Adaptation assessment and analysis of economic growth since the market reform in China

Ren, Chongqiang; Zhai, Guofang; Zhou, Shutian; Li, Shasha; Chen, Wei Working Paper Adaptation assessment and analysis of economic growth since the market reform in China Economics Discussion Papers, No. 2017-24 Provided in Cooperation with: Kiel Institute for the World Economy – Leibniz Center for Research on Global Economic Challenges Suggested Citation: Ren, Chongqiang; Zhai, Guofang; Zhou, Shutian; Li, Shasha; Chen, Wei (2017) : Adaptation assessment and analysis of economic growth since the market reform in China, Economics Discussion Papers, No. 2017-24, Kiel Institute for the World Economy (IfW), Kiel This Version is available at: https://hdl.handle.net/10419/158566 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/4.0/ Received May 3, 2015 Accepted as Economics Discussion Paper May 4, 2015 Published May 9, 2015 © Author(s) 2017. Licensed under the Creative Commons License - Attribution 4.0 International (CC BY 4.0) Discussion Paper No. 2017-24 | May 09, 2017 | http://www.economics-ejournal.org/economics/discussionpapers/2017-24 Adaptation assessment and analysis of economic growth since the market reform in China Chongqiang Ren, Guofang Zhai, Shutian Zhou, Shasha Li, and Wei Chen Abstract China has experienced extraordinary institutional and socio-economic changes after 1978, and its deepening reform to market-oriented economy since 1990s was also recognized as one the most significant factors to drive China’s rise in the contemporary world. Although many aspects of China’s market reform have been extensively analysed in the literature, specific attention on the adaptation of economic growth to this reform has been relatively ignored. To fill this gap, this research adopts the extenics assessment method to assess this adaptation and applies the membership function coordination degree model to analyse the sustainability of such adaptation. In conclusion, China has demonstrated a significantly enhanced adaptation capacity at the expense of coordination, which requires to be further emphasised in its economic growth adaptation strategies. (Published in Special Issue The Sustainable Development Goals—Assessing interlinkages, trade-offs and synergies for policy design) JEL A11 O11 P21 P41 Keywords Economic adaptation; extenics assessment method; membership function coordination degree model; market economy reform Authors Chongqiang Ren, School of Geographic and Oceanographic Sciences, Nanjing University, Nanjing, China, [email protected] Guofang Zhai, School of Architecture and Urban Planning, Nanjing University, Nanjing, China Shutian Zhou, School of Architecture and Urban Planning, Nanjing University, Nanjing, China Shasha Li, School of Geographic and Oceanographic Sciences, Nanjing University, Nanjing, China Wei Chen, School of Geographic and Oceanographic Sciences, Nanjing University, Nanjing, China Citation Chongqiang Ren, Guofang Zhai, Shutian Zhou, Shasha Li, and Wei Chen (2017). Adaptation assessment and analysis of economic growth since the market reform in China. Economics Discussion Papers, No 2017-24, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2017-24 1 Introduction China’s rapid and sustained economic growth offers several implications for the global economy (Lo D & Li G, 2011). As the economic growth rate gradually declined by 10.45%, 9.30%, 7.65%, 7.7%, 7.4% and 6.9% from 2010 to 2015 respectively, some scholars have promptly investigated into the continuity of the country’s past rapid and sustainable growth and the adaptation to its recent economic slowdown (Rajah R et al., 2013; Prime P B, 2012). The government considered the current decelerating economy as a ‘new norm’ and a rationalised adjustment process that suited the country’s basic conditions. In this process, China has been attempting to adjust and optimise its economic structure, to adopt highly reasonable economic operations, to upgrade its economic quality and achieve a highly sustainable economic growth. As the economic reform and openness policy in 1978 transformed China from a planned economy into a semi-market one, and the following economic growth at a relatively high and steady