L&S Module 15 (All) PDF

## Economy of our country: An overview of the Chinese economy ### Starting Point #### Inquiry topic: Economic development of China in the past 70 years **Study the sources below carefully and answer the following questions.** **Source 1** From the founding of the People's Republic of China (PRC)...

## Economy of our country: An overview of the Chinese economy ### Starting Point #### Inquiry topic: Economic development of China in the past 70 years **Study the sources below carefully and answer the following questions.** **Source 1** From the founding of the People's Republic of China (PRC) in 1949 to the launch of the Reform and Opening-up in 1978, political campaigns came in succession. Economic development was thus adversely affected. The Chinese economy underwent negative growth in the following six years: * 1960-1962 * 1967-1968 * 1976 The political events and political struggles of those years brought great damages to the economy. It was estimated that the Gross Domestic Product (GDP) of China was only RMB298.8 billion in 1976, while the per capita GDP was only RMB321. **** **Source 2** At the end of 1978, Deng Xiaoping, the state leader of China, delivered an important speech and introduced the policy to promote comprehensive modernization. In term of economic policies, some regions, enterprises, workers and peasants were allowed to make more money and improve their lives first. Later, the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China (CPC) was held. The focus of work of the CPC and the state was shifted from class struggle to economic development, and the Reform and Opening-up policy was implemented. **Source 3** After China implemented the Reform and Opening-up policy, the Chinese economy developed rapidly. In 1978, the GDP of China was RMB367.8 billion only, while the per capita GDP was RMB385. In 2010, the GDP of China rose to RMB412,119 billion. China replaced Japan as the world's second largest economy. However, China still ranked behind the United States (the US). The Chinese economy has maintained a high growth rate in the past 40 years, with an average annual GDP growth rate of 12.3%. It is a miracle of the world economy. **With reference to the sources above, compare the economic situation of China before and after 1978** **Do you agree that the development of China after the launch of Reform and Opening-up is a miracle of the world economy? Explain your answer.** **** ## Macro-economy of the Mainland ### Introductory Question China is the world's second largest economy right behind the US. Is the economy of the Mainland developed? ### Evaluate the economic development of the Mainland We adopt the following indicators to evaluate the economic development of the Mainland: **① Gross Domestic Product (GDP)** The Gross Domestic Product (GDP) of a region refers to the total market value of goods and services produced by the economic activities within its territory in a given period (usually a year). The investment and production included in the calculation must be conducted within the territory of the country. GDP can reflect the economic aggregate of a country. It is also helpful for evaluating the level of economic development of a country. **Archive** **Calculation of the GDP of China** The GDP of China is calculated in different ways by the Department of National Accounts of the National Bureau of Statistics of China (NBS) according to different industrial sectors, different characteristics of income and expenses and different sources of data. The NBS usually conducts the preliminary verification process and the final verification respectively in the second and fourth quarters of the year that follows. #### GDP of China between 1978 and 2019 | Year | GDP (in hundred million RMB) | |:--------|:------------------------------| | 1978 | 3,678 | | 1982 | 5,373 | | 1986 | 10,376 | | 1990 | 18,872 | | 1994 | 48,637 | | 1998 | 85,195 | | 2002 | 121,717 | | 2006 | 219,433 | | 2010 | 412,119 | | 2014 | 643,563 | | 2018 | 919,281 | | 2019 | 990,865 | **② Per capita GDP** When evaluating the economic development of a country, it is necessary to examine both the GDP and the per capita GDP. Per capita GDP of a country is obtained by dividing the total GDP in a year by the population of that country in the same year. **③ Economic structure** The economic structure of a country can be reflected from the export trade and production structure. To judge whether a country has transformed from a developing country into a developed country, the figures reflected in the economic structure can help people have better understanding of the country's economic development. **Keyword** * **Economic structure**: It refers to the economic composition of a certain region, such as the proportion of state-owned and private enterprises, the proportion of agriculture, industry and commerce, the proportion of import and export goods, the proportion of capital for investment and consumption, etc. * **Production structure**: It refers to the allocation of labour force, capital and resources to different industrial sectors, such as agriculture, industry, service