Chart: 70 Years of China’s Economic Growth
View a high-resolution version of this graphic here.
From agrarian economy to global superpower in half a century—China’s transformation has been an economic success story unlike any other.
Today, China is the world’s second largest economy, making up 16% of $86 trillion global GDP in nominal terms. If you adjust numbers for purchasing power parity (PPP), the Chinese economy has already been the world’s largest since 2014.
The upward trajectory over the last 70 years has been filled with watershed moments, strategic directives, and shocking tragedies — and all of this can be traced back to the founding of the People’s Republic of China (PRC) on October 1st, 1949.
How the PRC Came to Be
The Chinese Civil War (1927–1949) between the Republic of China (ROC) and the Communist Party of China (CPC) caused a fractal split in the nation’s leadership. The CPC emerged victorious, and mainland China was established as the PRC.
Communist leader Mao Zedong set out a few chief goals for the PRC: to overhaul land ownership, to reduce social inequality, and to restore the economy after decades of war. The first State Planning Commission and China’s first 5-year plan were introduced to achieve these goals.
Today’s timely chart looks back on seven decades of notable events and policies that helped shape the country China has become. The base data draws from a graphic by Bert Hofman, the World Bank’s Country Director for China and other Asia-Pacific regions.
The Mao Era: 1949–1977
Mao Zedong’s tenure as Chairman of the PRC triggered sweeping changes for the country.
1953–1957: First 5-Year Plan
The program’s aim was to boost China’s industrialization. Steel production grew four-fold in four years, from 1.3 million tonnes to 5.2 million tonnes. Agricultural output also rose, but it couldn’t keep pace with industrial production.
1958–1962: Great Leap Forward
The campaign emphasized China’s agrarian-to-industrial transformation, via a communal farming system. However, the plan failed—causing an economic breakdown and the deaths of tens of millions in the Great Chinese Famine.
1959–1962: Lushan Conference and 7,000 Cadres meeting
Top leaders in the Chinese Communist Party (CCP) met to create detailed policy frameworks for the PRC’s future.
1966–1976: Great Proletarian Cultural Revolution
Mao Zedong attempted to regain power and support after the failures of the Great Leap Forward. However, this was another plan that backfired, causing millions more deaths by violence and again crippling the Chinese economy.
1971: Joined the United Nations
The PRC replaced the ROC (Taiwan) as a permanent member of the United Nations. This addition also made it one of only five members of the UN Security Council—including the UK, the U.S., France, and Russia.
1972: President Nixon’s visit
After 25 years of radio silence, Richard Nixon was the first sitting U.S. President to step foot into the PRC. This helped re-establish diplomatic relations between the two nations.
1976–1977: Mao Zedong Death, and “Two Whatevers”
After Mao Zedong’s passing, the interim government promised to “resolutely uphold whatever policy decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave.”
1979: “One-Child Policy”
The government enacted an aggressive birth-planning program to control the size of the country’s population, which it viewed as growing too fast.
A Wave of Socio-Economic Reforms: 1980-1999
From 1980 onward, China worked on opening up its markets to the outside world, and closing the inequality gap.
1980–1984: Special Economic Zones (SEZs) established
Several cities were designated SEZs, and provided with measures such as tax incentives to attract foreign investment. Today, the economies of cities like Shenzhen have grown to rival the GDPs of entire countries.
1981: National Household Responsibility System implemented
In the Mao era, quotas were set on how many goods farmers could produce, shifting the responsibility of profits to local managers instead. This rapidly increased the standard of living, and the quota system spread from agriculture into other sectors.
1989: Coastal Development Strategy
Post-Mao leadership saw the coastal region as the potential “catalyst” for the entire country’s modernization.
1989–1991: Post-Tiananmen retrenchment
Early 1980s economic reforms had mixed results, and the growing anxiety eventually culminated in a series of protests. After tanks rolled into Tiananmen Square in 1989, the government “retrenched” itself by initially attempting to roll back economic reforms and liberalization. The country’s annual growth plunged from 8.6% between 1979-1989 to 6.5% between 1989-1991.
1990–1991: Shanghai and Shenzhen stock exchanges open
Combined, the Shanghai (SSE) and Shenzhen (SZSE) stock exchanges are worth over $8.5 trillion in total market capitalization today.