speed attributed to the institutional dimension of its market-oriented economic reform since 1992, China’s economy has switched to a different path that involves improving the overall economic efficiency, advancing the extant technologies, promoting the percentage of private sectors, stimulating the investments and financial assets, and providing the safety nets and welfare programs often by the government (Rajah R et al., 2013; Prime P B, 2012). During this period, a closer link to the world economy was established after China’s accession to the World Trade Organization (WTO) in 2001. Although the reform has resulted in an impressive economic progress, some daunting challenges have also been introduced (Prime P B, 2012), such as the Asian financial crisis in 1997, the global financial crisis in 2008, the SARS outbreak in 2003 and the Wenchuan earthquake in 2008. In addition, China has not yet devised any solution to escape the middle income trap (Woo W T & Zhang W, 2010).The country has also been suffering from the development inequalities in the western and eastern regions, the exacerbated rural-urban divergence, the increasing deficits in its energy sources supply, and the rising pollution issues (Li V & Lang G, 2010). Nevertheless, China maintains an overall high economic growth rate, which has been ascribed by some scholars to its favourable economic adaptation (Chakrabarti A, 2014; Watkiss P, Hunt A, Blyth W et al., 2015). Most researchers have emphasised the importance of market economy in stimulating rapid economic growth. However, only few empirical studies have assessed the adaptation of 2 China’s economic growth. To fill this gap, this research aims to quantitatively analyse that how has the Chinese economy adapted to changes since the market economy reform. This paper is organised as follows. Section 2 presents the theoretical lens of this study by reviewing the literature of the adaptation and economic adaptation. Section 3 then outlines the methodology. Section 4 identifies the data and discusses its application. After presenting the analysis results in Section 5, Section 6 discusses the findings and draws a conclusion. 2 Theoretical Considerations 2.1. Adaptation Derived from evolutionary ecology, the concept of adaptation has been viewed from diverse perspectives of both natural and social sciences (Smit B & Wandel J, 2006). In the natural sciences, adaptation refers to both the current state of being adapted and to the dynamic evolutionary process, which contributes to the fitness and survival of an organisms or a system to maintain and reproduce coping with environmental changes. By contrast, social science defines adaptation as the ability to develop or survive amidst the modifications and transformations in institutions, behaviour, approaches and technologies. Adaptation is found to involve a long-term and constant process of learning, experimentation and change, which influence the vulnerability of a system (Birkmann J et al., 2013). This concept, mainly dealing with the conservation and protection of the current systems and institutional settings, may also encompass factors such as adaptive capacity, adaptation options, adaptation actions and adaptation strategies, which are available to those with uncertain vulnerability (Birkmann J, 2011). Adaptation has therefore become an important part of evaluation in resource management, climate change, economic development, risk management, planning, food security, livelihood security and sustainable development (Smit B & Wandel J, 2006). Adaptation studies often ask, ‘adaptation to what?’, ‘who or what adapts?’, ‘how does adaptation occur?’ and ‘have the objectives been achieved?’ (Fünfgeld H & McEvoy D, 2011; Preston B L & Stafford–Smith M, 2009). 