industry, etc. * **World Bank**: It is an international organisation established in 1944 to help countries conduct reconstruction in the post-WWII period. Nowadays, the World Bank mainly provides developing countries with loans to help them get rid of poverty and raise their standards of living. ## Comparison of per capita GDP According to the World Bank, a country is recognised as a developed country only when the per capita GDP of that country has exceeded US$10,000. Although the GDP of China surpassed that of Germany and ranked 3rd in the world in 2008, China had a population of 1.32 billion and Germany had 82 million only. Consequently, the per capita GDP of China was merely US$3,400, while that of Germany was US$44,200. The per capita GDP of Germany was about 13 times of China's. Since 2010, China has surpassed Japan and ranked 2nd in the world in terms of GDP, just behind the US. However, the huge population of China has led China's per capita GDP continue to lag behind the two countries. In 2019, China's population was 1.439 billion, while that of the US and Japan were 331 million and 127 million respectively. In 2019, China's per capita GDP was US$10,287, while that of the US was US$65,254 (6 times of China's), and that of Japan was US$40,256 (4 times of China's). **Per capita GDP and ranking of the five largest economies in 2019** | Ranking | Country | Per capita GDP (US dollars) | |:--------|:--------|:--------------------------| | 7 | The US | 65,254 | | 18 | Germany | 46,473 | | 22 | Britain | 42,379 | | 25 | Japan | 40,256 | | 69 | China | 10,287 | ## Development of the four economic regions of China **Study the sources below carefully and answer the following questions.** **Source 1** | Region | Area (10,000 km²) (%) | Population (billion) (%) | GDP (billion RMB) (%) | Per capita GDP (RMB) | |:-------------|:----------------------|:--------------------------|:------------------------|:-------------------| | Eastern | 93.2 (9.7%) | 5.42 (38.7%) | 480,995.9 (52.6%) | 96,332 | | Central | 102.8 (10.7%) | 3.71 (26.5%) | 192,657.9 (21.1%) | 51,233 | | Western | 687.6 (71.4%) | 3.80 (27.1%) | 184,302.1 (20.1%) | 49,371 | | Northeastern | 78.8 (8.2%) | 1.08 (7.7%) | 56,751.6 (6.2%) | 52,298 | **Source 2** * **Eastern** (10 provinces and cities) * **Central** (6 provinces) * **Western** (12 provinces) * **Northeastern** (3 provinces) **1. According to the sources above, which region has the largest area and which region has the smallest area?** **2. According to Source 2, which region has the most population and which region has the least population?** **3. With reference to the economic indicators of Source 2, rank the order of the four economic regions of China ('1' for the highest and '4' for the lowest).** **4. What phenomenon of the economic development of China is reflected in Source 1? With reference to the sources above, explain your answer.** ## Comparison of economic structure The GDP of China ranks 2nd in the world, but there is still a distance between China and the developed regions with regard to the economic structure. According to the World Bank, China ranked 5th in the world in the aspect of service export in 2018, lagging behind such countries as the US and Germany. Besides, Germany still has an absolute advantage in high technology. The electronic information industry and financial services industry of Germany are far larger than those of China. It can be seen that China still falls behind Germany in the level of economic development. China has become the world's second largest economy in terms of GDP. However, in the aspects of per capita GDP and the economic structure, China is still regarded as a developing country. There is a long way to go before China fully catches up with the economic development of the developed countries. **Keyword**: * **Service export**: It is a process that an enterprise or individual of a country provides services for consumers of another country in order to obtain foreign exchange. Examples of service export include industries of tourism, culture, education, transportation, etc. ## Can China become a developed country? **The economists hold different views on the economic development of China. Study the sources below carefully and answer the following questions.** **Source 1** | Country | GDP | |:--------|:---| | China | | | Japan | | **Source 2** In 1990, the per capita national income of China was US$350 at current prices. In 2000, the figure had risen threefold to US$1,000. In 2008, the figure had tripled again to US$3,000. If China continues to have a GDP growth rate of 8% annually for the next two decades, the per capita national income at current prices may reach US$8,500 in 2020 and US$20,000 by 2030. The per capita income of China will surpass those of Taiwan and Korea, while the scale of the Chinese economy will be larger than that of both the US and the European Union today. To become a developed country by 2030, China does not have to keep an annual GDP growth rate of 10%, but 8% will do. Even if the growth rate falls to 6% or 7%, the momentum of development will be postponed by a few years