Economics is included as an influencing area because the size and growth of economic activity both help determine the amount of travel and are affected by travel. On an individual basis, income and employment are strongly correlated with travel demand. We expect China's past dynamic economic growth to affect both vehicle ownership and travel demand across all modes of transportation. In this section, we highlight national and regional economic trends, as well as income inequality, labor-force participation, the automobile industry, and investments in transportation infrastructure.
Economic Growth and Regional Economic Shares
We define economic growth as change in GDP. China's GDP has increased by a factor of eight, from just about 1.9 trillion Chinese yuan (CNY) in 1990 to just shy of CNY 16.6 trillion in 2011, in constant 1990 yuan (International Monetary Fund [IMF], 2013).7 In 2011, this was the equivalent of USD 7.3 trillion in 2011 dollars (IMF, 2012). Annual percentage change in GDP has likewise been very high. With the exception of 1990, the annual percentage increase has not gone below 7.5 percent per year. Since 2001, the annualized GDP per capita growth rate has averaged 10.2 percent, slightly lower than the previous decade's average of 10.3 percent (IMF, 2012, 2013).
Much of this growth has taken place in the eastern region. Although all four regions have seen substantial growth during the study period, more than half of China's overall growth during this period took place in the eastern region, and most of that growth took place in the past decade.
As with population growth, the share of total GDP produced in the eastern region has been fairly steady: 48 percent in 1992 and 51 percent in 2011 (National Bureau of Statistics of China, 1996, 1998, 2002, 2007, 2012).
Income Inequality and Labor-Force Participation
We used a new measure, the Palma ratio, to look at income inequality. The Palma ratio is the ratio of the top 10 percent of a population's share of gross national income to the share of the poorest 40 percent.8 In theory, a country with perfectly equal income distribution would have a Palma ratio of 0.25 because each decile (10 percent) of the population would have one-tenth of the country's income. The higher the ratio, the greater the inequality. Income inequality has risen in China since 1990. The Palma ratio was 1.25 in 1990 because the top 10 percent of the population earned about 25 percent of the country's total income, while the bottom 40 percent earned only 20 percent. This ratio reached 2.15 in 2008, when the top 10 percent earned 30 percent of total income and the bottom 40 percent earned only 15 percent (World Bank, 2013).
Labor-force participation is defined as the ratio of working adults to all adults, with adult defined as people ages 15-64. In China, this ratio has declined from 85 percent in 1990 to 76 percent in 2011. The number of workers employed in rural areas has decreased (from 477 million in 1990 to 405 million in 2011), while the number of urban ones has increased (from 170 million in 1990 to 359 million in 2011). As of 2011, there were still more rural workers than urban ones, but the lines seem to be converging (analysis of figures from National Bureau of Statistics of China, 2012, Tables 3-3 and 4-2).
Domestic Vehicle Industry and Transportation Infrastructure Investments
Total vehicle production began increasing dramatically in the 2000s; in 1990, China produced 514,000 vehicles (of which only 35,000 were passenger cars). By 2011, China produced about 18.4 million vehicles, divided more evenly between passenger cars (10.1 million) and commercial vehicles (8.3 million). China became the world's largest manufacturer of both passenger cars and commercial vehicles in 2009 (Bureau of Transportation Statistics, 2014). The automobile industry has become increasingly important in terms of output per GDP. In 1990, only 30 vehicles were produced for every CNY 100 million of GDP; by 2011, that figure was about 120.
Finally, we looked at total government spending on transportation infrastructure as a percentage of GDP. We used the category "state-holding" as a proxy for government spending across all levels (central, provincial, and local)9 and used the figures for spending on railway transport, road transport, urban public transport, and air transport (we excluded water and pipeline transport because water transport would be mostly shipping, not passenger movement). These data show that, as a percentage of total GDP, government infrastructure spending has risen since 2004 (earlier data were not available) from 3.7 to 4.4 percent, peaking in 2009 and 2010 at 5.5 percent. These two years represent counterrecessional spending. The 5.5-percent increase in 2009 reflects both lower-than-average GDP growth and a 50-percent increase in total infrastructure spending (from
CNY 265 billion to CNY 703 billion in 1990 yuan) (National Bureau of Statistics of China, 2005-2012, Table 5-14).