In 2006, China's gross domestic product reached US$2.6847 trillion and per capita GDP surpassed $2000 for the first time. It is expected that by 2020, per capita GDP will reach $3000 dollars. What does this mean?

Firstly, it means that the Chinese economy has entered a period of accelerated development. Per capita GDP grew by nearly 20% from 2005 to 2006. In Russia, per capita GDP grew 8% to reach $5129 in 2006. Luxemburg has the world's highest GDP per capita at $70,000.

When a country's per capita GDP reaches $2000 dollars, its economic prospects improve, people's confidence increases and investment momentum stays at a desirable level. For example, in South Korea, after its per capita GDP reached $2000, its economy witnessed 11 years of high growth, with an average growth rate of 8.8%.

International precedent indicates that the growth of GDP per capita from $2000 to $3000 dollars will be faster than that from $1000 to $2000. It took Japan six years to make the former leap and just three years to make the latter. It took China three years to grow its GDP per capita from $1000 to $2000.

Secondly, it means people will consume more and that the consumption structure will change. Large shopping malls appeared during this period in the US. People's demand for cars and houses will increase substantially. Such demand will decrease when per capita GDP reaches $13,000. The tourism industry will boom and people will have greater investment demands. Financial market will be more mature.

Thirdly, problems that appeared during the development period will become highly volatile. For example, Thailand maintained nearly 10 years of fast growth (average growth rate of 8%) between 1985 and 1995. Per capita GDP reached $2000 in 1993. Later, with the increase in salaries, consumption, over-investment in infrastructure, the stock market and a heated real estate market, bubbles appeared in the country. When the Asian financial crisis hit in 1997, Thailand's GDP fell rapidly. In 2001, its GDP per capita finally rose again to $2000, and in 2006, to $3000. All in all, it took 14 years for Thailand to grow its per capita GDP from $2000 to $3000 dollars. Experts believe China will experience some specific contradictions and problems, such as the gap between the rich and the poor. If this issue is not properly addressed, it will strangle the capacity for development.

Fourthly, it means that higher requirements are needed for various sectors of Chinese society. Enterprises and individuals will make higher demands of the economic environment, meaning that social credibility will be more important than ever. Economic development will have to conform to market rules and be more credible. The legal system will play an important role in maintaining the healthy development of the economy. The government needs to change its role. It should lift controls, play a market role, lift the market access system and improve the market management method. During this period, China should pay more attention to increasing people's real income so that they see a real benefit. China's economic growth has relied largely on export and foreign investment. If China's foreign exchange reserves depreciate in value, people's efforts to earn foreign currency will have been in vain.

Finally, the per capita GDP increase has to be seen objectively. If the cost of this $2000 has been high pollution, then the cost has been far higher than normal in terms of energy and resource consumption. If that $2000 has come from a more environmentally friendly industry, then per capita GDP really has increased.

Mao Yunshi, a professor from Zhongshan University, says that China's economic development is not very balanced. Only when most regions reach this level can we really say that China has entered a healthy and wealthy development period.

Editor: Yan