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Economy of China

This article is about the economy of People's Republic of China. For the economy of Republic of China, see Economy of Taiwan. For other uses, see Economy of China (disambiguation).

Economy of China
300px
Pudong in Shanghai in January 2014.
Currency Renminbi (RMB); Unit: Yuan (CNY)
Calendar year (1 January to 31 December)
Trade organisations
WTO, APEC, G-20 and others
Statistics
GDP $10.36 trillion (nominal; 2014 est.)[1]
$17.63 trillion (PPP; 2014.)[1]
GDP rank 2nd (nominal) / 1st (PPP) (2014)
GDP growth
11px9.5% (nominal; 2013)[2]
11px7.4% (real; 2014)[3]
GDP per capita
$8,211 (nominal; 82nd; 2014)
$13,992 (PPP; 89th; 2014)[1]
GDP by sector
agriculture: 9.2%, industry: 42.6%, services: 48.2% (2014)[4]
2.0% (2014)[5]
Population below poverty line
6.1% (2013)
0.469 (2014)
Labour force
787.6 million (1st; 2012)[6]
Labour force by occupation
agriculture: 36.7%, industry: 28.7%, services: 34.6% (2008 est.)
Unemployment 4.1% (Q2 2014)[7]
Average gross salary
$669 monthly (2012)[8]
Main industries
mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites
96th[9]
External
Exports $2.34 trillion (2014[10])
Export goods
Electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment. As well as almost every single category of industrial products.
Main export partners
23x15px United States 18.1%
Template:Country data Hong Kong 17.4%
Template:Country data Japan 6.8%
Template:Country data South Korea 4.1% (2013 est.)[11]
Imports $1.96 trillion (2014[10])
Import goods
Electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals
Main import partners
Template:Country data South Korea 9.4%
Template:Country data Japan 8.3%
23x15px Taiwan 8.0%
23x15px United States 7.8%
23x15px Australia 5.0%
23x15px Germany 4.8% (2013 est.)[12]
FDI stock
$1.344 trillion (2012)[13]
$863.2 billion (2013)
Public finances
22.15% of GDP (2012)[14]
Revenues $2.118 trillion (2013 est.)
Expenses $2.292 trillion (2013 est.)
AA- (Domestic)
AA- (Foreign)
AA- (T&C Assessment)
(Standard & Poor's)[15]
Foreign reserves
$3.73 trillion (1st; March 2015)[16]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.
File:Chi world GNI percapita.PNG
GNI per capita in 2013:
  China (6,560 $)
  Higher GNI per capita compared to China
  Lower GNI per capita compared to China

China's socialist market economy[17] is the world's second largest economy by nominal GDP,[1][18] and the world's largest economy by purchasing power parity according to the IMF;[19] the accuracy of the IMF's report on China's purchasing power parity has since been questioned.[20] It is the world's fastest-growing major economy, with growth rates averaging 10% over the past 30 years.[21] Due to historical and political facts of China's developing economy, China's public sector accounts for more share in the national economy with the burgeoning private sector.[22][23]

China is a global hub for manufacturing, and is the largest manufacturing economy in the world as well as the largest exporter of goods in the world.[24] China is also the world's fastest growing consumer market and second largest importer of goods.[25] China is a net importer of services products.[26]

China is the largest trading nation in the world and plays a vital role in international trade,[27] and has increasingly engaged in trade organizations and treaties in recent years. China became a member of the World Trade Organization in 2001.[28] China also has free trade agreements with several nations, including China–Australia Free Trade Agreement, China–South Korea Free Trade Agreement, ASEAN–China Free Trade Area, Switzerland and Pakistan.[29]

On a per capita income basis, China ranked 77th by nominal GDP and 89th by GDP (PPP) in 2014, according to the International Monetary Fund (IMF). The provinces in the coastal regions of China[30] tend to be more industrialized, while regions in the hinterland are less developed. As China's economic importance has grown, so has attention to the structure and health of the economy.[31][32]

Xi Jinping’s Chinese Dream is described as achieving the "Two 100s": the material goal of China becoming a "moderately well-off society" by 2021, the 100th anniversary of the Chinese Communist Party, and the modernization goal of China becoming a fully developed nation by 2049, the 100th anniversary of the founding of the People’s Republic.[33]

The internationalization of the Chinese economy continues to affect the standardized economic forecast officially launched in China by the Purchasing Managers Index in 2005. At the start of the 2010s, China became the sole Asian nation to have a GDP (PPP) above the $10-trillion mark (along with the United States and the European Union).[34] As China's economy grows, so does China's Renminbi, which undergoes the process needed for its internationalization.[35] The economy of China has recently initiated Asian Infrastructure Investment Bank in 2015.

