The People's Republic of China was founded in 1949. And the Chinese economy has since been enjoying healthy development over the past 60 years. However, in the first 30 years, the national economy developed slowly and the Chinese people failed to live a better life. Thanks to efforts made during the reform and opening up which started in late 1978, China's gap with developed countries has been narrowed. Life in the urban area improved with each passing day. Poverty has been wiped out in general and most people have solved the food problems, and many now enjoy a well-to-do life.

China's economy has gained remarkable achievements, and people lead a better life today.

 

I. More Money in Pockets

 

Changes take place to the urban area 0ver the past 60 years in two periods: The first 30 years and the second 30 years.

In the first 30-year period, while the global economy developed by leaps and bounds, the Chinese economy failed to catch pace with its growth. However, in the second 30 years, the reform and opening up program proved to be a boon for China's economic development. With the fast development of the national economy, the Chinese people's life have improved impressively. 

Before the founding of the PRC in 1949, China suffered from prolonged period of wars and the national economy was on the verge of collapse. The market was rather depressed and prices skyrocketed. A large number of people lost their jobs and lived a hard life. According to a report published in Hsin Min Pao on March 24, 1948, 10 million Republic of China Yuan was only equivalent to 37 Republic of China Yuan in 1937. Due to the price hike, people even could hardly meke out a living. In the autumn of 1948, there were about 68,000 people in Beijing who poverty-stricken, accounting for 24 percent of the city's population of 246,000 that year.

After 1949, most people in China enjoyed a poor life. Statistics show that the cash income per capita in 1949 was less than 100 Yuan. Under the situation, the Central People's Government took measures to recover the production, stabilize prices and create job openings in order to improve people's livelihood.

During the first Five-Year Plan (1952-1957), given the fact that China had a large population but a low productivity, the Government adopted the policy featuring low pay but extensive employment. This made it possible for all to have food to eat, thus guaranteeing social peace and stability. The broad masses of the people plunged into construction of New China with great enthusiasm, laying the initial material foundation for the further development of the country. The first Five-Year Plan is regarded as the first "Golden Age" of economic development after the founding of PRC. In 1957, the cash income of urban citizens per capita reached 254 Yuan, rising 62.8 percent when compared with the figure in 1952. Allowing for the price hike factors, there was a real increase of 48.5 percent and an annual increase averaging 8.2 percent. 

Afterwards, given some historical reasons at that time, China failed to concentrate on the economic construction. Repeated political movements proved to be a bane for economic development, and as a result the people had to struggle for a life featuring having "enough to eat" for a score of years. The decade-long "cultural revolution" (1966-1976) pushed the national economy to the verge of bankruptcy. As consumer goods were in extreme short supply, a great majority of commodities had to be purchased with coupon. All this happened when the world was experiencing fast economic development, and China's gap with developed countries widened in terms of economic development and people's livelihood.

In 1978, two years after the end of the "cultural revolution", the disposable income of urban people per capita stood at 343 Yuan, rising 35.4 percent when compared with the figure in 1957. Allowing for the price hike, in 21 years from 1957 to 1978, the income of urban residents enjoyed a real increase of 18.5 percent, or an annual average increase of a mere 0.8 percent. The Chinese people's life was not improved until 1978, when the policy of reform and opening up was introduced.

These 30 years after 1978 saw the most rapid economic development and the greatest income growth of urban people. A survey indicates that the annual disposable income of urban people per-capita increased from 343 Yuan in 1978 to 5,425 Yuan in 1998. Allowing for the price increase, there was a real increase of 2.2 times and an annual average increase of 6 percent. In 2008, this figure rose to 15,781 Yuan, a figure that shows the urban residents are at the threshold of a well-off society.

The increase in the income of urban residents finds concentrated expression in the amount of money they have in the bank. From 1952 to 1978, the balance of savings deposits of the Chinese jumped from 860 million Yuan to 21.06 billion Yuan. But in the past 30 years after 1978, the balance of savings deposits of the Chinese has enjoyed a geometric growth: The figure rose by 10  tfold from 1978 to 1986, reaching 223.76 billion Yuan; eight years later, in 1994, it rose to 2151.88 billion Yuan, registering a 100-time increase in 16 years; four years later, in 1998, it jumped to 5340.8 billion Yuan, rising 254 times over 1978 figure. In 2008, the balance of savings deposits of urban residents added up to 22,150.3 billion Yuan, including 21,788.5 billion Yuan in Renminbi.