2.2. Economic Adaptation 3 Economic adaptation is the extension of the adaptation concept in economics. From the perspective of uncertainty, MacKinnon et al. (2009) defined economic adaptation as an alternative method for economic actors to deal with the changes in their environment. Apart from reflecting complexity, diversity and variability, this concept implies an action or scheme for solving economic problems. Scholars from various fields (i.e., Steward J H, 1972; Denevan W M, 1983; O'Brien M J & Holland T D, 1992; Winterhalder B, 1980; IPCC, 1995; 2001; 2007; 2014) defined economic adaptation as the self-adaptation of the system to both internal and external environmental changes during the process of sustainable economic development. This concept is manifested as the capacity to adapt and shows a certain function correlation with economic vulnerability (Adger W N, 2006; Birkmann J et al., 2010; Smit B & Wandel J, 2006; Turner B L et al., 2003; Smit B et al., 1999). Economic adaptation also represents an effective decision-making institution that adjusts, manages and plans sustainable economic development (Adger W N et al., 2009a; Adger W N et al., 2009a; 2009b; Bertolini L, 2007). Accordingly, the implications of economic adaptation are reflected in three aspects. Firstly, the economic adaptation is a systematic concept that considered as a basic motivation to alter or adjust the structures and approaches of how the systems function in sustainable economic development whilst continuously interacting with their internal and external environments to improve their adaptation capacity (Turner B L et al., 2003; Bertolini L, 2007; Blaikie P et al., 2014). Secondly, economic adaptation is found to reduce economic vulnerability or the perception and prediction of economic exposure (Smit B & Wandel J, 2006). Thirdly, as an adaptation capacity, economic adaptation can be manifested as a strategy, institution or policy for management. Therefore, this standardised act and choice of value principles can be effectively used in economic decision making and planning. 2.3. Research Objectives Economic adaptation offers several benefits, including reduced economic vulnerability, improved sustainable economic capacity and long-term sustainable economic growth (Smit B & Wandel J, 2006; Luers A L, 2005; Hassink R, 2010). Economic adaptation has been empirically analysed in least developed countries under the guidance of National Adaptation Programmes supported by the United Nations Framework Convention on Climate Change (van Ruijven B J et al., 2014). A number of studies have investigated the effects of economic adaptation on climate change, adaptive agriculture, adaptive 4 infrastructure, adaptive urbanisation programs and micro insurance regimes (Mundial B, 2008). However, assessing economic adaptation and ensuring the sustainability and effectiveness of this concept remain unaddressed. Given the lack of quantitative empirical evidence, researchers have not yet reached a consensus on whether China’s economy can adapt to the changes brought by the market reform to achieve a sustainable growth. In fact, only a few studies have quantitatively evaluated the macro-economy from the adaptation perspective. This paper empirically evaluates the adaptation of China’s economic growth using the extenics assessment method to explore the effectiveness of various adaptation strategies and actions in ensuring sustainable economic growth and reducing economic vulnerability. 3 Method 3.1. Extenics Assessment Method Introduced by Cai in 1983, the extenics theory adopts formalised models to evaluate the applicability of extenics as well as the laws and methods of innovation. Extenics theory describes three elements, which are the matter, character and corresponding character value. These elements are assumed to solve contradictory and incompatible problems qualitatively and quantitatively (Cai W, 1983; 1994; 1999). The extenics assessment method generally involves six steps, namely, (1) identifying the classical domain, (2) identifying the joint domain, (3) identifying the matter-element to be evaluated, (4) identifying the weight of the evaluation index, (5) identifying the degree of correlation, and (6) identifying the category and eigenvalues of the grade variables of the evaluation object. First step: Identifying the classical domain. Suppose 1 1 1 2, 2 2 , ( , , ) (1) ... ... , j j j j j jjj n jm jn U c a b a b c R U C V c a b                   where j V is the classical domain of j U , which in turn indicates the range value in evaluation index set C that is chosen according to grade j U . Second step: Identifying the joint domain. 