The Immiserizing Growth During the Period of China’s Cultural Revolution

Abstract

While China's official data reported positive economic growth during the Cultural Revolution period, numerous reports and documents consistently indicated deterioration in living conditions for the same period. This study applies the theory of immiserizing growth in a command economy to explain the paradox. By using a proxy for the market price at the end of the period and using a survey sample to reveal residents' preference, we conduct an empirical test and conclude that the Cultural Revolution period is indeed an immiserizing growth case.

Keywords:

• China
• growth
• Mao
• immiserizing

Notes

1 State Council of China, “White Paper of Government “china’s Rural Poverty Assistance Development”, January 2001. http://www.scio.gov.cn/zfbps/ndhf/2001/Document/307929/307929.htm

2 We include housing in consumer goods because it is a major factor for Chinese residents to assess their material well-being, although in macroeconomics, housing is conventionally included in “investment” rather than “consumption.”

3 The converse is not true. That is, a measured fall in GDP by using the end period price is a necessary but not sufficient condition for the welfare deterioration.

4 Retrieved http://www.360doc.com/content/11/0423/15/1133289_111769486.shtml

5 The interpolation uses the official exchange rate of 1972, which is considered roughly acceptable for the market rate, as one data point; and, the foreign exchange cost of 1975 as the other data point. That is, between 2.24 and 2.96 in the range of the three years.

6 We use the GDP price index rather than Consumer price index to derive the constant dollar, because the GDP price index includes adequately the public goods.

7 The list of these observations (in Chinese) is available on request.

8 See Hanley & Lippman-Hand, 1983 for detailed discussion.