The
People's Republic of China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
has an upper middle income
developing mixed socialist market economy
The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is a market economy with the predominance of public ownership and state-owned enterprises. Th ...
that incorporates
economic planning
Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources b ...
through
industrial policies
An industrial policy (IP) or industrial strategy of a country is its official strategic effort to encourage the development and growth of all or part of the economy, often focused on all or part of the manufacturing sector. The government takes m ...
and strategic
five-year plans Five-year plan may refer to:
Nation plans
*Five-year plans of the Soviet Union, a series of nationwide centralized economic plans in the Soviet Union
*Five-Year Plans of Argentina
*Five-Year Plans of Bhutan, a series of national economic developm ...
.
[
—Xu, Chenggang. "The Fundamental Institutions of China’s Reforms and Development." ]Journal of Economic Literature
The ''Journal of Economic Literature'' is a peer-reviewed academic journal, published by the American Economic Association, that surveys the academic literature in economics. It was established in 1963 as the ''Journal of Economic Abstracts'', , vol. 49, no. 4, American Economic Association
The American Economic Association (AEA) is a learned society in the field of economics. It publishes several peer-reviewed journals acknowledged in business and academia. There are some 23,000 members.
History and Constitution
The AEA was esta ...
, 2011, pp. 1076–151, .
—Nee, Victor, and Sonja Opper. "Political Capital in a Market Economy." Social Forces, vol. 88, no. 5, Oxford University Press
Oxford University Press (OUP) is the university press of the University of Oxford. It is the largest university press in the world, and its printing history dates back to the 1480s. Having been officially granted the legal right to print books ...
, 2010, pp. 2105–32, .
—Shue Tuck Wong & Sun Sheng Han (1998) Whither China's Market Economy? The Case of Lijin Zhen, Geographical Review
The ''Geographical Review'' is a quarterly peer-reviewed academic journal published by Routledge on behalf of the American Geographical Society. It covers all aspects of geography. The editor-in-chief is David H. Kaplan (Kent State University).
...
, 88:1, 29-46,
—Gregory C. Chow (2005) The Role of Planning in China's Market Economy, Journal of Chinese Economic and Business Studies, 3:3, 193-203,
—HUA, HUANG. "The Market Economy in China." Security Dialogue, vol. 24, no. 2, Sage Publications
SAGE Publishing, formerly SAGE Publications, is an American independent publishing company founded in 1965 in New York by Sara Miller McCune and now based in Newbury Park, California.
It publishes more than 1,000 journals, more than 800 books ...
, Ltd., 1993, pp. 175–79, .
—Chow, Gregory C. "Development of a More Market-Oriented Economy in China." Science, vol. 235, no. 4786, American Association for the Advancement of Science
The American Association for the Advancement of Science (AAAS) is an American international non-profit organization with the stated goals of promoting cooperation among scientists, defending scientific freedom, encouraging scientific respons ...
, 1987, pp. 295–99, . Historically, China was one of the
world's foremost economic powers for most of the
two millennia from
the 1st until the 19th century.
Many analysts assert that the
Chinese economic model is one of the main examples of
state capitalism
State capitalism is an economic system in which the state undertakes business and commercial (i.e. for-profit) economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital a ...
in the 21st century. The economy consists of
state-owned enterprises
A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the governmen ...
(SOEs) and mixed-ownership enterprises, as well as a large domestic private sector and openness to foreign businesses in a system. China is one of the
fastest-growing major economies since the
1978 economic reforms. It has the world's second largest economy when measured by
nominal GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often ...
, totaling around US$17.7 trillion (114.4 trillion yuan) in 2021, and the
world's largest economy since 2016 when measured by
Purchasing Power Parity (PPP).
[GDP figures exclude ]Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
, and the special administrative regions
The special administrative regions (SAR) of the People's Republic of China are one of the provincial-level administrative divisions of the People's Republic of China directly under the control of its Central People's Government (State Co ...
of Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
and Macau
Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a pop ...
