10 facts on China’s economy

China’s model of economic development has brought huge success to the country in the last few decades. Alongside its achievements, however, are various implications to uneven growth. For example, China’s nutrition transition displays changing diets that lean more toward unhealthy, less diversified diets. The economic inequalities and rural-urban disparities are also alarming, and environmental pollution together with food safety are raising concerns among Chinese consumers.

The following 10 facts paint a picture of China’s economic development, the opportunities for change, and efforts to address the country’s existing challenges. Currently the largest economy in the world, China must face its challenges with a new outlook that focuses on sustainable, inclusive, and durable growth to reach high-income status and avoid the middle income trap.

1. China is experiencing the triple burden of malnutrition—coexistence of hunger, undernutrition and overnutrition: Despite remarkable progress in reducing hunger, almost one fifth of the world’s hungry live in China (about 145 million), over 9 percent of children under 5 are stunted (about 89 million) and obesity is growing—over 27 percent of men and women were overweight and obese in 2013. The triple burden of malnutrition is costly. For example, overweight and obesity costs China US$7.4 billion a year, or 8 percent of its GDP in 2013.

2. China has a growing appetite for meat: Higher incomes, more urbanized, sedentary lifestyles have changed dietary habits in China. The nutrition transition shows a growing prominence of meat in Chinese diets—meat consumption increased more than ten fold from 1975 to 2012, from 7.3 to 71 metric tons of beef, chicken and pork. In 2012, China overtook the US as the largest global meat consumers, where more than a quarter of meat produced worldwide were consumed in China. China is the top global buyer of soybean meal (used for animal feed), and is estimated to have bought 54 million tons of soymeal in 2014.

3. The Chinese food value chain is growing longer, with less participants: The rice value chain is an example of the China’s modernizing value chains that are becoming geographically longer but involves less participants—farm equipment holdings doubled between 2004 and 2009, and rice mills are consolidating and modernizing. Mechanization is transforming the agriculture sector with the emergence of private mechanized service providers, such as Combine Service Enterprises (CSEs). These farmer companies are replacing expensive labor with machinery, assisting farmers with land preparation and harvesting services at competitive prices. For example, a cluster of CSEs has developed in the Jiangsu Province that travel inter-regionally to harvest and thresh rice.

4. China is the world’s largest producer, and importer of rice: While China is expected to produce 141 million tons of rice in 2014, making it the top global rice producer, it is also the biggest importer of rice—in 2013, rice imports were estimated to increase to 3 million metric tons, almost 30 percent higher than the previous year. High labor costs (that causes domestic rice price to increase) and concern for safety of domestically produced rice are among several factors that drive demand for imported rice.

5. China is Africa’s largest trading partner: China has had long-standing relations in Africa. In 2009, China surpassed the US as Africa’s largest trading partner. Agricultural trade has been growing between China and Africa. For example, China’s share of all Africa’s food exports increased from 1.4 (US$32 billion) to 3.2 percent (US$159 billion) from 2005 to 2012. China could further contribute to Africa’s development transformation through a south-south cooperation based on China’s successes in agriculture-led growth, evidence-based policy-making, and strong institutions. China’s agricultural technologies, for example, are highly transferable to Africa, suited to geo-economic and political landscape of a fellow developing country.

6. China is experiencing widening inequalities: China’s successes have been met with emerging challenges in inclusive and durable growth. Inequalities manifest in income, education, and healthcare. China’s Gini coefficient rose from 29 in 1981 up to 0.47 in 2012, displaying wide income inequality across the country. Rural-urban disparities exhibit these inequalities: Children under five and pregnant women in rural areas are more likely to be anemic than those in urban areas. Unfavorable farm prices and development strategies that privileged coastal or more developed provinces over inland or less developed provinces have exacerbated rural-urban disparities. Urban inequality has also risen due to massive retrenchment of workers of state-owned enterprises in the 1990s and a shift in government policy in favor of the state sector over private enterprises.

7. China plans to establish universal social security by 2020: China’s 12th Five Year Plan (2011-2015) is projected to increase public social expenditure, which is expected to rise faster than the country’s GDP in the coming years. China has many challenges to overcome—social protection in rural areas is low compared to urban settlements; percentage of unemployed receiving benefits is less than 10 percent, especially for migrants (lower than Brazil and Russia); and the pension system is segmented. Establishing a universal social security system that covers rural and urban residents are expected to include a combination of social insurance and social protection schemes.

8. Environmental problems and food safety are now among the top concerns of urban residents: Air pollution is an increasing concern—Beijing’s pollution index exceeded the safety threshold 19 out of 31 days in January of 2013. Water pollution equally alarming, as the Ministry of Environmental protection reported that less than half of water in China can be treated for safe drinking. In addition, the contamination of milk, the use of tainted meat and gutter oil in food production, and poisonous materials in fertilizers are increasing consumer concerns about food safety and driving the need for better food safety regulation.

9. Renewable energy is sparking interest among Chinese investors: As one of the world’s biggest greenhouse gas emitter, China aims to shift to a more sustainable development model that focuses on energy efficiency and environmental protection. It intends to create a “green, circular, low-carbon economy.” Currently, China is the largest global investor in renewable energy, with investments reaching US$ 67 billion in 2012. The nation’s first electric aircraft, the RX1E, is set to be mass produced for domestic markets, with promising prospects for European and US markets.

10. Climate change mitigation is in the works: China has agreed to cap emissions by 2025 in a carbon deal with the United States. The 12^th Five Year Plan includes climate change mitigation at various levels, including city level—in light with urbanization trends, low-carbon pilot cities will be built. Five provinces and 8 cities will be built in the first stage, and 1 province and 28 cities will be built in the second stage.

Headline Image: Red Lantern by michmutters. CC-BY-NC-ND 2.0 via Flickr