5 Suppose 1 1 1 2, 2 2 , ( , , ) (2) ... ... , U U U U U U n Um Un U c a b a b c R U C V c a b                 where U V is the joint domain that serves as the range value in evaluation index set C that is chosen according to grade U. Third step: Identifying the matter-element to be evaluated. Suppose 1 2 2 (3) ... ... ik i i i i ik ik N c v c v R c v               where N is the evaluation object, ik v is the value of ik c that is associated with N, 1, 2, , k p   and p is the number of the secondary index. Fourth step: Identifying the weight of the evaluation index. Suppose 1 0 ( 1,2, , ); 1 (4) n i i i W i n W       where i W denotes the index weight of i . Fifth step: Identifying the degree of correlation. The degree of correlation of the second-class index is computed as follows: ( , ) ( , ) ( , ) ( , ) ( ) 0.05 (5) ( , ) ( , ) ik j i i kj kj ik U ik j i i j ik ik kj ik kj ik j i i kj kj i i kj kj v V x a b v V v V k c v a orv b vVx a b b a                  where ( ) j ik k c is the degree of correlation of grade j in second-class index K in order within the first-class index. The correlation coefficient is computed as follows: ( ) ( , ) (6) 2 2 ji ji ji ji ik j ik a b b a v V v       and ( ) ( , ) (7) 2 2 Ui Ui Ui Ui ik U ik a b b a v V v       After multiplying the weight vector of the second-class index by the correlation coefficient matrix of various grades of the second-class index, the correlation coefficient matrix of the first-class index is computed as follows: 6 1 1 2 1 1 1 2 2 2 2 1 2 1 2 1 ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ( )) , , , (8) ( ) ( ) ( ) i i m i i i m i i j i i i ip ip ip ip k c k c k c k c k c k c k c k c w w w k c k c k c                              After multiplying the weight vector of the first-class index by the fist-class correlation coefficient, the correlation coefficient matrix of the evaluation object is expressed as follows: 1 1 2 1 1 1 2 2 2 2 1 2 1 2 1 ( ) ( ) ( ) ( ) ( ) ( ) ( ) , , , (9) ( ) ( ) ( ) m m n n n n k c k c k c k c k c k c k N w w w k c k c k c                            Sixth step: Identifying the category and eigenvalues of the grade variables of the evaluation object. Evaluation grade: If   01,2, , ( ) max ( ) j j j m k N k N   , then the evaluation object N belongs to grade j . Evaluation coefficient: Suppose ' 1 * ' 1 ( ) (10) ( ) m j j m j j j k N j k N       where ' ( ) min ( ) ( ) max ( ) min ( ) j j j j j j j j k N k N k N k N k N   and * j is the grading coefficient. The extenics method has been applied in the literature as an assessment tool (i.e., Zheng G et al., 2009; Zhang Y et al., 2014; Wang M et al., 2015). As this method not only qualitatively analyses the state of being of the system during the market-oriented process but also quantitatively analyses the adaptation capacity of the system and the changes that occur at different stages, this research adopts the extenics method to assess economic growth adaptation for the first time. 3.2. Membership Function Coordination Degree Model Coordination refers to the effective restriction and regulation of system behaviour by organizing different ingredient working together, whilst development refers to the direction of the system movement. As the integration of the coordination and development of a system, the concept of coordinative development presents an important means and direction in sustainable development. The coordination degree model is 7 mainly adopted in the quantitative analysis of coordinative development. In economic research and analysis, the derivative models such as the membership function coordination degree model, coefficient of dispersion minimisation coordination degree model, Gini coefficient coordination degree model and data envelopment coordination degree model are widely adopted. This research utilizes the membership function coordination degree model to analyse the assessment results of economic adaptation. This model includes the static coordination degree model and dynamic coordination degree model. The former model estimates the grade of coordination and determines whether the systems are in coordination. The widely-adopted coordination degree classification criteria can be divided into nine levels (see Table 