. It has been the
second largest by nominal GDP since 2010, with data relying on fluctuating market exchange rates. It recently overtook the
economy of the European Union
The economy of the European Union is the joint economy of the member states of the European Union (EU). It is the third largest economy in the world in nominal terms, after the United States and China, and the third one in purchasing power p ...
in 2021. A forecast states that China will become the world's largest economy in nominal GDP by 2028.
China account for 18.79% share of global economy in 2022 in PPP terms
China is the world's
largest manufacturing economy and
exporter of goods. It is also the world's
fastest-growing consumer market and
second-largest importer of goods. China is also the world's largest consumer of numerous commodities, and accounts for about half of global consumption of metals. China is a net importer of services products. It is the largest trading nation in the world and plays a prominent role in
international trade
International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy)
In most countries, such trade represents a significant ...
. China is the largest recipient of
foreign direct investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
in the world as of 2020, receiving inflows of $163billion. It has the second largest
outward foreign direct investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
, at US$136.91 billion for 2019 alone, following Japan at US$226.65billion for the same period. As of 2018, China was first in the world in total number of billionaires and second in millionairesthere were 658 Chinese billionaires
and 3.5 million millionaires.
According to the 2019 Global Wealth Report by
Credit Suisse Group
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
, China surpassed the US in the wealth of the top ten percent of the world's population. China has the world's largest
foreign-exchange reserves
Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence ...
worth $3.1trillion,
but if the foreign assets of China's state-owned commercial banks are included, the value of China's reserves rises to nearly $4trillion.
With 778 million workers, the Chinese
labor force
The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic regio ...
was the world's largest as of 2020. It ranks 28th on the
Global Competitiveness Report
The ''Global Competitiveness Report'' (GCR) is a yearly report published by the World Economic Forum. Since 2004, the ''Global Competitiveness Report'' ranks countries based on the Global Competitiveness Index, developed by Xavier Sala-i-Martin an ...
. Per the
Global Innovation Index
The Global Innovation Index is an annual ranking of countries by their capacity for, and success in, innovation, published by the World Intellectual Property Organization. It was started in 2007 by INSEAD and ''World Business'', a British maga ...
in 2022, China was ranked 11th, 3rd in Asia & Oceania region and 2nd for countries with a population of over 100 million. It is the only middle-income economy and the only
newly industrialized economy in the top 30.
China ranks No.1 globally in patents, utility models, trademarks, industrial designs, and creative goods exports. It also has two (
Shenzhen-Hong Kong-Guangzhou and
Beijing
}
Beijing ( ; ; ), alternatively romanized as Peking ( ), is the capital of the People's Republic of China. It is the center of power and development of the country. Beijing is the world's most populous national capital city, with over 21 ...
in the 2nd and 3rd spots respectively) of the global top5 science and technology clusters, which is more than any other country.
As of March 2022, China has over 500 million
5G users and 1.45 million base stations installed.
China has four of the world's top ten most competitive
financial centers and three of the world's ten
largest stock exchanges (both by
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
and by
trade volume In capital markets, volume, or trading volume, is the amount (total number) of a security (or a given set of securities, or an entire market) that was traded during a given period of time. In the context of a single stock trading on a stock exch ...
).
China's economy is both a contributor to rising global greenhouse gas (GHG) emissions causing climate change and severely affected by its adverse impacts.
Although China is not the main source of historical cumulative emissions, it today accounts for 27 percent of annual global carbon dioxide and a third of the world’s greenhouse gases emissions. Reducing greenhouse gas emissions in its relatively carbon-intensive industrial economy will create economic transition risks but also open new opportunities for development. At the same time, large parts of China’s population and economic infrastructure are heavily exposed to climate risks.
History
![Economic growth of China](https://upload.wikimedia.org/wikipedia/commons/f/f1/Economic_growth_of_China.jpg)
Historically, China was one of the
world's foremost economic powers for most of the
two millennia from
the 1st until the 19th century.
