Let us compare economic growth rates of China and Japan. Japan entered a
period of high economic growth in the middle of 1950s. Before that, her growth
had been fairly rapid, but in many ways this was a recovery from the destruction
caused by the American air bombing during the Second World War. During the
decade from 1959 to 1969, Japan’s annual growth rate was more than 11 percent,
with the exception of two years. The high economic growth period for Japan
ended in 1974, as a result of the first oil shock which took place in the autumn of
1973. Thus, Japan’s high economic growth lasted 18 years with an average annual
growth rate of 9.3 percent.
Although there were episodes of high growth (as per our definition above) in
pre-1978 years in China, this period was characterized by three major periods
of ups-and-downs. These were caused mainly by political struggles within the Chinese Communist Party (CCP), as politics controlled the economy.
Genuine continuous high economic growth in China therefore started in 1979.
Since then, China has maintained a high growth rate of more than 6 percent,
with the exception of the three years of 1981, 1989, and 1990. The average annual
growth rate during the 27 years between 1979 and 2005 has been 8.6 percent. It
seems that China’s high growth period will continue through 2006 and beyond.
Above image does not show the growth rates of Taiwan and Korea. However, it is
known that Taiwan entered a period of high growth at the end of 1950s. It ended
in 1998 when the Asian financial crisis broke out. Korea began to grow rapidly at
the beginning of 1960s and was also severely hurt by the Asian financial crisis.
It adopted a tightening policy suggested by the IMF, and achieved a temporary
recovery in 1999. Taiwan’s annual growth rate averaged to 8.3 percent for a period
of 40 years, and Korea’s annual average growth rate was 8.6 percent for nearly
the same four decades. Taiwan and Korea may thus far hold the world record for
high economic growth, both in terms of the annual growth rate and the length
of the period. The interesting question therefore is whether China will be able to
surpass Taiwan and Korea with regard to growth performance.