only, which cannot affect the overall outcome. **Source 3** The Chinese economy develops rapidly, but China has to wait for another 40 years before it can become the world's largest economy. Even by then, the economic development of China will still be categorised as second or third class in terms of per capita GDP, and it will at most be a moderately developed country. In the latter half of the 19th century, the US was not only the largest economy in the world, but also ahead of Europe in terms of per capita GDP, GDP per hour (namely the productivity), etc. The US enjoyed unprecedented wealth in human history during the 'Gilded Age', **1. According to Sources 1 and 3, why is it still hard for China to become a developed country although the GDP growth rate of China is remarkable?** **2. With reference to Source 2, does the per capita GDP of China grow rapidly? Why are some scholars optimistic about the future of China?** **3. With regard to the future development, is it hard for China to compare with the US? Cite two arguments and support your answer with reference to the sources, and using your own knowledge.** ## Industrial structure of China To evaluate the economic development of China from a macro-perspective, we should also study the industrial structure of China. **Industrial structure**: Refers to the statistical classification of various economic activities. It can be simply classified into three major industries, namely the primary industry, the secondary industry and the tertiary industry. In statistics, it is generally indicated by the output values and employment figures. **Keyword**: * **Industrial structure:** 產業結構 * **Primary industry:** 第一產業 * **Secondary industry:** 第二產業 * **Tertiary industry:** 第三產業 ## The three strata of industry **Study the source below carefully and answer the following questions.** * **Farmers**: grow rice in the fields with electrical machinery. * **Workers**: transfer the rice to the food processing factories or shops. * **Factory workers**: make rice noodles from rice and pack the rice noodles. * **Workers**: send packages of rice noodles to different shops. * **Merchants**: sell rice and rice noodles. **1. With reference to the source above, complete the relationship diagram of the three strata of industry by writing the appropriate letters in the boxes provided.** **2. Give another example that can reflect the interdependence among the three strata of industry and explain your answer.** ## Development of the three strata of industry in China since the Reform and Opening-up **Study the sources below carefully and answer the following questions.** **Source 1** Economists point out that the primary industry is generally the largest sector in developing countries. Most of the working population is engaged in agriculture, fishing, etc. When the economy takes off, the secondary industry will develop rapidly. Since the economic benefits of the secondary industry are much higher than that of the primary industry, a large number of surplus rural labour force will become workers in the secondary industry. With the further development of the economy, the development of the tertiary industry will speed up. The service industry can absorb more labour than the secondary industry. **Source 2** | Year | Primary industry (%) | Secondary industry (%) | Tertiary industry (%) | |:--------|:--------------------||:----------------------|:---------------------| | 1978 | 70.5% | 17.3% | 12.2% | | 2019 | 25.1% | 27.5% | 47.4% | **Source 3** | Year | Primary industry (%) | Secondary industry (%) | Tertiary industry (%) | |:--------|:--------------------||:----------------------|:---------------------| | 1978 | 27.7% | 47.7% | 24.6% | | 2019 | 3.8% | 36.8% | 59.4% | **1. Explain the data provided in Source 2 by using the theory mentioned by economists in Source 1.** **2. With reference to the sources above, identify the current stage of economic development of China.** **3. According to the source above, which two industries contributed the most to the GDP growth of China in 1990?** **4. According to the source above, which two industries contributed the most to the GDP growth of China in 2019?** **5. Based on the contribution of the three strata of industry to the GDP growth of China, what are the development trends of the three strata of industry? Explain your answer.** ## Analyse how the three strata of industry promoted the GDP growth of China **The GDP growth rate contributed by the three strata of industry in China from 1990 to 2019** | Year | GDP (%) | Primary industry (%) | Secondary industry (%) | Tertiary industry (%) | |:-------|:-------|:---------------------|:-----------------------|:---------------------| | 1990 | 3.9 | 1.6 | 1.6 | 0.8 | | 1995 | 11.0 | 1.0 | 6.9 | 3.1 | | 2000 | 8.5 | 0.4 | 5.1 | 3.1 | | 2005 | 11.4 | 0.6 | 5.8 | 5.0 | | 2010 | 10.6 | 0.4 | 6.1 | 4.2 | | 2015 | 7.0 | 0.3 | 2.8 | 3.9 | | 2019 | 6.1 | 0.2 | 2.2 | 3.6 | **1. According to the source above, which two industries contributed the most to the GDP growth of China in 1990?** **2. According to the source above, which two industries contributed the most to the GDP growth of China in 2019?