Shandong and Jiangsu have relatively low GDP quality

 

　　In early 2014, the China Economic Research Institute, a think tank under China Economic Weekly, calculated the "2013 GDP Quality Ranking of 31 Provinces" based on the latest economic data for 2013 released by 31 provinces (as of February 23), using the formula "per capita disposable income divided by per capita GDP" provided by Yang Kaizhong, director of the China Regional Economic Research Center at Peking University. Experts and scholars were interviewed for in-depth analysis of the ranking.

 

　　The results show that in 2013, the GDP quality ranking of 31 provinces in mainland China is as follows: Shanghai, Beijing, Guangdong, Zhejiang, Yunnan, Jiangxi, Anhui, Hainan, Chongqing, Shanxi, Fujian, Heilongjiang, Guangxi, Guizhou, Sichuan, Hunan, Hubei, Jiangsu, Tianjin, Liaoning, Henan, Gansu, Hebei, Ningxia, Jilin, Shandong, Shaanxi, Qinghai, Xinjiang, Inner Mongolia, Tibet.

 

　　Shanghai, Beijing, and Guangdong have been in the top three for three consecutive years

 

　　Guangdong: The secret of rising from outside the top ten to firmly in the top three

 

　　Since 2011, Shanghai, Beijing, and Guangdong have been in the top three for three consecutive years, with no change in their positions.

 

　　Fang Chuanglin, director of the Regional and Urban Planning Research Center at the Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, told China Economic Weekly that in the economic structure of Beijing and Shanghai, the service sector accounts for over 75%, mainly high-end services such as building international financial centers. Through industrial structure upgrading and transformation, residents' incomes are relatively higher, accounting for a larger share of per capita GDP, so the GDP quality value is larger.

 

　　Yang Kaizhong said in an interview with China Economic Weekly that generally, residents' income sources include wage income, property income, operating income, and transfer income. Beijing, Shanghai, and Guangdong are the provinces with the highest levels of economic and social development in China, which means residents have more wage income and property income. At the same time, there are more financial products, providing more opportunities to earn income. With the increase in capital, operating income may also increase. In addition, in terms of transfer income, the more developed the economy, the more welfare and social security may increase under other conditions being equal. Therefore, in the national income structure of these regions, disposable income accounts for a higher proportion of GDP.

 

　　It is worth mentioning that Guangdong Province, which has been in the top three for the past three years, only ranked 9th and 11th in the GDP quality rankings in 2009 and 2010, but jumped to 3rd in 2011 and has maintained that position since then.

 

　　Fang Chuanglin explained that Guangdong initially accumulated capital and GDP through low-end manufacturing. But in the subsequent reform and economic transformation, Guangdong transformed its low-end manufacturing, which originally accounted for the main proportion of the secondary industry, into high-end manufacturing. At the same time, Guangdong has a high degree of openness and has developed a large number of services, greatly increasing the proportion of the tertiary industry, and the proportion of service trade and international trade as well as the logistics industry have been developed and strengthened. All these have promoted the increase in per capita disposable income in Guangdong, so the GDP quality is high.

 

　　The GDP quality of major economic provinces Shandong and Jiangsu is somewhat low

 

　　GDP and GDP quality rankings do not match; also look at residents' income

 

　　An analysis of the "2013 GDP Quality Ranking of 31 Provinces" reveals two prominent phenomena: first, there are large differences in GDP quality between different regions; second, provinces with large GDP totals do not necessarily have high GDP quality, and some provinces with small GDP totals have relatively high GDP quality.

 

　　"The level and differences of GDP quality reflect, to a certain extent, the economic structure of each province," Yang Kaizhong pointed out.

 

　　According to the ranking, the bottom five provinces in GDP quality are Shaanxi, Qinghai, Xinjiang, Inner Mongolia, and Tibet. The rankings of these western provinces have not changed for three consecutive years.

 

　　Xiao Jincheng, director of the Institute of Land Development and Regional Economy at the National Development and Reform Commission, said in an interview with China Economic Weekly that sometimes investment in the western region is large, with a big project, but it does not necessarily increase the income of local residents. For example, a province builds a large hydropower station, which drives large investment, but the construction team may not be local residents; it could be from another province, and the equipment may be purchased from elsewhere. This does not have a significant impact on local residents' income, but GDP increases, meaning the denominator per capita GDP increases, while the numerator per capita disposable income does not increase significantly, so the GDP quality is not high.

 

　　Fang Chuanglin believes that compared with developed provinces, the western region has less industrial support, agriculture still accounts for a large proportion, and the industrial structure is relatively low-end, so the products produced are low-value-added, labor-intensive, and low-tech, resulting in low income and low per capita disposable income. At the same time, when calculating per capita disposable income, the urbanization rate in the western region is also relatively low, so the calculated GDP quality is low.

 

　　Xiao Jincheng suggests that while focusing on and strengthening infrastructure construction, the western region should pay more attention to investment in people's livelihood and public services.

 

　　In addition to the imbalance in GDP quality between regions, the correlation between GDP total and GDP quality also appears unbalanced in some provinces.

 

　　In 2013, the GDP of Guangdong, Jiangsu, Shandong, and Zhejiang ranked among the top four in the country. But their GDP quality rankings were 3rd, 18th, 26th, and 4th, respectively. Although Jiangsu and Shandong have high GDP totals, their quality performance is not outstanding, and even somewhat lagging.

 

　　Fang Chuanglin analyzed that Jiangsu has large petrochemical and steel industries, with heavy manufacturing accounting for a large proportion, and the tertiary industry in the industrial structure is relatively weak, so per capita disposable income lags somewhat. Although southern Jiangsu is very developed, northern Jiangsu is very backward, so on average, per capita disposable income is low.