1). The latter model determines whether a state of development occurs amongst systems from the time series perspective (Ding L et al., 2015; Yang Q, et al., 2014; Li Y et al., 2012). A state of coordination and development amongst systems indicates the sustainable development of adaptation capacity in economic growth, whilst the lack of coordination and development implies that economic adaptation derives from sustainable development. These systems must be adjusted for them to adopt further rationalised adaptation strategies or actions in the future. The static coordination degree model is expressed in its basic form as follows:     min ( / ),( ( / ) ( , ) (11) max ( / ),( ( / ) s u i j u j i c i j u i j u j i  where ( , ) s c i j denotes the static coordination degree between systems i and j , that is, 0 ( , ) 1 s c i j   . A larger ( , ) s c i j implies the better coordination of the system. ( / ) u i j denotes the degree of coordination, which is calculated based on the discrepancy between the actual level of development of the system and the coordination value. Such degree is calculated as follows: 2 2 ( / ) exp ( ) / u i j x x s           , where x is the actual value of the system, x  is the coordination value between systems i and j that is generally expressed by a regression coefficient and 2 s is the mean square error of system i . The dynamic coordination degree model is expressed as follows in its t basic form: 1 0 1 ( ) ( ) (12) T d s K c t C t k T      8 GDP(C10) Ratio of tertiary industry to GDP(C11) 0.9173 0.0827 0.0299 14 Ratio of expenditure on consumer to GDP(C12) 0.8679 0.1321 0.0477 8 Urbanization rate(C13) 0.8509 0.1491 0.0539 4 Ratio of expenditure on education to GDP(C14) 0.9159 0.0841 0.0304 13 Ratio of total health expenditure to GDP(C15) 0.9470 0.0530 0.0191 20 Coverage rate of community service facilities(C16) 0.9364 0.0636 0.0230 18 Ratio of unemployment insurance contributors total employed persons(C17) 0.8871 0.1129 0.0408 9 Ratio of statistics on basic pension insurance to total population(C18) 0.6271 0.3729 0.1347 1 Expenditure on relief to natural disasters per 10000 person(C19) 0.7987 0.2013 0.0727 3 Elasticity ratio of energy production(C20) 0.9740 0.0260 0.0094 25 Efficiency of energy conversion(C21) 0.9716 0.0284 0.0102 24 Ratio of investment completed in the treatment of industrial pollution to secondary industry(C22) 0.9364 0.0636 0.0230 19 Discharge standard-meeting rate of industrial wastewaters(C23) 0.9182 0.0818 0.0295 15 Discharge standard-meeting rate of industrial SO2(C24) 0.9341 0.0659 0.0238 17 Percentage of industrial solid wastes produced(C25) 0.9240 0.0760 0.0275 16 Table 5: Results of weight of system capacity Capacity weight Rank Economic capacity(EC) 0.5020 1 Social capacity(SC) 0.3746 2 Nature-resources-environment capacity(NREC) 0.1234 3 5.2. Assessment of Economic Adaptation The three system capacities and economic adaptation were assessed using the extenics method. Table 6 and Figure 1 present the calculation results. Economic adaptation gradually moved upwards between 1993 and 2009, showed a prominent inflection point in 2010 and then gradually moved upwards again afterwards. 15 In other words, economic adaptation underwent ‘non-adaptation’ from 1993 to 2003, ‘basic adaptation’ from 2004 to 2010 and ‘adaptation in advance’ from 2011 to 2014. Similarly, the three system capacities showed an upward trend from 1993 to 2014 (see Table 6 and Figure 1). However, unlike economic adaptation and the nature–resources–environment capacity, both economic and social capacities showed a prominent inflection point in 2012 instead of 2008. These capacities also gradually moved upwards before reaching their prominent inflection points. Table 6: Results of economic adaption Year Economic capacity (EC) Social capacity (SC) Nature-resourcesenvironment capacity (NREC) Economic adaptation Rating level 1993 1.3377 1.2158 1.0877 1.2516 1994 1.3772 1.214 1.113 1.2729 1995 1.3773 1.2177 1.1887 1.284 1996 1.3801 1.2279 1.1995 1.2885 1997 1.4064 1.2347 1.1554 1.2961 1998 1.4208 1.2558 1.1995 1.318 1999 1.4986 1.2858 1.185 1.3596 2000 1.5272 1.2969 1.1595 1.3773 2001 1.5496 1.3246 1.3354 1.4257 2002 1.6133 1.3395 1.3405 1.4611 2003 