** **3. Based on the contribution of the three strata of industry to the GDP growth of China, what are the development trends of the three strata of industry? Explain your answer.** ## Relative importance of the three strata of industry **2.1 Relative importance of the primary industry** After 1978, the output of China's primary industry has risen sharply, but its contribution to GDP has dramatically dropped. It accounted for nearly 30% (27.7%) of the GDP in 1978, but dropped to less than 10% (3.8%) in 2019. With regard to the number of employed persons, people engaged in primary industry accounted for over 70% of the labour force in 1978. However, the proportion has decreased continuously. In 2019, it dropped to less than 30% (25.1%) of the labour force, lagging behind the tertiary industry. **2.2 Relative importance of the secondary industry** Since the Reform and Opening-up, the secondary industry has held a leading position in the contribution to the GDP of China. Between 1978 and 2014, the contribution of the secondary industry to the GDP of China was always over 40%. In 2019, its contribution was slightly less than 40% (36.8%). With regard to the number of employed persons, the proportion of the secondary industry contiuned to rise from more than 10% (17.3%) in 1978 to nearly 30% (27.5%) in 2019. **2.3 Relative importance of the tertiary industry** China's tertiary industry has developed rapidly since 1978. The tertiary industry contributed to over 20% (24.6%) of China's GDP in 1978, and reached more than 50% (59.4%) in 2019. In terms of the number of employed persons, the proportion of the tertiary industry also rose sharply from more than 10% (12.2%) in 1978 to nearly 50% (47.4%) in 2019, becoming the highest among the three strata. In conclusion, the agricultural productivity of China had transferred to the secondary and tertiary industries in an enormous scale since 1978. This relieved the population pressure of the rural areas, while promoting the diversified industrial development of China. Therefore, the achievements of the Reform and Opening-up are not only reflected in the growth of GDP, but also the diversification of industrial structure. **What is the advantage of the changes of proportion of employed persons of the three strata of industry to the economic development of China?** ## Threat or collapse? China's economy has undergone rapid development in recent years, but there are different views about its future development. The 'Threat Theory' and 'Collapse Theory' are among the hottest topics for discussion. **Step 1: Summarise the content of the theories.** * **Threat theory**: As the comprehensive national strength of China increases, the country has become a strong power in Asia and even in the world. Some people think China will some day threaten the economic development of other countries. For example, the increase in the exports of goods made in China may affect related industries in some countries. * **Collapse Theory**: Although China's economy grows rapidly, there are many kinds of problems, such as unemployment, corruption and environmental pollution. Therefore, some people think that China's economy will soon be on its way to collapse. **Step 2: Find evidence and formulate arguments.** * **Evidence:** Let's analyse the evidence! When finding evidence and formulating arguments, try to think from different angles, such as military, political, economic, social and cultural factors. * **Example:** Why would the rise of China threaten world peace? * **Military aspect**: China's military strength is expanding fast, and it is modernising its army actively. Every year, China's military expense shows double-digit growth. * **Economic aspect**: Experts think that China's economic growth will maintain at a rate of 8% to 10% in the future, while the growth rate of the US will remain at 2% to 3%. Economic growth in China would intensify competition in the Asia-Pacific region. This may even lead to military conflicts in the region. * **Political aspect**: As one of the few socialist countries, China has always been the attention of capitalist countries in the world. Moreover, the unsolved Taiwan issue is considered a trigger for war. **Step 3: Analyse and conclude.** **With reference to the example, can you sum up the importance of the Threat Theory in different aspects?** When you are doing your analysis, make sure you avoid holding on to one viewpoint subjectively. It is better to list out reasonable arguments and analyse them one by one. After summarising a wide range of information and making your own analysis, you can give your own point of view in the conclusion. **What is the relationship between the Threat Theory and the Collapse Theory?