 

　　Yang Kaizhong believes that Shandong has many state-owned enterprises, which leads to slower growth in residents' operating income and financial income. On the other hand, compared with Beijing and Shanghai, Shandong and Jiangsu both attach great importance to real industry but pay insufficient attention to financial management. With increased attention in this regard, there is potential for rapid growth in per capita disposable income in Jiangsu and Shandong.

 

　　It is worth noting that although Hainan Province's GDP in 2013 was only 314.646 billion yuan, ranking 28th in the country, its GDP quality ranked 8th nationwide with 0.45466.

 

　　Fang Chuanglin analyzed that Hainan is an international tourism island, with the service industry dominating, which helps directly increase local residents' income, so per capita disposable income increases and GDP quality is higher.

    　The economic development mode is becoming more "people-oriented"

 

　　GDP growth hits a new low, GDP quality hits a new high

 

　　According to data released by the National Bureau of Statistics on January 20, China's GDP in 2013 was 56.8845 trillion yuan, with a growth rate of 7.7%. This growth rate is the same as in 2012 but is the lowest in nearly five years.

 

　　However, a China Economic Weekly reporter analyzed the GDP quality data for the past five years and found that although GDP growth in 2013 was a new low, the national average GDP quality in 2013 was a new high for the past five years, and when broken down by province, GDP quality also showed an upward trend. Calculated as the arithmetic average of 31 provinces, the national average GDP quality for the past five years (2009-2013) was 0.3856, 0.3756, 0.3763, 0.395, and 0.409, respectively, showing an upward trend.

 

　　Ma Jiantang, director of the National Bureau of Statistics, said that in 2013, the per capita net income of rural residents in China increased by 9.3% in real terms, and the per capita disposable income of urban residents increased by 7% in real terms. After weighting by the urbanization rate of 53.7%, the growth rate of residents' income exceeded the GDP growth rate of 7.7%.

 

　　From the calculation formula of GDP quality, GDP quality will increase because the growth rate of per capita disposable income is higher than the growth rate of per capita GDP.

 

　　Yang Kaizhong told China Economic Weekly that since the start of the 12th Five-Year Plan (2011), GDP quality has risen overall, indicating that China's economic development mode and policies benefiting the people (policies that do not compete with the people for profits) have been implemented more thoroughly, and the effects of livelihood policies and economic development modes are more obvious and full. The growth of quality across the country has generally accelerated, but some came later and some earlier. Provinces with stronger financial resources and more high-end industrial structures have faster development mode transformation, which is reflected in faster GDP quality growth.

 

　　The decision adopted at the Third Plenary Session of the 18th CPC Central Committee clearly pointed out that the assessment and evaluation system for development achievements should be improved, the bias of evaluating political performance solely by economic growth rate should be corrected, the weight of indicators such as resource consumption, environmental damage, ecological benefits, overcapacity, technological innovation, work safety, and new debt should be increased, and more attention should be paid to employment, residents' income, social security, and people's health.

 

　　The change in the "GDP-only performance view" will make China's macroeconomic regulation system more sound, create conditions for the steady development of the market and society, make residents' income grow faster, and GDP quality will reach new highs.

 

　　What is GDP quality? How is it calculated?

 

　　Humanized GDP, happiness index, sense of happiness, increasing residents' income

 

　　Cheng Enfu, a member of the Chinese Academy of Social Sciences and director of the Department of Marxist Studies, believes that improving people's livelihood is the starting point and ultimate goal of economic development. Measuring the degree of economic development and economic strength is not just about GDP indicators; first, one should look at the amount of people's income, the level of living standards and quality of life, and the level of "happiness." Cheng Enfu believes that the "GDP quality" selected by China Economic Weekly is basically consistent with "humanized GDP," "happiness index," and "sense of happiness," the core of which is "increasing residents' income."

 

　　Development factor P2=I/MGDP

 

　　In 2005, Cui Jianwei, a former senior engineer at Shandong Electric Power Group Corporation, published a paper in the Journal of Shandong University, formally introducing the formula P2=I/MGDP, where P2 represents the development factor, I represents the disposable income of residents in a country or region, M represents the local resident population, and GDP represents the local per capita GDP. The development factor proposed by Cui Jianwei became an intuitive representation of GDP quality, revealing the "livelihood content" of GDP, and is basically consistent with the "GDP quality" calculation formula later selected by this magazine.

 

　　The ratio of per capita disposable income to per capita GDP equals per capita disposable income divided by per capita GDP

 

　　In 2010, when China Economic Weekly was searching nationwide for a new people-oriented economic development measurement indicator, Yang Kaizhong, director of the China Regional Economic Research Center at Peking University, provided the calculation formula for the "ratio of per capita disposable income to per capita GDP": "per capita disposable income" divided by "per capita GDP," and the resulting value is equivalent to the local GDP quality, i.e., the residents' happiness index. Since then, the "31 Provinces GDP Quality Ranking" for five years has received widespread attention and high praise from all sectors of society, and this indicator has been used to this day.

 

　　Per capita disposable income = (urban per capita disposable income + rural per capita net income) × urban population proportion

 

　　It should be pointed out that per capita GDP is obtained by dividing the total local GDP by the local permanent resident population. However, statistical agencies in various places have not published data on per capita disposable income, so according to expert suggestions, an approximate algorithm is used for per capita disposable income, which is calculated as "(urban per capita disposable income + rural per capita net income) × urban population proportion."