Success and challenges: Overview of China's economic growth and reform since 1978

It has been 30 years since China started its market-oriented economic reforms. During the period from 1978 to 2007, China’s gross domestic product (GDP) increased from 214.2 billion US$ in 1978 to 3,400.4 billion US$ in 2007; GDP per capita increased from 224 US$ to 2,604 US$ (see Table 1.1). Its annual average growth rate of GDP reached 9.9 per cent, far above the world average growth rate of 3.3 per cent during the same period (Ma, 2007). China has become the fourth largest economy in the world after the United States (US), Japan and Germany measured by the official exchange rate. If measured by Purchase Power Parity (PPP), it surpassed Germany in 1987 and Japan in 1994, and now it is second only to the US (World Bank, 2006). Although the per capita GDP of China is still at a relatively low level, the overall size of the economy will catch up with the US by the end of 2025 if each country continues to grow at the same speed as it has over the last decade.