 

II. Changes in Urban Consumption

 

The past 60 years have seen changes in urban consumption Levels.

In the early days of the 1950s, China worked hard for economic recovery and people's life was greatly improved. However, political movements launched one after another after 1958 seriously undermined China's economic development and resulted in the decline in people's standard of living. The "cultural revolution" that rocked the world from 1966 to 1976 pushed the national economy to the verge of collapse and people's standard of living went on declining. A review of the 30 years from the birth of New China to the introduction of the reform and opening up in late 1978 shows that people's standard of living improved but not impressively.

According to a survey, the living expense of urban people per capita was 222 Yuan in 1957. Of these, 130 Yuan went to food and 27 Yuan to clothes. These two items accounted for 70 percent of the total expenses, with only 30 percent left for other items. In 1964, the annual expense per capita was 221 Yuan, a decrease of 10.4 percent when price increase has been taken into consideration. Of these, 131 Yuan was spent on food and 24 Yuan on clothes, combining to account for the same proportion with that in 1957. In 1978, the annual expense per capita was 311 Yuan. Allowing for price hike, this meant a real increase of 22.6 percent. Of these, 179 Yuan was spent on food and 42 Yuan on clothes. These two items combined to take up 71 percent, a slight increase from the figure of the past 20 years. Facts shown above indicate that, from the founding of the PRC in 1949 to the introduction of reform and opening up in late 1978, the expenses of urban people were mostly paid to "having food to eat and clothes to wear". Commodities were in so short supply that coupons were issued for what was considered fair distribution. 

Over the past 30 years of reform and opening up, the urban residents have been enjoying an increasingly improved standard of living. The problem of food and clothing, which remained a big headache for 30 years before 1978, was completely solved during the Sixth Five-Year Plan (1981-1985). No coupon is issued for the supply of commodities. And the urban residents have begun to move into a well-off society.

 

1. Food Consumption

According to the Engel coefficient (food expenses in consumption outlay) of the FAO of the United Nations, which is generally used to evaluate people's living standard, when the Engel coefficient is above 60 percent, people are in poverty; it is a society of having enough to eat and wear when it is 50-60 percent, and below 40 percent means a well-off society. The Engel coefficient of China's urban residents remained over 57 percent until the early years of the reform program. This means they had just shaken off poverty and were still struggling for "having enough to eat and wear". This lasted until the Sixth Five-Year Plan (1981-1985), when the country enjoyed economic development and a booming market. People were making more money and coupon was no longer in need for the purchase of commodities. Engel coefficient saw a sudden fall to 53.3 percent in 1985 after a slight bounce. The figure indicates that the Chinese people gained a secured life with enough food and clothes, and started to accomplish the goal of living a well-off life in 2000. In the 1990s, Engel coefficient decreased every year. It fell to 50 percent in 1994 for the first time and 44.7 percent in 1998. Engel coefficient of the rural people was 43.7 percent in 2008, and that of urban people stood at 37.9 percent. This index indicates that urban people in China are living a comparatively better-off life.

Over the past 60 years since 1949, especially during the recent 30 years, food available to urban residents gradually became great in variety and rich in terms of nutrition. According to a survey, food expenditure per capita was 130 Yuan in 1957; in 2007, however, that of the rural residents was 1,389 Yuan, rising 15.7 times over the figure in 1978, with the annual average increase of 10.4 percent; and that of the urban residents was 3,628 Yuan, rising 19.3 times over the figure in 1978, with the annual average increase of 10.9 percent. The same period also saw improvement in terms of the variety and nutrition of the food consumed. From 1978 to 2007, for example, food consumption of the rural residents reduced from 248 kg to 199 kg, while that of the urban residents experienced a decrease from 205.3 kg to 77.6 kg. In the aspect of nutrition, meat, poultry, egg and milk consumed are on the increase. The pork consumption of the rural residents per capita rose from 5.2 kg in 1978 to 13.4 kg, and that of egg from 0.8 kg to 4.7 kg. As for the urban residents, there was a rise in pork and egg consumption from 13.7 kg and 1.97 kg in 1978 to 18.2 kg, and 10.3 kg.