1994: Shandong Huaneng lists on the NYSE
The power company was the first PRC enterprise to list on the NYSE. This added a new N-shares group to the existing Chinese capital market options of A-shares, B-shares, and H-shares.
1994–1996: National “8-7” Poverty Reduction Plan
China successfully lifted over 400 million poor people out of poverty between 1981 and 2002 through this endeavor.
1996: “Grasp the Large, Let Go of the Small”
Efforts were made to downsize the state sector. Policy makers were urged to maintain control over state-owned enterprises to “grasp the large”. Meanwhile, the central government was encouraged to relinquish control over smaller SOEs, or “let go of the small”.
1997: Urban Dibao (低保)
China’s social safety net went through restructuring from 1993, and became a nationwide program after strong success in Shanghai.
1997-1999: Hong Kong and Macao handover, Asian Financial Crisis
China was largely unscathed by the regional financial crisis, thanks to the RMB (¥) currency’s non-convertibility. Meanwhile, the PRC regained sovereignty of Hong Kong and Macau back from the UK and Portugal, respectively.
1999: Western Development Strategy
The “Open Up the West” program built out 6 provinces, 5 autonomous regions, and 1 municipality—each becoming integral to the Chinese economy.
Turn of the Century: 2000-present
China’s entry to the World Trade Organization, and the Qualified Foreign Institutional Investor (QFII) program – which let foreign investors participate in the PRC’s stock exchanges – contributed to the country’s economic growth.
2006: Medium-term Plan for Scientific Development
The PRC State Council’s 15-year plan outlines that 2.5% or more of national GDP should be devoted to research and development by 2020.
2008-2009: Global Financial Crisis
The PRC experienced only a mild economic slowdown during the crisis. The country’s GDP growth in 2007 was a staggering 14.2%, but this dropped to 9.7% and 9.5% respectively in the two years following.
2013: Belt and Road Initiative
China’s ambitious plans to develop road, rail, and sea routes across 152 countries is scheduled for completion by 2049—in time for the PRC’s 100th anniversary. More than $900 billion is budgeted for these infrastructure projects.
2015: Made in China 2025
The PRC refuses to be the world’s “factory” any longer. In response, it will invest nearly $300 billion to boost its manufacturing capabilities in high-tech fields like pharmaceuticals, aerospace, and robotics.
Despite the recent ongoing trade dispute with the U.S. and an increasingly aging population, the Chinese growth story seems destined to continue on.
China Paving the Way?
The 70th anniversary of the PRC offers a moment to reflect on the country’s journey from humble beginnings to a powerhouse on the world stage.
Because of China’s economic success, more and more countries see China as an example to emulate, a model of development that could mean moving from rags to riches within a generation.
COVID-19 Crash: How China’s Economy May Offer a Glimpse of the Future
China has seen a severe economic impact from COVID-19, and it may be a preview of what’s to come for countries in the early stages of the outbreak.
The Economic Impact of COVID-19
China, once the epicenter of the COVID-19 pandemic, appears to be turning a corner. As the number of reported local transmission cases hovers near zero, daily life is slowly returning to normal. However, economic data from the first two months of the year shows the damage done to the country’s finances.
Today’s visualization outlines the sharp losses China’s economy has experienced, and how this may foreshadow what’s to come for countries currently in the early stages of the outbreak.
A Historic Slump
The results are in: China’s business activity slowed considerably as COVID-19 spread.
|Economic Indicator||Year-over-year Change (Jan-Feb 2020)|
|Investment in Fixed Assets*||-24.5%|
|Value of Exports||-15.9%|
*Excluding rural household investment
As factories and shops reopen, China seems to be over the initial supply side shock caused by the lockdown. However, the country now faces a double-headed demand shock:
- Domestic demand is slow to gain traction due to psychological scars, bankruptcies, and job losses. In a survey conducted by a Beijing financial firm, almost 65% of respondents plan to “restrain” their spending habits after the virus.
- Overseas demand is suffering as more countries face outbreaks. Many stores are closing up shop and/or cancelling orders, leading to an oversupply of goods.
With a fast recovery seeming highly unlikely, many economists expect China’s GDP to shrink in the first quarter of 2020—the country’s first decline since 1976.
