990. So did the use of farm machinery, notably pumps, small tractors, and food processing equipment.3”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“But of course many individual economic reforms require the state to give up some power. Streamlining the SOEs means a big reduction in the state’s ownership of assets. Financial liberalization means cutting the government’s ability to direct capital to its favored projects. The enduring dilemma of party-driven economic policy is how much and what kind of power are Chinese leaders willing to sacrifice, in exchange for how much and what kind of economic growth?”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“in the international arena, national power is a direct result of economic might.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“The “East Asian development model” is an adaptation of the strategy advocated by German economist Friedrich List (1789–1846), which in turn drew inspiration from the “American System” created in the early United States by Alexander Hamilton and Henry Clay. The United States and Bismarck’s Germany (which adopted much of List’s program) were the two most successful “catch-up” economies of the nineteenth century. Japan’s first modernization drive, which turned it from an agrarian feudal state to Asia’s first industrial power in the decades after 1870, more or less copied the German model.17”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“The basic reason why poor countries are poor is that they lack the technological capital that rich countries have, which makes output per worker dramatically higher. To get rich, poor countries must therefore undertake a process of “technological catch-up,” in which they acquire technology from rich countries and use it to accelerate the productivity of their own workforce. Exports help this catch-up process in two ways. When a country is poor, foreign technology is expensive and must be paid for in scarce hard currency. Exports (initially of agricultural products, handicrafts, and cheap manufactures) can earn the foreign exchange needed to buy the capital equipment that enables higher-value production.”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Deng’s judgment about the importance of strong economic growth was later validated by a series of studies of the collapse of the USSR conducted by party scholars in the 1990s. These scholars concluded that the Communist Party of the Soviet Union (CPSU) fell for four main reasons: •  The economy did not grow fast enough, leading to frustration and resentment, and this failure resulted from insufficient use of market mechanisms. •  The CPSU’s propaganda and information systems were too closed and ideologically rigid, preventing officials from getting accurate and timely knowledge about conditions both inside and outside the Soviet Union. •  Decision-making was far too centralized, and hence far too slow. •  Once reforms started under Gorbachev, they undermined the core principle of the party’s absolute monopoly on political power.14”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“China, almost uniquely among modern authoritarian regimes, has achieved three successive transfers of power from one living leader to another unrelated one. (Only Vietnam has done better, with four leadership transitions since 1991.)”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know

“Wen Jiabao: “When you multiply any problem by China’s population, it is a very big problem. But when you divide it by China’s population, it becomes very small.” The”
― Arthur R. Kroeber, China's Economy: What Everyone Needs to Know