 

2. Clothing Expenditure

Before 1978, the urban residents were told to "lead a simple life" and the slogan was that a new garment be dressed for three years; when it becomes "old", it be worn for another three years; and when it is worn out, one should refrain from buying new ones and instead patch it to wear for the next three years. According to a survey, in 1957, people bought 0.7 ready-made clothes and 7.3 meters of clothes (not enough to make a quilt which the Chinese usually made themselves) on average. In 1964, bought an average of one ready-made clothes and 4 meters of cloth.

After 1978, the year the reform and opening-up program was introduced, a dazzling variety of clothes were available on the market, and people are better-dressed with many clothes for one season. In the past, they bought cloth and hired tailors to make clothes for them. Today, however, they purchase read-made clothes in supermarket. Almost no one is doing what they used to do decades ago. In the rural areas, the per-capita clothing expenditure increased from less than 6 Yuan in 1983 to 130 Yuan in 2007, rising 21.8 times, and the number of clothes purchased increased from 0.7 per person to 2.4, a rise of 2.3 times. In the urban area, the per-capita clothing expenditure was 1,042 Yuan in 2007. Of these, expenditure on ready-made clothes was 748 Yuan per-capita, accounting for 71.8 percent of the total. The number of ready-made clothes bought by the urban residents rose from 3.13 in 1978 to 7.82 in 2007. Fashions in vogue among the public serve as a window on modern life in China.

 

3. Durable Expenditure

The past 60 years witnessed changes in urban life,changes which find expression in the increasing demand of the people for better quality durables. Before 1978, people strove to own bicycles, sewing machines, wrist watches, and radios, and took pride in owning these. In the early days of the reform and opening-up which began in late 1978, owning four new ones were in vogue; they were refrigerators, washing machines, color TV sets and tape recorders. Nowadays, air-conditioners, home-computers and cars have begun to move into urban families. A survey shows, in urban areas in 1981, every 100 urban families owned an average of 0.6 color TV sets, six washing machines, 0.2 refrigerator, and 13 tape-recorders; and in the rural areas the durables were rarely seen then. In 2007, every 100 urban households owned 137.8 color TV sets, 95 refrigerators, and 96.8 washing machines, and every 100 rural households owned 94.4 color TV sets, 26.1 refrigerators and 45.9 washing machines respectively. Besides, some families started to buy hi-tech household electrical appliances for the purpose of study and entertainment. In the 21^st century, urban households turned to buy mobile phones, computers, and cars. In 2007, every 100 urban households owned 165 mobile phones, 54 home-computers, and six cars while every 100 rural households owned 77.8 mobile phones, 3.7 home-computers and 1.2 cars respectively.

 

4. Housing Expenditure

After people have enough food and clothing, efforts were made to solve problems related to other consumption items. In recent years, there has been a popular saying to the effect that whether the China has entered a well-off society depends on whether the Chinese have a good housing to live. This points up to the importance of improved housing conditions. Housing is one of the most complicated problems which have yet to be solved. In the past 60 years, the Chinese governments at all levels have all taken great efforts to address the housing problems facing the urban residents.

