Input-output structure and growth in China

The fast and steady economic growth in China during the 1990s has attracted much international attention. Using the three most recent Chinese input-output tables, this paper investigates industry structure and inter-industry relationships and the relationship of both to economic growth. The input-output tables contain intermediate demand and final demand for six broad industries, namely, Agriculture, Industry, Construction, Transportation, Post and Telecommunications, Services, and Other, for 1992, 1995 and 1997, which enables computing of input-output coefficients for three time periods. As direct and indirect input-output coefficients characterise industry structure during a particular time period, changes over time reflect the patterns in industry structure evolvement. Furthermore, output growth in a particular industry can be analysed from two different sources, namely the changes in input-output coefficients that reflect technological change, and the change in final demand. This paper sheds light on four different issues over the five-year period from 1992 to 1997: (1) Was growth driven by technological changes or final demand increases? (2) As a result of the interdependence of industries, how did an increase in final demand in one industry affect growth in another? (3) How has the bottleneck of an insufficient capability in the Transportation, Post and Telecommunications sector to cope with demands from other sectors been affected during this period? (4) Has the industry structure of the economy been shifting in conformity with traditional growth theory, namely with a decline in the agricultural sector and a rise in the modern industrial sector?