Danger on the Horizon
Are other countries destined to follow the same path? Based on preliminary economic data, it would appear so.
About half the U.S. population is on stay-at-home orders, severely restricting economic activity and forcing widespread layoffs. In the week ending March 21, total unemployment insurance claims rose to almost 3.3 million—their highest level in recorded history. For context, weekly claims reached a high of 665,000 during the global financial crisis.
“…The economy has just fallen over the cliff and is turning down into a recession.”
—Chris Rupkey, Chief Economist at MUFG in New York
In addition, manufacturing activity in eastern Pennsylvania, southern New Jersey, and Delaware dropped to its lowest level since July 2012.
Other countries are also feeling the economic impact of COVID-19. For example, global online bookings for seated diners have declined by 100% year-over-year. In Canada, nearly one million people have applied for unemployment benefits.
Hard-hit countries such as Italy and Spain, which already suffer from high unemployment, are also expecting to see economic blows. However, it’s too soon to gauge the extent of the damage.
Light at the End of the Tunnel
Given the near-shutdown of many economies, the IMF is forecasting a global recession in 2020. Separately, the UN estimates COVID-19 could cause up to a $2 trillion shortfall in global income.
On the bright side, some analysts are forecasting a recovery as early as the third quarter of 2020. A variety of factors, such as government stimulus, consumer confidence, and the number of COVID-19 cases, will play into this timeline.
The Emissions Impact of Coronavirus Lockdowns, As Shown by Satellites
While the COVID-19 pandemic has been all-consuming, these satellite images show its unintended environmental impacts on NO₂ emissions.
The Emissions Impact of Coronavirus Lockdowns
There’s a high chance you’re reading this while practicing social distancing, or while your corner of the world is under some type of advised or enforced lockdown.
While these are necessary measures to contain the spread of the COVID-19 pandemic, such economic interruption is unprecedented in many ways—resulting in some surprising side effects.
The Evidence is in NO₂ Emissions
Nitrogen dioxide (NO₂) emissions, a major air pollutant, are closely linked to factory output and vehicles operating on the road.
As both industry and transport come to a halt during this pandemic, NO₂ emissions can be a good indicator of global economic activity—and the changes are visible from space.
These images from the Centre for Research on Energy and Clean Air (CREA), as well as satellite footage from NASA and the European Space Agency (ESA), show a drastic decline in NO₂ emissions over recent months, particularly across Italy and China.
NO₂ Emissions Across Italy
In Italy, the number of active COVID-19 cases has surpassed China (including the death toll). Amid emergency actions to lock down the entire nation, everything from schools and shops, to restaurants and even some churches, are closed.
Italy is also an industrial hub, with the sector accounting for nearly 24% of GDP. With many Italians urged to work from home if possible, visible economic activity has dropped considerably.
This 10-day moving average animation (from January 1st—March 11th, 2020) of nitrogen dioxide emissions across Europe clearly demonstrates how the drop in Italy’s economic activity has impacted the environment.
Source: European Space Agency (ESA)
That’s not all: a drop in boat traffic also means that Venice’s canals are clear for the time being, as small fish have begun inhabiting the waterways again. Experts are cautious to note that this does not necessarily mean the water quality is better.
NO₂ Emissions Across China
The emissions changes above China are possibly even more obvious to the eye. China is the world’s most important manufacturing hub and a significant contributor to greenhouse gases globally. But in the month following Lunar New Year (a week-long festival in early February), satellite imagery painted a different picture.
Source: NASA Earth Observatory
NO₂ emissions around the Hubei province, the original epicenter of the virus, steeply dropped as factories were forced to shutter their doors for the time being.
What’s more, there were measurable effects in the decline of other emission types from the drop in coal use during the same time, compared to years prior.
Back to the Status Quo?
In recent weeks, China has been able to flatten the curve of its total COVID-19 cases. As a result, the government is beginning to ease its restrictions—and it’s clear that social and economic activities are starting to pick back up in March.
Source: European Space Agency (ESA)
With the regular chain of events beginning to resume, it remains to be seen whether NO₂ emissions will rebound right back to their pre-pandemic levels.
This bounce-back effect—which can sometimes reverse any overall drop in emissions—is [called] “revenge pollution”. And in China, it has precedent.
—Li Shuo, Senior climate policy advisor, Greenpeace East Asia
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