** ## Suggestions for Life and Society and cross-curricular learning activities ### A. Suggestions for Life and Society and cross-curricular learning activities **1. Quiz about the Chinese economy** * **Scope of activity**: Organise an inter-class quiz. Each class is responsible for drawing up 20 questions and answers focusing on the topics mentioned in the module. After collecting all questions and answers, the organizing team should verify and fix them with the assistance of teachers, and map out the format of the quiz. * **Cross-curricular suggestion**: This activity can be jointly organised with the Department of Chinese History or the Current Affairs Society. **2. Study the economic conditions of the five largest economies in the world** * **Scope of activity**: Divide the class into 5 groups, each of which is responsible for collecting information about the economic conditions of one of the five countries. Organise the information in a concise way, make posters and exhibit them in the classroom. * **The content of the posters may cover:** * GDP; * Per capita GDP; * Gross industrial output value; * Composition of labour force; * Industrial structure, etc. * **Cross-curricular suggestion**: This activity can be jointly organised with the Department of Economics or the Current Affairs Society. ### B. Suggestions for website browsing **The State Council of the People's Republic of China** The website provides comprehensive information about China, including politics, economy, society and law. It links you to the websites of various ministries and organisations of the Chinese government, including those mentioned in this module, so you can browse the relevant information. Besides, it links you to the website of the National Bureau of Statistics of China (NBS), so you can obtain various statistical data published by the NBS. http://english.gov.cn/ ## Data-response questions **Study the sources below carefully and answer the following questions.** **Source 1** Since the early 1990s, the imbalance in China's economic development had begun to appear. Its major characteristics include a continuous decline in domestic consumption and dependence on exports to promote economic development. In 2005, China's total domestic consumption accounted for 38% of GDP. In 2007, the proportion of domestic consumption in GDP fell to 35%, which reached a record low. Consequently, export growth had become the main driving force of GDP growth. **Source 2** In recent years, the Chinese Central Government has played an active role in promoting new spending patterns. For example, the Central Government has been encouraging tangible retail companies to undergo digital transformation and provide delivery services. This year, the expansion of domestic demand in China's online consumer market has become the main driving force for economic growth. As of March this year, the number of online shopping users in China reached 710 million. Compared to 2018, it shows an increase of 100 million users. In addition, the number of smartphone users shopping online reached 707 million this year. Compared to 2018, it shows an increase of 116 million users. In the first half of this year, national online retail sales reached RMB5.15 trillion, showing a year-on-year increase of 7.3%. Among the total online retail sales, online retail sales of tangible goods amounted to RMB4.35 trillion. Sales of tangible goods rose against the market trend by 14.3%, accounting for 25.2% of total retail sales. According to the Ministry of Commerce, it has been rare for people to go out shopping under the influence of the novel coronavirus epidemic. It has in turn accelerated the development of e-commerce and unleashed domestic consumption potential. The Ministry predicts that the national online retail market will not only give full play to 'contactless' economic advantage but also maintain rapid economic growth in the second half of this year. **1. According to Source 1, describe a phenomenon in the Chinese economy.** **2. According to Source 2, what has the Chinese government done to improve the economy?** **3. Do you think that the Chinese government's policies can improve the aforementioned economic phenomenon? Explain your answer according to the sources above and your own knowledge.** ## Extended-response questions **Study the source below carefully and answer the following questions.** **Source 1** The economic development of China is driven by three driving forces, namely investment, export and consumption. From 2003 to 2006, the contribution of consumption to GDP dropped to 50%, hitting a record low. On the contrary, investments rose to 42.4%. This development is extremely unhealthy. Firstly, the economic growth of China has been entirely depended upon investment (i.e. setting up of factories, construction of buildings, and purchase of equipment) in recent years. If the global or Chinese economy gets worse and investment shrinks, the Chinese economy will drop significantly. Secondly, many investments are made blindly. The local governments, in particular, do not understand the industries very well. They still carry out a large number of relevant projects driven by pursuit of political achievements and interests. There are more than ten industries with excessive capacity in China, such as iron and steel, automobile, electric power, coal and textile. Finally, although China is the "world's factory, its export profits are very low. The BOSS shirts sold in the US, for example, are priced at US$120. The American distributor enjoys 60% of the profit; the brand owner, 30%; and the Chinese manufacturer, 10% only. You can get a general idea about how much the Chinese manufacturer and workers can earn after the deduction of raw material costs. This mode of economic development cannot sustain for a long time. This is because if only low value-added products are produced and cheap labour force is exchanged for very small profit, the economic growth will slow down or even decline when it reaches a certain limit. **What concerns do people have about the economic development of China? Explain your answer with reference to the sources above, and using your own knowledge.