China has been criticized by Western media for unfair trade practices, including artificial currency devaluation, intellectual property theft, protectionism, and local favoritism due to one-party oligopoly by the Chinese Communist Party with Socialism with Chinese characteristics.[36][37][38][39]

Regional economies

File:ChinaGDPdist.jpg
Distribution of GDP in mainland China in 2007

China's unequal transportation system—combined with important differences in the availability of natural and human resources and in industrial infrastructure—has produced significant variations in the regional economies of China.

Economic development has generally been more rapid in coastal provinces than in the interior, and there are large disparities in per capita income between regions. The three wealthiest regions are along the southeast coast, centred on the Pearl River Delta; along the east coast, centred on the Lower Yangtze River; and near the Bohai Gulf, in the BeijingTianjinLiaoning region. It is the rapid development of these areas that is expected to have the most significant effect on the Asian regional economy as a whole, and Chinese government policy is designed to remove the obstacles to accelerated growth in these wealthier regions.

See also: List of administrative regions by GDP, List of administrative regions by GDP per capita, and List of cities by GDP per capita.

GDP by Administrative Division

There are 31 administrative divisions in China. Below are the top administrative divisions in China ranked by GDP in 2014,[40] GDP was converted from CNY to USD using a FX rate of 6.1428 CNY/USD.[41]

List of Chinese provinces by 2014 GDP[40]
PPP: abbreviation of purchasing power parity;
Nominal:CNY 6.1428 per US dollar; PPP: CNY 3.6192 per Intl. dollar
(based on IMF WEO April 2015)[41]
provinces GDP(in millions) GDP per capita Mid-year
population
(in 1000)
Rank CN¥ Nominal
(US$)
PPP
(intl$.)
real
growth
(%)
Share
(%)
Rank CN¥ Nominal
(US$)
PPP
(intl$.)
Share
(%)
Mainland China 63,646,270 10,361,117 17,585,749 7.4 100 46,652 7,595 12,890 100 1,364,270
Guangdong 1 6,779,224 1,103,605 1,873,128 7.8 10.65 9 63,452 10,330 17,532 136 106,840
Jiangsu 2 6,508,832 1,059,587 1,798,417 8.7 10.23 4 81,874 13,329 22,622 175 79,498
Shandong 3 5,942,659 967,419 1,641,981 8.7 9.34 10 60,879 9,911 16,821 130 97,614
Zhejiang 4 4,015,350 653,668 1,109,458 7.6 6.31 5 72,967 11,878 20,161 156 55,030
Henan 5 3,493,938 568,786 965,390 8.9 5.49 24 34,808 5,667 9,618 75 100,377
Hebei 6 2,942,115 478,953 812,919 6.5 4.62 18 39,984 6,509 11,048 86 73,582
Liaoning 7 2,862,658 466,018 790,964 5.8 4.50 7 65,198 10,614 18,015 140 43,907
Sichuan 8 2,853,666 464,555 788,480 8.5 4.48 22 35,128 5,719 9,706 75 81,236
Hubei 9 2,736,704 445,514 756,163 9.7 4.30 13 47,124 7,671 13,020 101 58,075
Hunan 10 2,704,846 440,328 747,360 9.5 4.25 17 40,287 6,558 11,132 86 67,139

Hong Kong and Macau

In accordance with the One Country, Two Systems policy, the economies of the former British colony of Hong Kong, and Portuguese colony of Macau, are separate from the rest of China, and each other. Both Hong Kong and Macau are free to conduct and engage in economic negotiations with foreign countries, as well as participating as full members in various international economic organizations such as the World Customs Organization, the World Trade Organization and the Asia-Pacific Economic Cooperation forum, often under the names "Hong Kong, China" and "Macau, China".

See also: Closer Economic Partnership Arrangement (disambiguation) with Hong Kong and Macau.

Development

See also: List of administrative divisions by Human Development Index (HDI).
File:Graph of Major Developing Economies by Real GDP per capita at PPP 1990-2013.png
China and other major developing economies by GDP per capita at purchasing-power parity, 1990-2013. The rapid economic growth of China (red) is readily apparent.[42]

China, economically frail before 1978, has again become one of the world's major economic powers with the greatest potential. In the years since reform and opening-up in 1979 in particular, China's economy has developed at a remarkable rate.[citation needed]

China adopts the "five-year-plan" strategy for economic development. The Twelfth Five-Year Plan (2011–2015) is currently being implemented.[citation needed]

Like Japan and South Korea before it, for nearly 30 years China has indeed been growing, thrusting its citizens into prosperity and its goods across the world. Between 1978 and 2005, China's per capita GDP had grown from $153 to $1284, while its current account surplus had increased over twelve-fold between 1982 and 2004, from $5.7 billion to $71 billion. During this time, China had also become an industrial powerhouse, moving beyond initial successes in low-wage sectors like clothing and footwear to the increasingly sophisticated production of computers, pharmaceuticals, and automobiles.[citation needed]

