1. The Chinese Economy: Whats the real Problem? Andong Zhu Tsinghua University IDEAs Conference on A Decade After: Recovery and Adjustment Since the East Asian Crisis 12-14 July 2007

2. Outline Introduction The Impacts of the Crisis on the Chinese Economy Whats the Real Problem? Conclusion

3. Outline Similar Story with Other Asian Countries The Chinese Story Whats the Real Problem Conclusion

4. Similar Story with Other Asian Countries High GDP Growth Savings Investment Gap CA Surplus High Foreign Reserves Pressure for Appreciation of the Currence Jobless Growth High Inequality Foreign Capital Penetration in the Economy ……

11. Decreasing Employment Elasticity Total Primary Industry Secondary Industry Tertiary Industry 1979-19890.340.210.570.58 1991-20000.11-0.110.100.50 2001-20050.11-0.160.190.37

12. Income Inequality in China:1979~2004

13. Share in Industry Output by Ownership (%)

14. The Chinese Story with the Crisis One Good Impact: Capital Account Liberalization Stopped Other Impacts:

15. The Over-dependency on Foreign Trade

16. The Over-dependency on Investment

17. The Excessive Savings in China: 1981-2004

18. Decreasing Consumption Rate

19. Sweden 25, India 32.5, United States 40.8, China 44.7, Brazil 59.1 Gini Coefficient for Chinas Income Distribution

20. The Increasing Inequality According to a recent study, In urban area, the top 10% familys income is 31 times of the bottom 10% familys income, rather than 9 times, as some statistics show. If we consider both the urban and rural area, the ratio is 55, rather than 21 times.

21. Informalizing Labor Market

22. The Laid-off/privatization Movement

23. Urban employment State-owned Units Collective -owned Units Mining and Quarrying Manufacturi ng highest level 27331(2005) 11261(1995) 3628(1991) 932(1995)9803(1995) lowest level19040(1995) 6488(2005)810(2005) 558(2005)8043(2000) change8291-4773-2818-374-1760

24. Ownership Changes in the Chinese Economy Shrinking SOE Sector Increasing Private Enterprises Share Increasing Foreign Control

25. Share in Industry Output by Ownership (%)

27. Foreign Capitals Share in Different Industries in China:2005

28. Share of Different Ownership in Different Industries in China:2005

29. Take away Profits, Leave GDP and… Pollution

30. Pollution in the World:1999

31. Searching a Job Or a War

32. Whats the Real Problem? Too much foreign Reserves Too much foreign capital High CA surplus (most of them owned by foreign capital) Pressure for appreciation of the currence Easy solution or not?

33. Why We are always the Victim? Should we just solve the urgent problem or should we rethinking the world political and economic system?

34. Thanks!