[ Accessed 2007. See the "Table 1.3. Levels of Chinese and European GDP Per Capita, 1–1700 AD" in page 29, Chinese GDP Per Capita was 450 and European GDP Per Capital was 422 in 960AD. Chinese GDP Per Capita was 600 while European was 576. During this time, Chinese per capita income rose by about a third.] China accounted for around one-quarter of the global GDP until the late 1700s and approximately one-third of the global GDP in 1820 as the Industrial Revolution was beginning in Great Britain. China's GDP in 1820 was six times as large as Britain's, the largest economy in Europeand almost twenty times the GDP of the nascent United States.
The government began its
economic reforms in 1978 under the leadership of
Deng Xiaoping
Deng Xiaoping (22 August 1904 – 19 February 1997) was a Chinese revolutionary leader, military commander and statesman who served as the paramount leader of the People's Republic of China (PRC) from December 1978 to November 1989. After CC ...
.
As a result,
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
has the world's
fastest-growing major economy, with
growth rates averaging 10% over 30 years.
Since the
12th National Congress of the
Chinese Communist Party
The Chinese Communist Party (CCP), officially the Communist Party of China (CPC), is the founding and One-party state, sole ruling party of the China, People's Republic of China (PRC). Under the leadership of Mao Zedong, the CCP emerged victoriou ...
in 1982, the economy has been described as a "
socialist market economy with Chinese Characteristics".
Wealth in China
![China's_real_GDP_growth_by_decade](https://upload.wikimedia.org/wikipedia/commons/3/36/China%27s_real_GDP_growth_by_decade.svg)
China has had the world's largest middle class population since 2015, and the middle class grew to a size of 400 million by 2018 and is projected to reach 1.2 billion by 2027, making up one fourth of the world total. As of 2018, China was first in the world in total number of billionaires and second in millionairesthere were 658 Chinese billionaires
and 3.5 million millionaires.
In 2019, China overtook the US as the home to the highest number of rich people in the world, according to the global wealth report by
Credit Suisse
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
. In other words, as of 2019, a hundred million Chinese are in the top ten percent of the wealthiest individuals in the worldthose who have a net personal wealth of at least $110,000. In 2020, China has the world's highest number of billionaires, which is more than the US and India combined, and as of March 2021, the number of billionaires in China reach 1,058 with the combined wealth of US$4.5trillion.
According to the
Hurun
Hurun () is a town of Jingxi, Guangxi, China.
See also
* List of township-level divisions of Guangxi
References
Towns of Guangxi
Jingxi, Guangxi
Towns and townships in Baise
{{Guangxi-geo-stub ...
Global Rich List 2021, China is home to six of the world's top ten cities (
Beijing
}
Beijing ( ; ; ), alternatively romanized as Peking ( ), is the capital of the People's Republic of China. It is the center of power and development of the country. Beijing is the world's most populous national capital city, with over 21 ...
,
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
,
Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
,
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
,
Hangzhou
Hangzhou ( or , ; , , Standard Mandarin pronunciation: ), also romanized as Hangchow, is the capital and most populous city of Zhejiang, China. It is located in the northwestern part of the province, sitting at the head of Hangzhou Bay, whi ...
and
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and alternatively romanized as Kwongchow or Kwangchow, is the capital and largest city of Guangdong province in southern China. Located on the Pearl River about north-northwest of Hong Kon ...
in the 1st, 2nd, 4th, 5th, 8th and 9th spots, respectively) by the highest number of billionaires, which is more than any other country.
As of January 2021, China had 85 female billionaires, two-thirds of the global total.
According to the IMF, on a
per capita income
Per capita income (PCI) or total income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population.
Per capita i ...
basis, China ranked
59th by GDP (nominal) and
73rd by GDP (PPP) in 2020.
China ranked 3rd by
GDP per capita (nominal) and 5th by
GDP per capita (PPP) among countries with a population of over 100 million.
State-owned enterprises
State-owned enterprises accounted for over 60% of China's market capitalization in 2019 and generated 40% of China's GDP of US$15.98trillion dollars (101.36 trillion yuan) in 2020, with domestic and foreign private businesses and investment accounting for the remaining 60%. As of the end of 2019, the total assets of all China's SOEs, including those operating in the financial sector, reached US$58.97trillion In 2015. Ninety-one (91) of these SOEs belong to the 2020 Fortune Global 500 companies.
