China Sector-by-Sector

By Matthew Yglesias

Of course one doesn’t need to travel to China to look up statistics on the Internet, but it’s always helpful to supplement one’s personal observations with statistically valid research. I noticed on the train ride from Shanghai to Yiwu that even in the relatively developed eastern portion of China the agricultural sector still seemed to consist overwhelmingly of farmers working tiny plots of land with little to no machinery and thought the country’s agricultural productivity must be frighteningly low. And if the numbers on the Economy of China Wikipedia page are to be believed, that seems to be the case.

Here’s the share of GDP coming from different sectors of the economy and the share of the labor force they employ:


This represents a very efficient use of the land in China, with the country reaping the world’s largest agricultural output out of less arable land than we have in the United States. But as you can see, it’s a very inefficient deployment of people relative to what you see in the other sectors. So insofar as global demand for Chinese industrial products continues to grow, the Chinese economy will be able to maintain substantial growth simply by shifting people off farms and into factories even without moving up the value chain.

How far that demand will actually hold up is, of course, open to some doubt. Lately thanks to the economic crisis that hasn’t been the case and China has maintained its growth largely through a major construction boom. Somewhat interestingly, Chinese officials seem to widely that they’ve been seeing a bubbly situation in real estate and are trying to tamp it down. That’s a contrast to the U.S. housing bubble whose existence was widely denied by policymakers, and over the next year or so we should see an interesting situation unfold that will shed some light on whether awareness of a bubble actually leads to an effective policy response.