Just how long the trajectory could continue, however, remained unclear. According to the 11th five-year plan, China needed to sustain an annual growth rate of 8% for the foreseeable future. Only with such levels of growth, the leadership argued, could China continue to develop its industrial prowess, raise its citizen's standard of living, and redress the inequalities that were cropping up across the country. Yet no country had ever before maintained the kind of growth that China was predicting. Moreover, China had to some extent already undergone the easier parts of development. In the 1980s, it had transformed its vast and inefficient agricultural sector, freeing its peasants from the confines of central planning and winning them to the cause of reform. In the 1990s, it had likewise started to restructure its stagnant industrial sector, wooing foreign investors for the first time. These policies had catalysed the country's phenomenal growth. Instead, China had to take what many regarded as the final step toward the market, liberalizing the banking sector and launching the beginnings of a real capital market. According to an article in Journal of the Asia Pacific Economy authored by Mete Feridun of University of Greenwich Business School and his co-author Abdul Jalil from Wuhan University in China, financial development leads to a reduction in the income inequality in China.[43] This process, however, would not be easy. As of 2004, China's state-owned enterprises were still only partially reorganized, and its banks were dealing with the burden of over $205 billion (1.7 trillion RMB) in non-performing loans, monies that had little chance of ever being repaid. The country had a floating exchange rate, and strict controls on both the current and capital accounts.[citation needed]

In mid-2014 China announced it was taking steps to boost the economy, which at the time was running at a rate 7.4% per annum, but was slowing. The measures included plans to build a multi-tier transport network, comprising railways, roads and airports, to create a new economic belt alongside the Yangtze River.[44]

In 2024 China will become the world’s largest economy, according to the global information provider IHS Inc. NYSE:IHS. "Over the next 10 years, China’s economy is expected to rebalance toward more rapid growth in consumption, which will help the structure of the domestic economy," Rajiv Biswas, IHS chief Asia economist, said in a statement by the company based in Englewood, Colo.[45]

Regional development

200px
The East Coast
(with existing development programmes)
"Rise of Central China"
"Revitalize Northeast China"
"China Western Development"

These strategies are aimed at the relatively poorer regions in China in an attempt to prevent widening inequalities:

Foreign investment abroad:

  • Go Global, to encourage its enterprises to invest overseas.

Key national projects

The "West-to-East Electricity Transmission", the "West-to-East Gas Transmission", and the "South–North Water Transfer Project" are the government's three key strategic projects, aimed at realigning overall of 12 billion cu m per year. Construction of the "South-to-North Water Diversion" project was officially launched on 27 December 2002 and completion of Phase I is scheduled for 2010; this will relieve serious water shortfall in northern China and realize a rational distribution of the water resources of the Yangtze, Yellow, Huaihe, and Haihe river valleys.

Macroeconomic trends

In January 1985, the State Council of China approved to establish a SNA (System of National Accounting), use the gross domestic product (GDP) to measure the national economy. China started the study of theoretical foundation, guiding, and accounting model etc., for establishing a new system of national economic accounting. In 1986, as the first citizen of the People's Republic of China to receive a Ph.D. in economics from an overseas country, Dr. Fengbo Zhang headed Chinese Macroeconomic Research – the key research project of the seventh Five-Year Plan of China, as well as completing and publishing the China GDP data by China's own research. The summary of the above has been included in the book Chinese Macroeconomic Structure and Policy (1988) Editor: Fengbo Zhang, collectively authored by the Research Center of the State Council of China. This is the first GDP data which was published by China. The State Council of China issued "The notice regarding implementation of System of National Accounting" in August 1992, the SNA system officially is introduced to China, replaced Soviet Union's MPS system, Western economic indicator GDP became China's most important economic indicator (WikiChina: China GDP, The First China GDP).

The table below shows the trend of the GDP of China at market prices estimated by the International Monetary Fund (IMF) with figures in millions (Chinese yuan).[46][47] See also.[48] For purchasing power parity comparisons, the US dollar is exchanged at 2.05 CNY only.

