The Scorecard on

Development
1960-2016:
China and the
Global Economic
Mark Weisbrot, Co-Director, CEPR
Rebound October 9th, 2017
Political Context
President Obama: Over the last 25 years, the
number of people living in extreme poverty
has been cut from nearly 40 percent of
humanity to under 10 percent.

This is presented as evidence of the success of

globalization since 1990
China and Poverty Reduction

But 2/3 of that reduction was in China

From 1981-2010, China accounted for 94 percent of the

net reduction in people living below the extreme
poverty line

Looking at the past 25 years, what about the 1/3 of net

poverty reduction that took place outside of China?

China had a lot to do with that too

China and Developing Countries
From 1990 until its peak in 2013, Low- and Middle-Income Country Exports to China
the share of low- and middle- 3.0% $600.00
income country exports sent to
China increased from 0.8 percent $523.09
to 9.7 percent, growing from $4 2.5% $500.00
billion to more than $520 billion.
Exports to China from low-and-
middle-income countries

Billions of USD (Current)

2.0% $400.00
increased from 0.1 to 2.6 percent
of these countries GDP

Percent of GDP
$360.54

From 2013-16, fell from 2.6 to 2 1.5% $300.00

percent
Also: hundreds of billions of 1.0% $200.00
dollars of investment, loans, and
aid from China in the past 25
years 0.5% $100.00

0.0% $-
1980 1985 1990 1995 2000 2005 2010 2015

Exports to China as Percent of GDP (Left Axis) Exports to China (Right Axis)

Source: IMF DOTS, IMF WEO

Chinese Globalization
Chinese globalization has done very well.
Chinas per capita GDP has multiplied 21 times
since 1980.

But Chinese globalization was based on very

different economic policies than those
adopted by the vast majority of low-and
middle-income-countries
Chinese Economic Policy

Until recently, most investment

controlled by the government
Huge role for state-owned enterprises
(SOEs), as recently as 2010 controlled
44 percent of major industrial
companies assets
China: Economic Policy and Globalization

Foreign investment controlled to fit with development planning

Technology transfer, performance requirements, export promotion

Financial system state-controlled

Central bank not independent

Strict currency controls for most of this period

Gradual, careful transition from planned to mixed economy

Neoliberal Globalization for Most Low- and
Middle-income Countries
Often indiscriminate opening to international trade and capital flows
Central Bank independence
Abandonment of industrial and development policies
Tighter fiscal and monetary policies, often pro-cyclical, inflation targeting
Financial and other de-regulation
Increasing protectionism in the area of intellectual property
Privatization of state-owned enterprises
Failure and Rebound: 1960-2016
Real, Per Capita GDP
4

3
Annualized Growth (Percent)

0
<$1520 $1520-2900 $2900-7020 $7020-14500 >$14500
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5

19601980 19802000 20002015

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
Failure and Rebound 1960-2016
Real, Per Capita GDP
Methodology: avoids problem of 4

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
diminishing returns in per capita GDP
growth and health indicators 3

Annualized Growth (Percent)

Looks at unweighted averages of
individual countries 2

Sharp slowdown in growth of per

capita GDP 1980-2000
1

Note 2nd quintile: 60 percent growth

1960-1980; 15 percent 1980-2000
0

Rebound in 21st century <$1520

Quintile 1
$1520-2900
Quintile 2
$2900-7020
Quintile 3
$7020-14500
Quintile 4
>$14500
Quintile 5
Real, Per Capita GDP
19601980 19802000 20002015

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
Possible Reasons for Rebound
Real, Per Capita GDP
China (noted above) 4

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017

Loss of IMF influence in middle-

income countries 3

Annualized Growth (Percent)

Counter-cyclical policies become
more common in developing 2

countries
Note that high-income countries 1

slowed considerably in 21st

century, did not contribute to the 0
<$1520 $1520-2900 $2900-7020 $7020-14500 >$14500

rebound for rest of world. Real, Per Capita GDP

Quintile 1 Quintile 2

19601980
Quintile 3

19802000
Quintile 4

20002015
Quintile 5

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
Child Mortality
Rate of progress shows similar pattern for bottom two quintiles
Mortality Rate, Under Age 5 (per 1,000 live births)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
175396 96175 4195 2041 419
0
-0.24
-0.37

-1 -0.76
-0.81 -0.82

-1.60
-2 -1.77
Average Annual Change

-2.01

-3 -2.78

-4 -3.81
-3.98 -3.92

-5
-4.89

-6
-6.18

-7

19601980 19802000 20002015

Source: World Bank, World Development Indicators.

Adult Female Mortality
Mortality Rate, Adult, Female (per 1,000 female adults)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
355645 238354 155234 110155 41110
2
0.86

-0.76
-1.17 -1.11
-2 -1.34
-1.17
-2.17
Averange Annual Change

-1.89

-3.18 -3.02
-4

-4.37
-4.60
-4.53
-6
-5.56

-8

-10

-10.75

-12
Mortality Rate, Adult, Female (per 1,000 female adults)
19601980 19802000 20002015

Source: World Bank, World Development Indicators

Adult Male Mortality
Mortality Rate, Adult, Male (per 1,000 male adults)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5

Source: World Bank,408731 307408

World Development Indicators 243306 186241 77186
2

0.33

-0.53
-1.09
-2 -1.73
-1.79
-0.61 -1.97
-2.31
Averange Annual Change

-2.62
-3.47 -3.39
-4
-4.03

-5.00
-6
-5.52

-8

-10

-10.46

-12
Mortality Rate, Adult, Male (per 1,000 male adults)
19601980 19802000 20002015

Source: World Bank, World Development Indicators

 Adult Female Mortality Comparison
Mortality Rate, Adult, Female (per 1,000 female adults) Mortality Rate, Adult, Female (per 1,000 female adults), With Selected Countries Removed
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
355645 238354 155234 110155 41110 355557 238354 155234 110155 41110
2 0
0.86

0 -1 -0.80
-1.20 -1.10
-0.76
-1.11 -1.30 -1.20
-1.17
-2 -1.34 -2
Averange Annual Change

-1.17

Average Annual Change

-2.17
-1.89 -2.20
-3.18 -3.02
-4 -3
-2.80
-4.37 -3.20 -3.00
-4.60
-4.53
-6 -4
-5.56
-2.80

-8 -5 -4.70 -4.40

-4.50
-10 -6
-5.80 -6.00
-10.75
-12 -7
Mortality Rate, Adult, Female (per 1,000 female adults)
19601980 19802000 20002015 19601980 19802000 20002015

Source: World Bank, World Development Indicators

Infant Mortality
Mortality Rate, Infant (per 1,000 live births)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
110224 68109 3468 1634 315
0

-0.20
-0.31
-1

-0.63
-0.66 -0.64
-1
Average Annual Change

-1.06

-1.28
-2 -1.41

-2

-1.71

-3 -2.32 -2.37

-2.23

-3
-2.92
-3.10

-4

19601980 19802000 20002015

Source: World Bank, World Development Indicators

In Conclusion
Many who praise the success of globalization may be unintentionally
praising Chinese economic policy
There should be more skepticism and inquiry regarding the impact of
globalization on low-and-middle-income countries, as has recently
happened with regard to high income countries.
Also regarding the institutions that promote and embody (IMF and World
Bank) and codify (WTO) the globalization effort
The sharp decline in economic growth 1980-2000, as well as declining
progress on health and social indicators, remains largely unnoticed and
unexplained. Also the 21st century rebound.
This should be an important topic of interest for economists