Thursday, July 23, 2009

Book Review: The Chinese Economy: Transitions and Growth

I have been reading The Chinese Economy: Transitions and Growth by Barry Naughton. It seems to be a nicely balanced objective survey of the Chinese economy covering both its evolution, especially since the key dates of 1949 (founding of the PRC) and 1978 (beginning of liberalization). As the author writes, most commentators seem to either over- or under- estimate China. And as other commenters on the Amazon website say, it is very interesting to read. One of the many things I learnt which I hadn't really realised before is how much economic growth there was in China from 1949 to 1978 though it was largely focused in the (at the time) small urban sector. What happened post 1978 was a doubling of the growth rate rather than the beginning of the era of modern economic growth.

As far as criticisms go, I think the book could benefit from more maps - there are six, five in the early part of the book and one in the final chapter (on the environment) - and some key charts are omitted. I can't remember seeing a chart of GDP or its growth rate over the entire 1949-2005 period (Fig 18.1 does include per capita income from 1953-2000 as part of a chart of the rate of household saving). There tend to be separate charts for many variables for the pre 1979 and post 1979 periods. There is nothing on the transformation of the built environment, especially in the residential sector or other components of changing living standards such as ownership rates of various consumer goods, nutrition etc. Well, I guess it's hard to cover everything about the world's largest country in one book :)

The final chapter cites my argument that the environmental Kuznets curve model does not really explain what is going on in developing economies but then claims it still might be useful to understand what is going on in China despite the evidence marshalled showing that China is working to turn things around environmentally at a relatively low income level.

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