China's Historical GDP for 1978 - 2014[49]
(Revison based on the 3rd Economic Census 2013[50])
year GDP GDP per capita (GDPPC)
based on mid-year population
Reference index
GDP in billions real
growth
(%)
GDPPC real
growth
(%)
Mid-year
population
in millions
exchange rate
1 foreign currency to CNY
CNY USD PPP
(Int$)
CNY USD PPP
(Int$)
USD 1 Int$ 1
(PPP)
p2014 63,646.27 10,361.12 17,632.041 7.4 46,652 7,595 12,763 6.9 1,364.27 6.1428 3.6554
2013 58,801.88 9,494.59 16,185.93 7.7 43,320 6,995 11,924 7.2 1,357.38 6.1932 3.6329
2012 53,412.30 8,461.35 14,906.31 7.7 39,544 6,264 11,036 7.2 1,350.70 6.3125 3.5832
2011 48,412.35 7,495.56 13,810.40 9.5 36,018 5,577 10,275 9.0 1,344.13 6.4588 3.5055
2010 40,890.30 6,040.37 12,267.95 10.6 30,568 4,515 9,171 10.1 1,337.71 6.7695 3.3331
2009 34,562.92 5,059.72 10,716.19 9.2 25,963 3,801 8,050 8.7 1,331.26 6.8310 3.2253
2008 31,675.17 4,560.79 9,851.08 9.6 23,912 3,443 7,437 9.1 1,324.66 6.9451 3.2154
2007 26,801.94 3,524.72 8,837.65 14.2 20,337 2,675 6,706 13.6 1,317.89 7.6040 3.0327
2006 21,765.66 2,730.33 7,328.01 12.7 16,602 2,083 5,590 12.1 1,311.02 7.9718 2.9702
2005 18,589.58 2,269.32 6,403.58 11.3 14,259 1,741 4,912 10.7 1,303.72 8.1917 2.9030
2004 16,071.44 1,941.75 5,611.54 10.1 12,400 1,498 4,330 9.4 1,296.08 8.2768 2.8640
2003 13,656.46 1,649.93 4,965.99 10.0 10,600 1,281 3,854 9.3 1,288.40 8.2770 2.7500
2002 12,100.20 1,461.91 4,446.80 9.1 9,450 1,142 3,473 8.4 1,280.40 8.2770 2.7211
2001 11,027.04 1,332.25 4,042.32 8.3 8,670 1,047 3,178 7.5 1,271.85 8.2770 2.7279
2000 9,977.63 1,205.26 3,645.86 8.4 7,902 955 2,887 7.6 1,262.65 8.2784 2.7367
1999 9,018.77 1,089.45 3,221.10 7.6 7,199 870 2,571 6.7 1,252.74 8.2783 2.7999
1998 8,488.37 1,025.28 2,922.39 7.8 6,835 826 2,353 6.8 1,241.94 8.2791 2.9046
1997 7,942.95 958.16 2,659.26 9.2 6,457 779 2,162 8.1 1,230.08 8.2898 2.9869
1996 7,157.23 860.84 2,373.24 9.9 5,878 707 1,949 8.8 1,217.55 8.3142 3.0158
1995 6,112.98 732.01 2,123.08 11.0 5,074 608 1,762 9.8 1,204.86 8.3510 2.8793
1994 4,845.96 562.26 1,870.88 13.1 4,066 472 1,570 11.8 1,191.84 8.6187 2.5902
1993 3,552.43 616.53 1,614.23 13.9 3,015 523 1,370 12.6 1,178.44 5.7620 2.2007
1992 2,706.83 490.85 1,412.23 14.3 2,324 421 1,212 12.9 1,164.97 5.5146 1.9167
1991 2,189.55 411.31 1,194.06 9.3 1,903 357 1,038 7.8 1,150.78 5.3233 1.8337
1990 1,877.43 392.51 1,058.84 3.9 1,654 346 933 2.4 1,135.19 4.7832 1.7731
1989 1,709.03 453.91 1,000.78 4.2 1,528 406 895 2.6 1,118.65 3.7651 1.7077
1988 1,510.11 405.71 923.67 11.3 1,371 368 838 9.5 1,101.63 3.7221 1.6349
1987 1,210.22 325.14 801.63 11.7 1,116 300 739 9.9 1,084.04 3.7221 1.5097
1986 1,030.88 298.56 700.18 8.9 966 280 656 7.3 1,066.79 3.4528 1.4723
1985 903.99 307.84 630.44 13.5 860 293 600 11.9 1,051.04 2.9366 1.4339
1984 722.63 310.54 538.15 15.2 697 300 519 13.7 1,036.83 2.3270 1.3428
1983 597.56 302.45 450.99 10.8 584 296 441 9.2 1,023.31 1.9757 1.3250
1982 533.30 281.80 391.07 9.0 529 279 388 7.4 1,008.63 1.8925 1.3637
1981 489.81 287.36 337.36 5.1 493 289 339 3.8 993.89 1.7045 1.4519
1980 455.16 303.76 293.29 7.9 464 310 299 6.5 981.24 1.4984 1.5519
1979 406.77 261.59 7.6 420 270 6.1 969.01 1.5550
1978 365.02 216.81 11.6 382 227 10.2 956.17 1.6836