Download Report - Independent Evaluation Group - World Bank

1IntroductionChina’s Achievements in a Quarter-Century of ReformIn December 1978, China reversed its development strategy of the previous30 years and launched a process of economic reform and opening up to theoutside world. The results of China’s strategic shift have been dramatic.Growth. Since 1980, China has had one of thehighest sustained rates of growth of per capitaincome in the world (see figures 1.1 and 1.2).While there is a lively debate on the accuracy ofofficial statistics, there is widespread agreementthat per capita gross domestic product (GDP)in constant domestic prices doubled between1980 and 1990 and then approximately doubledagain between 1990 and 2000. 1 In constantdollars and current purchasing power parity(PPP) terms (see table 1.1), the increase waseven greater, owing to exchange ratemovements. Exports in current U.S. dollarsincreased from $18 billion in 1980 to $249billion in 2000—a nearly 14-fold increase.Poverty reduction. Between 1990 and 2000, thenumber of people living on a dollar a day fell by170 million—during a period when total populationrose by more than 125 million. Over the pasttwo decades, China accounted for 75 percent ofpoverty reduction in the developing world.Stability. China also avoided the instability andoutput declines of most other transitioneconomies. This stabilityis often attributedto China’s gradualistapproach to economicreform (“crossing theriver by feeling thestones”), in whichinstitutional changesSince 1980, China hashad one of the highestsustained rates of growthof per capita income inthe world.have preceded or accompanied policychanges. 2Shortcomings and ChallengesDespite China’s enormous achievements ingrowth, poverty reduction, and stability, therehave been shortcomings as well, especially inthe 1990s.• Rising inequality and vulnerability. Therural reforms of 1979–84 reduced inequality, aswell as poverty. Since the late 1980s, however,inequality and vulnerability have increased, andsince the mid-1990s, poverty reduction hasslowed. 3 In the second half of the 1990s, theshare of people in poverty stagnated, despite anoverall growth rate of more than 8 percent.1