Remarks by Chairman Ben S. Bernanke
At the Chinese Academy of Social Sciences, Beijing, China
December 15, 2006

The Chinese Economy: Progress and Challenges

The emergence of China as a global economic power is one of the most important developments of recent decades. For the past twenty years, the Chinese economy has achieved a growth rate averaging nearly 10 percent per year, resulting in a quintupling of output per person. In overall size, China's economy today ranks as the fourth largest in the world in terms of gross domestic product (GDP) at current exchange rates and the second largest when adjustments are made for the differences in the domestic purchasing power of national currencies. This strong economic performance has resulted in improved living standards for the Chinese people. By some estimates, about 200 million Chinese have been brought out of poverty since the reforms began in 1978.1 Moreover, by 2004 life expectancy at birth in China had reached seventy-one years, the infant mortality rate had fallen to 26 per 1,000 live births, and the literacy rate of those aged fifteen or above had reached 90 percent.2 These are remarkable accomplishments.

Nonetheless, by most measures China remains a