A Study On China’s Economic Performance Based On The Sustainable Development And Welfare Growth

Nowadays the economic development of China is facing two core problems. One is the extensive mode of economic growth. China’s economic growth relies on a large number of resources input, and the restriction of energy environment might bring about serious threat to the sustainable economic development in China. Second is the people’s livelihood issue. Chinese People hadn’t benefitted universally from the rapidly economic growth, and the overall residents’welfare also falls behind the economic development. In order to understand China’s economic performance, we must answer two questions:First, how is the efficiency of30-year economic growth of China according to currently economic growth path, and whether the extensive economic growth is sustainable, especially with a large amount of energy consumption, which have caused many unexpected by-products such as environmental pollution, accompanied with the high economic output. The second question is, whether the rapid economic growth of China could effectively convert to the improvement of the residents’welfare. In other words, we should make it clear whether the boost of residents’welfare would match the pace of economic growth, and how to make economic growth converts more sufficiently to welfare growth. The various economic and social problems now in China can be traced from the two questions above. So I would like to research and evaluate China’s economic performance in my dissertation based on the sustainable development and welfare growth.Firstly, this paper builds the theoretical framework of economic performance, and points out that the optimal economic performance should make all elements’input convert effectively into economic growth, at the same time, the economic growth can also converts effectively into welfare growth. The economic performance includes two aspects: the economic growth path and the value of that. The improvement of economic performance results from interaction of the efficiency and welfare. From the preliminary analysis about China’s economic performance based on the current situation of economic growth path and the value of that, we can make a conclusion that situation is very severe not only on the sustainable development of economy but also on the welfare growth.Secondly, I analyze China’s sustainable development level under the restriction of energy environment based on the economic growth path of China. I assess the total factor productivity of China’s economic growth by using the DEA-Malmquist model, and calculate the efficiency of economic growth through DEA-SBM model. My research shows that China’s economic growth is based on the large scale of elements input. The average growth rate of Chinese total factor productivity amounted to0.2%from1986to2010, which only accounted for2.007%of China’s economic growth, while the input contribution rate reaches as high as97.993%. China’s economic growth belongs to a typical extensive mode, which could lead to unfavorable sustainable development. Meanwhile, the whole economic efficiency of China was low from1985to2010, the mean figure was only0.481based on SBM model, indicating that the economic growth is inefficiency to some extent. The efficiency loss of economic growth is0.519, which means that the inputs of capital, labor and energy haven’t converted into economic outputs effectively, and the vision of the sustainable economic development tends to bleak.Thirdly, the paper analyzes the China’s welfare level based on the value of China’s economic growth and measures China’s welfare development. I applied Set Pair Analysis Method based on Sen’s "Capability Approach" to evaluate the changes of China’s welfare level since the reform and opening-up of China in late1970from the angles of "Function" and "Capability". The study shows that China’s overall welfare has been ascendant since the reform and opening-up of China, but its speed was very slow and sometimes it had been gone backwards. The change of welfare in China is the integrated result of Function and Capability. Function measures the given welfare level and Capabilities measure the potential or feasible welfare level. The welfare of Function in China is growing rapidly, but the welfare of Capability remains stagnant, and even went backwards during1980s and1990s. The inadequacy of Capability is eroding the welfare growth of Function, which made the overall welfare low in China. There has been a huge gap between the welfare development and economic growth in China during a long time. The growth rate of welfare is much lower than that of GDP, so comes to the "low-welfare growth" phase in China. The structural dislocation of the economic growth mode and income distribution pattern has obstructed the improvement of welfare, thus impacted the transformation from economic growth to welfare improvement of China. Finally, taking the overall economic performance of China to consideration, the calculating result shows that the economic performance based on economic growth path and economic growth value is quite unsatisfied. The average value of China’s economic performance is0.26, which means the development of economic growth path and economic growth value is on rather low level. Now we are fulfilling the reforms of economic growth path and economic growth value. The new institutional economists’ studies address that the institution affects the efficiency of the public behavior and the resources allocation, resulting in the difference of economic performance. By using the empirical analysis on the relevant factors of the economic performance from the institutional angle, we can found that the degree of marketization, the quality of government service, and innovation mechanism together devote much to the economic performance. The quality of government service is the most important factor compared to others. When I rethought about China’s economic mode based on economic performance, I found out that China’s economic mode brought rapid growth, but the cost of economic transformation in the long-term maybe far exceed the short-term interest. Chinese market pattern which depended on the comparative advantages and government controls has brought insurmountable problems. China’s economic mode confronts many risks, such as low economic efficiency, outdated technologies, imbalanced economy, environment damages, the lack of welfare, relative deprivation, the monopoly interest groups and corruptions as well. As a result, we must change the extensive economic mode to the "sustainable and Welfare-oriented economic development mode".