1.6822 1.3433 1.3059 1.4848 Non-adaptation 2004 1.7065 1.3536 1.4084 1.5101 2005 1.7326 1.3592 1.456 1.5167 2006 1.7964 1.3661 1.5529 1.5387 2007 1.9272 1.3699 1.652 1.5677 2008 2.089 1.3934 2.6299 1.6503 2009 2.4021 1.3848 2.2052 1.7495 2010 2.6541 1.4222 2.5176 2.3822 Basical adaptation 2011 2.7905 1.4203 2.2669 2.5641 2012 2.8618 2.1845 2.5779 2.6181 2013 2.8542 2.2451 2.4305 2.6017 2014 2.8547 2.2932 2.542 2.6198 Adaptation in advance 16 Figure 1: The trend and stage of economic adaptation 5.3. Analysis of the Coordination Degree to Economic Adaptation Coordinating the three system capacities can promote sustainable economic growth. However, the static coordination degree model reveals the lack of coordination amongst these capacities. The static coordination degree decreased between 1993 and 2007, during which period, serious non-coordinations were illustrated in EC–SC, SC–NREC and EC–SC–NREC. At the same time, SC–NREC gradually declined from basic coordination to serious non-coordination. The coordination degrees of all capacities showed a fluctuating trend between 2008 and 2012. A very small static coordination degree was observed in serious non-coordination since 2013. Table 7: Static coordination degree EC-SC EC-NREC SCNREC EC-SCNREC Year degree level degree level degree level degree level 1993 0.1887 0.7591 0.1501 0.3660 1994 0.1902 0.7241 0.1494 0.3546 1995 0.1871 0.7595 0.1429 0.3632 1996 0.1787 0.7626 0.1356 0.3590 1997 0.1738 0.7079 0.1327 0.3381 1998 0.1580 0.7135 Basically coordination 0.1180 0.3298 1999 0.1407 0.6115 Mildly coordination 0.1013 0.2845 2000 0.1353 Serious noncoordinatio n 0.5669 Mildly 0.0962 Serious noncoordination 0.2661 Serious noncoordination 17 non-coordinati on 2001 0.1193 0.6413 Mildly coordination 0.0826 0.2811 2002 0.1162 0.5594 Mildly non-coordinati on 0.0762 0.2506 2003 0.1223 0.4521 0.0739 0.2161 2004 0.1193 0.4870 Medium non-coordinati on 0.0724 0.2262 2005 0.1197 0.4898 0.0722 0.2272 2006 0.1266 0.4884 0.0756 0.2302 2007 0.1568 0.3998 0.0834 0.2133 2008 0.2006 0.0854 0.6764 Mildly coordination 0.3208 2009 0.5661 Mildly non-coordi nation 0.3400 0.2798 Mildly noncoordination 0.3953 2010 0.7625 Basically coordinatio n 0.3895 0.7437 Basically coordination 0.6319 Mildly coordination 2011 0.3888 0.0492 0.2794 0.2391 2012 0.0081 0.1488 0.0016 0.0528 2013 0.0041 0.0714 0.0004 0.0253 2014 0.0025 Serious non-coordi nation 0.1279 Serious non-coordinati on 0.0004 Serious noncoordination 0.0436 Serious noncoordination Figure 2: The trend and level of static coordination degree 18 Table 8. Dynamic coordination degree EC-SC ECNREC SCNREC EC-SCNRECYear degree State*degree State degree State degree State 1993 0.1887 - 0.7591 - 0.1501 - 0.3660 - 1994 0.1895 ↑ 0.7416 ↓ 0.1498 ↓ 0.3603 ↓ 1995 0.1887 ↓ 0.7476 ↑ 0.1475 ↓ 0.3613 ↑ 1996 0.1862 ↓ 0.7513 ↑ 0.1445 ↓ 0.3607 ↓ 1997 0.1837 ↓ 0.7426 ↓ 0.1421 ↓ 0.3562 ↓ 1998 0.1794 ↓ 0.7378 ↓ 0.1381 ↓ 0.3518 ↓ 1999 0.1739 ↓ 0.7197 ↓ 0.1329 ↓ 0.3422 ↓ 2000 0.1691 ↓ 0.7006 ↓ 0.1283 ↓ 0.3327 ↓ 2001 0.1635 ↓ 0.6940 ↓ 0.1232 ↓ 0.3269 ↓ 2002 0.1588 ↓ 0.6806 ↓ 0.1185 ↓ 0.3193 ↓ 2003 0.1555 ↓ 0.6598 ↓ 0.1144 ↓ 0.3099 ↓ 2004 0.1525 ↓ 0.6454 ↓ 0.1109 ↓ 0.3029 ↓ 2005 0.1499 ↓ 0.6334 ↓ 0.1080 ↓ 0.2971 ↓ 2006 0.1483 ↓ 0.6231 ↓ 0.1057 ↓ 0.2923 ↓ 2007 0.1488 ↑ 0.6082 ↓ 0.1042 ↓ 0.2871 ↓ 2008 0.1521 ↑ 0.5755 ↓0.13 99 ↑ 0.2892 ↑ 2009 0.1764 ↑ 0.5617 ↓ 0.1482 ↑ 0.2954 ↑ 2010 0.2090 ↑ 0.5521 ↓ 0.1812 ↑ 0.3141 ↑ 2011 0.2185 ↑ 0.5256 ↓ 0.1864 ↑ 0.3102 ↓ 2012 0.2079 ↓ 0.5068 ↓ 0.1772 ↓ 0.2973 ↓ 2013 0.1982 ↓ 0.4861 ↓ 0.1688 ↓ 0.2843 ↓ 2014 0.18 93 ↓ 0.4698 ↓ 0.1611 ↓ 0.2734 ↓ *↑ is the state of development. ↓ is the state of decline. Figure 3: The trend of dynamic coordination degree Table 8 and Figure 3 illustate the results for the dynamic coordination degree. EC–SC–NREC, EC–SC and SC–NREC showed almost the same dynamic coordination 19 degree, which gradually moved downwards before experiencing the state of decline between 1993 and 2008. Afterwards, the dynamic coordination degree gradually moved upwards and underwent a state of development between 2009 and 2011. Since 2012, the dynamic coordination degree gradually moved downwards and underwent a state of decline. EC–NREC obviously underwent a state of decline in 1995 and 1996. 