Machinery and Chinas Trade-Growth Nexus 743 Table 7. Ownership of major consumer durables (units per 100 households), 1981-96 Sources:zTN(1988,p.808);zIN(1990.p.306,321);zrz,(1997,p.75,78) a)1981b)l988(c)1996b)(a) (c)/(b) Urban areas .50 74.46 Rural areas Black-and-white Tv Urban areas 57. 25.53 2.27 Washing machines Urban areas 73.42 ural areas 3.03 Household refrigerators Urban areas 28.07 127.59 0.63 12.97 64.16 72.66 4.95 Rural areas 31.15 size. Thus, as can be seen from Table 7, the ownership of major consumer durables increased at exponential rates in urban households in the 1980s and in rural households in the 1990s. Especially in urban areas, by 1988, there were on average 44 colour TV sets, 73 washing machines and 28 refrigerators in every 100 households, up 73 times, ll times and 127 times, respectively, over 1981 The impact of the consumption revolution on economic growth is conceivable. The massive importation of foreign manufacturing equipment and know-how, which were in the main technologically advanced by Chinese standard, is just like a process of continuous technical progress. More important, the industries that produce these consumer durables are themselves characterized by fast productivity change and high income elasticity of demand. It is this appropriate match between mass production and mass consumption which, as is in line with the various bodies of writings on Fordism(see, e.g., Lo, 1995 for a review), has propelled the growth of the industries concerned. This is broadly captured by the structural change indicated in Table 6. The mechanical and electronics industry, which has been responsible for producing a major proportion of the new consumer durables, has increased its output share in Chinese industry by five percentage points during 1980-96 But this pattern of economic growth has its intrinsic contradictions. The consumer durables industries were characterized by serious import-dependence. They were prone to remain at the assembly stage of production, and their growth relied heavily on the continuous importation of industrial inputs and machinery. The phenomenal increase of output share of consumer goods in the electronics industry from 40 per cent in 1983 to 57 per cent in 1988(see Figure 1)clearly illustrates this situation. The reason is conceivable: most of these industrial inputs and machinery were capital intensive, high-tech products for which China did not have the international comparative advantage. The regulation of the market, therefore, would tend to favour imports rather than domestic manufacturing of the products 01998 John Wiley Sons, Ltd J.mnt.Dev.10,733-749(1998)size. Thus, as can be seen from Table 7, the ownership of major consumer durables increased at exponential rates in urban households in the 1980s and in rural households in the 1990s. Especially in urban areas, by 1988, there were on average 44 colour TV sets, 73 washing machines and 28 refrigerators in every 100 households, up 73 times, 11 times and 127 times, respectively, over 1981. The impact of the consumption revolution on economic growth is conceivable. The massive importation of foreign manufacturing equipment and know-how, which were in the main technologically advanced by Chinese standard, is just like a process of continuous technical progress. More important, the industries that produce these consumer durables are themselves characterized by fast productivity change and high income elasticity of demand. It is this appropriate match between mass production and mass consumption which, as is in line with the various bodies of writings on Fordism (see, e.g., Lo, 1995 for a review), has propelled the growth of the industries concerned. This is broadly captured by the structural change indicated in Table 6. The mechanical and electronics industry, which has been responsible for producing a major proportion of the new consumer durables, has increased its output share in Chinese industry by ®ve percentage points during 1980±96. But this pattern of economic growth has its intrinsic contradictions. The consumer durables industries were characterized by serious import-dependence. They were prone to remain at the assembly stage of production, and their growth relied heavily on the continuous importation of industrial inputs and machinery. The phenomenal increase of output share of consumer goods in the electronics industry from 40 per cent in 1983 to 57 per cent in 1988 (see Figure 1) clearly illustrates this situation. The reason is conceivable: most of these industrial inputs and machinery were capital intensive, high-tech products for which China did not have the international comparative advantage. The regulation of the market, therefore, would tend to favour imports rather than domestic manufacturing of the products. Table 7. Ownership of major consumer durables (units per 100 households), 1981±96. Sources: ZTN (1988, p. 808); ZTN (1990, pp. 306, 321); ZTZ, (1997, pp. 75, 78). (a) 1981 (b) 1988 (c) 1996 (b)/(a) (c)/(b) Colour TV Urban areas 0.59 43.93 93.50 74.46 2.13 Rural areas Ð 2.80 22.91 Ð 8.18 Black-and-white TV Urban areas 57.06 59.22 25.53 1.04 0.43 Rural areas Ð 28.64 65.06 Ð 2.27 Washing machines Urban areas 6.31 73.42 90.06 11.64 1.23 Rural areas Ð 6.79 20.54 Ð 3.03 Household refrigerators Urban areas 0.22 28.07 69.67 127.59 2.48 Rural areas Ð 0.63 7.27 Ð 11.54 Cassette recorders Urban areas 12.97 64.16 72.66 4.95 1.13 Rural areas Ð 13.04 31.15 Ð 2.39 #1998 John Wiley & Sons, Ltd. J. Int. Dev. 10, 733±749 (1998) Machinery and China's Trade±Growth Nexus 743