** **By obtaining the title of the 'world's factory', what advantages and disadvantages does it bring to the development of China? Explain your answer with reference to the sources above, and using your own knowledge.** ## Independent Inquiry Study: Threat or Collapse? China's economy has undergone rapid development in recent years, but there are different views about its future development. The 'Threat Theory' and 'Collapse Theory' are among the hottest topics for discussion. * **Step 1: Summarise the content of the theories.** * **Threat Theory**: As the comprehensive national strength of China increases, the country has become a strong power in Asia and even in the world. Some people think China will some day threaten the economic development of other countries. For example, the increase in the exports of goods made in China may affect related industries in some countries. * **Collapse Theory**: Although China's economy grows rapidly, there are many kinds of problems, such as unemployment, corruption and environmental pollution. Therefore, some people think that China's economy will soon be on its way to collapse. * **Step 2: Find evidence and formulate arguments.** * **Evidence**: Let's analyse the evidence! When finding evidence and formulating arguments, try to think from different angles, such as military, political, economic, social and cultural factors. * **Example:** Why would the rise of China threaten world peace? * **Military aspect**: China's military strength is expanding fast, and it is modernising its army actively. Every year, China's military expense shows double-digit growth. * **Economic aspect**: Experts think that China's economic growth will maintain at a rate of 8% to 10% in the future, while the growth rate of the US will remain at 2% to 3%. Economic growth in China would intensify competition in the Asia-Pacific region. This may even lead to military conflicts in the region. * **Political aspect**: As one of the few socialist countries, China has always been the attention of capitalist countries in the world. Moreover, the unsolved Taiwan issue is considered a trigger for war. * **Step 3: Analyse and conclude.** * **With reference to the example, can you sum up the importance of the Threat Theory in different aspects?** * **When you are doing your analysis, make sure you avoid holding on to one viewpoint subjectively. It is better to list out reasonable arguments and analyse them one by one. After summarising a wide range of information and making your own analysis, you can give your own point of view in the conclusion.** * **What is the relationship between the Threat Theory and the Collapse Theory?** ## After-class Inquiry Activities ### A. Suggestions for Life and Society and cross-curricular learning activities **1. Quiz about the Chinese economy** * **Scope of activity**: Organise an inter-class quiz. Each class is responsible for drawing up 20 questions and answers focusing on the topics mentioned in the module. After collecting all questions and answers, the organizing team should verify and fix them with the assistance of teachers, and map out the format of the quiz. * **Cross-curricular suggestion**: This activity can be jointly organised with the Department of Chinese History or the Current Affairs Society. **2. Study the economic conditions of the five largest economies in the world** * **Scope of activity**: Divide the class into 5 groups, each of which is responsible for collecting information about the economic conditions of one of the five countries. Organise the information in a concise way, make posters and exhibit them in the classroom. * **The content of the posters may cover:** * GDP; * Per capita GDP; * Gross industrial output value; * Composition of labour force; * Industrial structure, etc. * **Cross-curricular suggestion**: This activity can be jointly organised with the Department of Economics or the Current Affairs Society. ### B. Suggestions for website browsing **The State Council of the People's Republic of China** The website provides comprehensive information about China, including politics, economy, society and law. It links you to the websites of various ministries and organisations of the Chinese government, including those mentioned in this module, so you can browse the relevant information. Besides, it links you to the website of the National Bureau of Statistics of China (NBS), so you can obtain various statistical data published by the NBS. http://english.gov.cn/