Regional economies for China
![ChinaGDPdist](https://upload.wikimedia.org/wikipedia/commons/6/64/ChinaGDPdist.jpg)
China's unequal
transportation system, combined with important differences in the availability of
natural
Nature, in the broadest sense, is the physical world or universe. "Nature" can refer to the phenomena of the physical world, and also to life in general. The study of nature is a large, if not the only, part of science. Although humans are p ...
and
human resources
Human resources (HR) is the set of people who make up the workforce of an organization, business sector, industry, or economy. A narrower concept is human capital, the knowledge and skills which the individuals command. Similar terms include m ...
and in industrial
infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
, has produced significant variations in the regional economies of China.
Economic development
In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and o ...
has generally been more rapid in
coastal provinces than in the interior and there are large disparities in
per capita income
Per capita income (PCI) or total income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population.
Per capita i ...
between regions. The three wealthiest regions are the
Yangtze River Delta
The Yangtze Delta or Yangtze River Delta (YRD, or simply ) is a triangle-shaped megalopolis generally comprising the Wu Chinese-speaking areas of Shanghai, southern Jiangsu and northern Zhejiang. The area lies in the heart of the Jiangnan reg ...
in East China; the
Pearl River Delta
The Pearl River Delta Metropolitan Region (PRD; ; pt, Delta do Rio das Pérolas (DRP)) is the low-lying area surrounding the Pearl River estuary, where the Pearl River flows into the South China Sea. Referred to as the Guangdong-Hong Kong-Mac ...
in South China; and
Jingjinji
The Jingjinji Metropolitan Region or Jing-Jin-Ji (JJJ),, sometimes rendered in historical context as King–Sin–Peh, also known as Beijing-Tianjin-Hebei (BJ-TJ-HB), Peking–Tientsin–Hopeh and the Capital Economic Zone, is the National Cap ...
region in North China. 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. By 2035, China's four cities (
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
,
Beijing
}
Beijing ( ; ; ), alternatively romanized as Peking ( ), is the capital of the People's Republic of China. It is the center of power and development of the country. Beijing is the world's most populous national capital city, with over 21 ...
,
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and alternatively romanized as Kwongchow or Kwangchow, is the capital and largest city of Guangdong province in southern China. Located on the Pearl River about north-northwest of Hong Kon ...
and
Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
) are projected to be among the global top ten largest cities by
nominal GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often ...
according to a report by Oxford Economics.
GDP by administrative division
Hong Kong and Macau
In accordance with the
One country, two systems
"One country, two systems" is a constitutional principle of the People's Republic of China (PRC) describing the governance of the special administrative regions of Hong Kong and Macau.
The constitutional principle was formulated in the early ...
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
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
and
Macau
Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a pop ...
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 Customs Organization (WCO) is an intergovernmental organization headquartered in Brussels, Belgium. The WCO works on customs-related matters including the development of international conventions, instruments, and tools on topics suc ...
, the
World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
and the
Asia-Pacific Economic Cooperation
The Asia-Pacific Economic Cooperation (APEC ) is an inter-governmental forum for 21 member economy, economies in the Pacific Rim that promotes free trade throughout the Asia-Pacific region. forum, often under the names "Hong Kong, China" and "Macau, China".
Development
![Graph of Major Developing Economies by Real GDP per capita at PPP 1990-2013](https://upload.wikimedia.org/wikipedia/commons/6/6c/Graph_of_Major_Developing_Economies_by_Real_GDP_per_capita_at_PPP_1990-2013.png)
The
economic reforms
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the p ...
implemented in 1978 helped to propel China into the ranks of the world's major economic powers. The economic development of
Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
has caused the city to be referred to as the world's next
Silicon Valley
Silicon Valley is a region in Northern California that serves as a global center for high technology and innovation. Located in the southern part of the San Francisco Bay Area, it corresponds roughly to the geographical areas San Mateo County ...
. The
provinces
A province is almost always an administrative division within a country or state. The term derives from the ancient Roman ''provincia'', which was the major territorial and administrative unit of the Roman Empire's territorial possessions outsi ...
in the coastal
regions of China
{{Cat main, List of regions of China
Geography of China
Administrative divisions of China
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a populati ...
tend to be more
industrialized
Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econom ...
while regions in the hinterland are less
developed.