Before 1949, families with 3-5 persons sharing the same title-roofed or adobe house accounted for 70 percent of the total in the urban area. And the rent was extremely high for those who had no houses. The past 60 years saw the housing conditions keep increasing in the urban areas. Especially, since 1978, the year the reform program was introduced, people's living standard has improved significantly. According to surveys, in 1981, there were only 13.5 percent of the total urban households each with a living space averaging eight square meters per capita. This figure rose to 48.1 percent in 1988 and 76.8 percent in 1998. Before 1978, most of the urban residents lived in the houses which belonged to the leasing units or the housing authority, and only a small number of people had their own houses. In this populous country, it is common to see people enjoy small living space and, in many cases, three generations of the same family had to live under the same roof. That was a true picture of the housing situation at that time. After 1978, the State attached great importance to improving living conditions in the urban areas, and has been investing more in the construction of apartment buildings. In recent years, the State has tried all possible means to solve the housing problems through construction of low-rent houses and economically affordable houses. Many apartment buildings have been built, making it possible for large numbers of urban households to say good by to the low-lying, shabby houses and move to the spacious ones with large windows and bright kitchens and toilets. In 2007, the living space of the urban residents reached 22.6 square meters per capita, as against 4.2 square meters in 1978.  Meanwhile, there is great improvement in the surroundings of the dwelling quarters in the urban area.  

The rural residents also enjoy better living conditions and environment. The per-capita share of the living space in the rural areas increased from 8.1 square meters in 1978 to 31.6 square meters in 2007, a 2.9-fold increase. So far as the type of buildings are concerned, the brick and wood houses and those of the reinforced concrete structure account for 86.4 percent, an increase of 37.8 percentage points from that of 48.6 percent in 1981. The living conditions have also improved remarkably. In 2007, for instance, there were 16.4 percent of the rural residents whose houses were equipped with the flush toilets, 25.7 percent of the them having access to electricity, clean fuel, and fuel gas, and 41.3 percent to tap water.

 

5. Transportation and Communication Expenditure

Since 1949, China has been enjoying fast economic development. Modern transportation and telecommunication take a part of the public consumption expenditures in China. In 1981, per-capita annual expenditure on traffic and communication in the urban area was only 6.6 Yuan, of which 6.12 Yuan went to traffic and 0.48 Yuan to communication (actually postal service). In 1998, the public expenditure in this regard rose sharply to 257 Yuan, a 38-fold increase. The Chinese Government invested heavily in the construction of transportation and communication facilities and a sound networks has taken initial shape in the country. Transportation tools used include not only bicycles but also motorcycles, electrical motor cars and cars. To travel, people ride not only buses and trains but also taxis and aircrafts. Statistics shows that national passenger transport volume reached 22.27761 billion people in 2007, a 7.8-fold increase from 1978, up 7.8 percent annually on average. National passenger turnover totaled 2159.3 billion passenger-km, an 11.4-fold increase, up by 9.1 percent annually on average. In 2007 every 100 urban households owned an average of 6.1 cars, a 9.1-fold increase from that in 2001. In the past, people contacted their relatives and friends by means of telegrams and letters, which today have been replaced by to telephones, mobile phones and emails. According to a survey, national penetration rate of the telephones was 1.11 per 100 persons in 1990 and 69.5 in 2007, an annual average increase of 27.5 percent. Of these, the penetration rate of mobile phones was 41.6 sets per 100 persons in 2007, as against 0.002 set in 1990, an annual average increase of 79.5 percent. Telecom service is relatively underdeveloped in the rural areas. In 2007, however, the administrative villages with access to the postal service accounted for 98.5 percent of the total. Some 99.5 percent of the administrative villages have been installed with home phones.

 

6. Other Expenditures

People are spending more for travel purpose in China today. As the Government allows its people to work five days a week and enjoy long holidays on May 1 and October 1, which started in 1998, the people not only have money but also time to spend on traveling. In response, the travel services are organizing weekend tour of the surrounding beauty spots, and tour of scenic spots in other provinces. Overseas visits are also available to the Chinese. The year 2007 saw 1.61 billion domestic tourists, 2.1 times over the figure of 1994. Also in 2007, some 34.924 million people made overseas visits, a figure which is 2.5 times more than in 2002 and an annual average increase of 28.3 percent.

