China and the Post-2008 World
Pressing Trends: China in the Post-2008 World
January 21, 2015
This article has been produced by the efforts of the following team members:
Oscar Crawford-Ritchie – Research Assistant
Louis-Claude Perrault-Carré – Team Leader for China-Industry
Like most nations the 2008 financial crisis negatively impacted China’s economy but unlike most major economic players, China’s economy still experienced very strong growth. China’s GDP grew 14.2% in 2007, but only grew by approximately 9.6% in 2008 and 9.2% in 2009. Since 2008 the growth rate has been steadily declining to about 7.7% in 2013.[1] While a 7.7% growth rate is very substantial by most standards, the Chinese economy requires very high growth rates to ensure constant job creation for its large and continually growing population.[2] It also needs a high GDP growth rate as it is still has a developing economy. China’s per capita GDP is very small compared to most industrialized nations. It’s GDP per capita (based on US dollar) is far behind any G7 nation at about $6,800 USD/ capita compared to about $52,000 USD/capita in Canada.[3] Without huge growth rates the Chinese economy will be unable to catch up to other economically powerful nations.
The global recession also resulted in a decrease in the region’s employment rates. Once again the impact was not as major as it was in other industrialized nations. In 2007 the unemployment rate was 3.8% of the labour force and increased to 4.4% in both 2008 and 2009. There has been a minor increase in the unemployment rate, reaching 4.6% in 2013.[4] If the employment rate continues to drop, Chinese consumers will find it difficult to purchase non-essential goods, which will mitigate the strides made in consumption over the past years. It does appear that the unemployment rate is levelling off but it is still almost a full percentage point higher than at the start of the crisis six years ago.
China’s ranking on the Human Development Index (HDI) has seen significant and consistent improvement over the last few decades. In 2008 China was ranked 101st overall. By 2013 its ranking had increased to 91st, being classified as having “high human development”. Since 2000 China’s average annual growth has been 1.5%, an extremely high annual rate.[5] This indicates that the livability standards in China have been improving alongside the growing economy. Gender equality, average income and average years of education have all improved since 2008. China still needs to make progress to improve its HDI ranking, but continuing at its current pace, it will not take too long to begin competing with other developed nations.
Overall, China’s economy is in worse shape since 2008. The region’s economy is experiencing slowing economic growth rates and a relatively low GDP per capita. Unemployment is higher than it was at the start of 2008, and businesses will ultimately suffer as consumer spending will drop with the worsening economy. On a positive note, the significantly improving HDI index rankings could indicate the continued liberalization of China’s economy and political system as well as the benefits that come with it. This liberalization should make it easier to do business in China in the near-future.