![China_vs_World_by_Nominal_GDP_per_capita_in_2020_new](https://upload.wikimedia.org/wikipedia/commons/6/61/China_vs_World_by_Nominal_GDP_per_capita_in_2020_new.png)
To guide economic development, the Chinese central government adopts "
five-year plans Five-year plan may refer to:
Nation plans
*Five-year plans of the Soviet Union, a series of nationwide centralized economic plans in the Soviet Union
*Five-Year Plans of Argentina
*Five-Year Plans of Bhutan, a series of national economic developm ...
" that detail its economic priorities and essential policies. The
Fourteenth Five-Year Plan (2021–2025) is currently being implemented, placing an emphasis on consumption-driven growth and technological self-sufficiency while China transitions from being an upper middle-income economy to a high-income economy. The
public sector
The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...
plays a central role in China's economy. This development is also in line with the planning goals of the Chinese central government to achieve the "
Two Centenaries
The Two Centenaries () is a political slogan that refers to two 100-year anniversaries and a stated set of economic and political goals advanced by General Secretary Xi Jinping following the 18th National Congress of the Chinese Communist Party ...
''",'' namely the material goal of China becoming a "
moderately prosperous society in all respects" by 2021 and the modernization goal of China becoming a "
fully developed nation" by 2049, the 100th anniversary of the founding of the People's Republic.
![China's share of global export](https://upload.wikimedia.org/wikipedia/commons/f/fd/China%27s_share_of_global_export.svg)
Like Japan and South Korea before it, China’s economy has grown rapidly, raising the income levels and living standards of its citizens while producing goods that are consumed globally. Between 1981 and 2019, the percentage of the population living in
extreme poverty
Extreme poverty, deep poverty, abject poverty, absolute poverty, destitution, or penury, is the most severe type of poverty, defined by the United Nations (UN) as "a condition characterized by severe deprivation of basic human needs, includi ...
decreased from 88.1% to 0.2%.
Its
current account surplus increased by a factor of 53 between 1982 and 2015, from $5.7billion to $304billion. During this time, China also became an industrial powerhouse, moving beyond initial successes in low-wage sectors like
clothing
Clothing (also known as clothes, apparel, and attire) are items worn on the body. Typically, clothing is made of fabrics or textiles, but over time it has included garments made from animal skin and other thin sheets of materials and natural ...
and
footwear
Footwear refers to garments worn on the feet, which typically serves the purpose of protection against adversities of the environment such as wear from ground textures and temperature. Footwear in the manner of shoes therefore primarily serves th ...
to the increasingly sophisticated production of
computers
A computer is a machine that can be programmed to carry out sequences of arithmetic or logical operations (computation) automatically. Modern digital electronic computers can perform generic sets of operations known as programs. These programs ...
,
pharmaceuticals
A medication (also called medicament, medicine, pharmaceutical drug, medicinal drug or simply drug) is a drug used to diagnose, cure, treat, or prevent disease. Drug therapy (pharmacotherapy) is an important part of the medical field and rel ...
, and
automobiles
A car or automobile is a motor vehicle with wheels. Most definitions of ''cars'' say that they run primarily on roads, seat one to eight people, have four wheels, and mainly transport people instead of goods.
The year 1886 is regarded as ...
. China's factories generated $3.7trillion real manufacturing value added, more than the US, South Korea, Germany and the UK combined. China's manufacturing sector benefits from the world's largest domestic market, immense manufacturing scale, and highly developed manufacturing supply chains.
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
A transport network, or transportation network, is a network or graph in geographic space, describing an infrastructure that permits and constrains movement or flow.
Examples include but are not limited to road networks, railways, air routes, ...
, comprising
railways
Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a pre ...
,
road
A road is a linear way for the conveyance of traffic that mostly has an improved surface for use by vehicles (motorized and non-motorized) and pedestrians. Unlike streets, the main function of roads is transportation.