More cultural facilities have been set up to cope with the growing needs for diversified cultural activities. With life improved, people who used to watch TV at home and go to cinemas in the past now turn to visiting the tea houses, bars, cafe bars, reading rooms, and holiday resorts. In public places nearby communities, fitness facilities have been added for the public to do exercises. The same period also saw the mushrooming of many sports centers, such as stadiums, natatoriums, gyms and yoga houses. In the face of the sharp market competition, many adults, young students and even children attend knowledge enhancement training classes. According to a survey, the per-capita expenditure on entertainment and education in the rural areas was only 10.1 Yuan in 1981, but 305.7 Yuan in 2007, an annual average increase of 14 percent. The figure was 35.8 Yuan in 1981 in the urban areas, and 1,329.2 Yuan in 2007, an annual average increase of 14.9 percent

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III. Higher Purchasing Power of the Urban Residents

 

The past 60 years saw people in the urban and rural areas enjoy higher purchasing power.

In 2007, the per-capital disposal income of urban residents was 13,785.8 Yuan, or 39.1 times higher than in 1978 which was an annual average increase of 7.2 percent when price hikes are taken into consideration. The per-capita net income of rural residents was 4,140.4 Yuan in 2007, 30 times over the figure of 1978, or an annual average increase of 7.1 percent when price hikes are taken into consideration. Increased cash income of rural residents has stimulated their consumer demand to a great extent. In 2007, the net cash income of the rural people accounted for 85.2 percent of the total net income, as against 42.2 percent in 1978.

So far as the spending is concerned, the consumption level of the urban and rural residents averaged 7,081 Yuan in 2007, representing a 7.2 time increase over the 1978 figure, or an annual average increase of 7.5 percent. Of the total, the annual average consumption of rural residents was 3,265 Yuan, a 4.7-fold increase, up 5.9 percent annually on average, while that for urban residents was 11,855 Yuan, a 4.9-fold increase, up 6.3 percent annually on average.

So far as the total retail sales of consumer goods are concerned, the total retail sales of consumer goods reached 8,921 billion Yuan in 2007, an increase of 56.2 fold when compared to the 1978 figure, or an annual average increase of 15 percent.

So far as the balance of bank savings is concerned, the year-end balance of savings deposits of the urban and rural residents was 17,253.42 billion Yuan in 2007, or 818.3 times more than the figure of 1978, or an annual average increase of 26 percent. 

 

IV. Low-Income Urban Citizens Guaranteed in Life and Impoverished Rural Population Shrinking Substantially

 

In 1999, the State Council promulgated the Regulations on Guaranteeing Urban Residents' Minimum Standard of Living. A system has since been introduced to ensure a minimum standard of living for the urban residents. A total of 4.026 million urban residents received minimum life guarantee relief in 2000 and 22.72 million in 2007.  

Thanks to efforts made during the 30 years of reform and especially thanks to efforts made to implement State "8-7" program designed to lift 80 million people out of absolute poverty in the period of seven years from 1994 to 2000, and the Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010). At the end of 2007, the number of rural residents in absolute poverty was 14.79 million, a decrease of 230 million from the 1978 figure of 250 million in 1978, averaging 8 million who have got rid of poverty a year. And the impoverishment rate dropped by 29.1 percentage points from 30.7 percent in 1978 to 1.6 percent in 2007. Also in 2007, there were 28.41 million rural residents in the low income bracket, who have just enough to eat and wear. This figure represents a decline by 33.72 million from the 2000 figure of 62.13 million, or an annual average decrease of over 4 million. The proportion of low-income people in the rural areas had decreased to 3 percent from 6.7 percent in 2000. The number of rural residents who lived in poverty and thus were provided with a minimum standard of living increased from 3.002 million in 2000 to 35.66 million in 2007.

 

V. Building a Well-Off Society in an All-Round Way

 

In recent years, the National Bureau of Statistics monitored the progress made in building a well-off society in an all-round way in six aspects including economic development, social harmony, life quality, democracy and law, education, and resources and environment. The results show that between 2000 and 2007,China enjoys fairly rapid economic growth, the quality of people's life noticeably improves, construction of social undertakings accelerates, and efforts made to "Build up a Well-off Society in an All-Round Way" pays off dearly.

According to estimates by experts, the index of "Building up a Well-off Society in an All-Round Way" was 72.9 in 2007, up 13.6 percentage points from 2000, or an annual average increase of 1.93 percentage points. It is predictable that, by 2020, China will successfully build up a well-off society in an all-round way".