RENMINBI EXCHANGE RATES China has maintained an average annual GDP growth rate of 9.7 ercent from 1978 to 2006, and the rate has exceeded 10 percent since 2003. The key contributing factors are enhanced labor produc- ivity and total factor productivity. Such enhancements are at the core for Chinas increased competitiveness and are the most impor- tant contributing factors for the evolvement of Chinas macroeco- nomic policies, trade surplus, and foreign exchange reserves Labor Productivity Chinas labor productivity( total output per worker) has skyrocket- d from 1, 586 RMB per worker in 1990 to 5, 747 in 2005, resulting in an annual average growth rate of 8.96 percent(Table 2). This increase is largely due to rapid urbanization during which rural work ers have enhanced their human capital with better education and TABLE 2 LABOR PRODUCTIVITY. 1990-2005 Labor GDP Productivity Productivity rMb billion (RMB billion, (Annual based on fixed Employment based on fixed growth price in 1978) (Millions) price in 1978) rate, % 1990 1,02685 647.49 1585.9 654.91 1,712.09 1,830.9s 2373.75 3.36050 2,554 3578.62 2,76999 720.85 384267 738 3.000.00 730.25 4,108.18 3,272 2003 3.600.73 74432 4837.61 3.963.79 52.00 5271.00 2005 758.25 5.747.23 Average growth rate of labor productivity from 1990 to 2005 8.96 SOURCE: CEIO191 Renminbi Exchange Rates China has maintained an average annual GDP growth rate of 9.7 percent from 1978 to 2006, and the rate has exceeded 10 percent since 2003. The key contributing factors are enhanced labor produc￾tivity and total factor productivity. Such enhancements are at the core for China’s increased competitiveness and are the most impor￾tant contributing factors for the evolvement of China’s macroeco￾nomic policies, trade surplus, and foreign exchange reserves. Labor Productivity China’s labor productivity (total output per worker) has skyrocket￾ed from 1,586 RMB per worker in 1990 to 5,747 in 2005, resulting in an annual average growth rate of 8.96 percent (Table 2). This increase is largely due to rapid urbanization during which rural work￾ers have enhanced their human capital with better education and table 2 Labor Productivity, 1990–2005 Labor Labor GDP Productivity Productivity (RMB billion, (RMB billion, (Annual based on fixed Employment based on fixed growth price in 1978) (Millions) price in 1978) rate, %) 1990 1,026.85 647.49 1,585.90 — 1991 1,121.26 654.91 1,712.09 7.96 1995 1,830.98 680.65 2,690.05 9.94 1998 2,373.75 706.37 3,360.50 6.59 1999 2,554.92 713.94 3,578.62 6.49 2000 2,769.99 720.85 3,842.67 7.38 2001 3,000.00 730.25 4,108.18 6.91 2002 3,272.66 737.40 4,438.11 8.03 2003 3,600.73 744.32 4,837.61 9.00 2004 3,963.79 752.00 5,271.00 8.96 2005 4,357.84 758.25 5,747.23 9.03 Average growth rate of labor productivity from 1990 to 2005 8.96 Source: CEIC