6 Discussion and Conclusions Using the extenics assessment method and the membership function coordination degree model, this paper assesses and analyses the coordination of China’s economic adaptation since its market economic reform. The rapid economic growth of China may be attributed to the country’s favourable economic adaptation capacity. China underwent several market-oriented economic reforms since 1992, during which the country faced a weak social foundation, low resource use efficiency and serious environmental pollution despite experiencing considerable economic growth. China joined the WTO in 2001 and took advantage of the organisation’s inclusive policies. China also began to construct an effective market system and implement policy measures to promote its economic adaptation. China experienced a rapid economic growth despite facing challenges in its continuous marketization process, which suggests that the constant changes in the internal and external environments of China have altered or adjusted the structure and adaptation of the system to prevent economic exposure. The challenges that face the Chinese economy may be perceived as important strategic opportunities (Summers L, 2012; Wan W P & Yiu D W, 2009). China has taken advantage of such opportunities by enhancing its adaptation capacity, and the assessment results all demonstrate significant enhancements in the adaptation capacity of China (Lo D & Li G, 2011). The lack of coordination can result in a declining and unsustainable economic growth. The downward pressure on China’s economic growth after 2010 can be ascribed to the country’s declining economic adaptation capacity. However, the assessment results showed that China had a higher economic adaptation capacity during this period. Analysing the coordination degree revealed some risks in the coordination and sustainability of China’s economic development, which echoed the findings of Allington N F B et al. (2012). China has been faxing serious challenges in its way to sustainable growth. The country’s economic adaptation capacity is also in a state of non-coordination, indicating that the systems have been operating independently during 20 the economic growth process. Such lacks of coordination further compromises the overall operation of these systems, which contradicts the coordination principle of sustainable economic growth. China’s economic adaptation capacity is in a state of decline when viewed from the time series and coordination perspectives, which indicates that the Chinese economy has deviated from the path towards sustainable growth. These findings clearly demonstrate the value orientation of adaptation strategies. China must switch to a different path to achieve sustainable economic growth. The country must also adopt the necessary measures to improve the coordination of its adaptation capacity. China has demonstrated favourable economic adaptation capacity since the market economy reform. China may achieve sustainable growth as long as the economy exercises such reform and improves coordination to avoid the inherent risks in the implementation of rationalised adaptation strategies (Norman J & Kraft, 2012). However, this study only signifies a first step towards assessing economic growth adaptation. Future work could emphasize on diagnosing and assessing the vulnerability of economic growth, which are also combined with economic sensitivity during the market reform process. Acknowledgments This work is supported by Gansu Social Science Planning Office under Grant 13YD030 ; Soft Science of Gansu Science and Technology Support Program under Grant 1504ZKCA092-1. Author Contributions Guofang Zhai and Chongqiang Ren developed the original idea and contributed to the conceptual framework, Guofang Zhai and Chongqiang Ren wrote the paper and were responsible for data colletion, process and analysis. Shasha Li, Wei Chen and Shutian Zhou provided improving suggestions. All authors have read and approved the final manuscript. 21 References Adger W N, Dessai S, Goulden M, et al.（2009b）. Are there social limits to adaptation to climate change?. Climatic change, 93(3-4): 335-354. 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