There are many types of ...
s and
airport
An airport is an aerodrome with extended facilities, mostly for commercial air transport. Airports usually consists of a landing area, which comprises an aerially accessible open space including at least one operationally active surface ...
s, to create a new economic belt alongside the
Yangtze
The Yangtze or Yangzi ( or ; ) is the longest river in Asia, the third-longest in the world, and the longest in the world to flow entirely within one country. It rises at Jari Hill in the Tanggula Mountains (Tibetan Plateau) and flows ...
River.
In 2021, it was reported that China's GDP could continue to grow on an average of 5.9% annually until 2025, according to the Centre for Economic and Business Research, which also predicts that China will overtake the US economy by the end of the decade.
Disputes over economic data
There exists disputes over reliability of official economic data. Foreign and some Chinese sources have claimed that official Chinese government statistics overstate China's economic growth.
However, several Western academics and institutions have stated that China's economic growth is higher than indicated by official figures.
Others, such as the
Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is the research and analysis division of the Economist Group, providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, ...
, state that while there's evidence China's GDP data is "smoothed", they believe that China's nominal and real GDP data are broadly accurate.
Overestimating
Chinese provinces and cities have long been suspected of cooking their numbers, with the focus on local government officials, whose performance are often assessed based on how well their respective economies have performed. In recent years, China claimed growth numbers have come under increased scrutiny, with both domestic and international observers alleging the government has been inflating its economic output.
A survey by ''
The Wall Street Journal
''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' of 64 select economists found that 96% of respondents think China's GDP estimates don't "accurately reflect the state of the Chinese economy." However, more than half the economists in the survey estimated that China's annual growth was somewhere in the 5% to 7% range, which represents robust growth.
Chinese premier
Li Keqiang
Li Keqiang (born 1 July 1955) is a Chinese politician who is the outgoing premier of China. An economist by profession, Li is head of China's executive branch as well as one of the leading figures behind China's Financial and Economic Affai ...
has said he is far from confident in the country's GDP estimates, calling them "man-made" and unreliable, according to a leaked document from 2007 obtained by WikiLeaks. He said government data releases, especially the GDP numbers, should be used "for reference only".
Analysts like
Wilbur Ross
Wilbur Louis Ross Jr. (born November 28, 1937) is an American businessman who served as the 39th United States Secretary of Commerce from 2017 to 2021. A member of the Republican Party, Ross was previously chairman and chief executive officer ...
and Donald Straszheim believe China's recent economic growth has been overstated, and estimate a growth rate at around 4% or less. According to Chang-Tai Hsieh, an economist at the
University of Chicago Booth School of Business
The University of Chicago Booth School of Business (Chicago Booth or Booth) is the graduate business school of the University of Chicago. Founded in 1898, Chicago Booth is the second-oldest business school in the U.S. and is associated with 10 N ...
and research associate at the
National Bureau of Economic Research
The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic c ...
, Michael Zheng Song, an economics professor at the
Chinese University of Hong Kong
The Chinese University of Hong Kong (CUHK) is a public research university in Ma Liu Shui, Hong Kong, formally established in 1963 by a charter granted by the Legislative Council of Hong Kong. It is the territory's second-oldest university an ...
, and coauthors, China's economy was smaller than what the Chinese government stated in 2016. In their research paper, published by the
Brookings Institution
The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in ec ...
, they adjusted the historical GDP time series using
value-added tax
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end ...
data, which they said are "highly resistant to fraud and tampering".
They found that China's economic growth may have been overstated by 1.7 percent each year between 2008 and 2016, meaning that the government may have been overstating the size of the Chinese economy by 12-16 percent in 2016.
Issues with underestimating
Several Western academics and institutions have supported the claim that China's economy is likely to be underestimated.
A paper by the US-based
National Bureau of Economic Research
The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic c ...
claimed that China's economic growth may be higher than what is reported by official statistics. An article by Hunter Clarka, Maxim Pinkovskiya and
Xavier Sala-i-Martin
Xavier X. Sala i Martín (also ''Sala-i-Martin'' in English) is a Spanish-born Catalan-American economist and professor of economics at Columbia University. Sala i Martin is one of the leading economists in the field of economic growth.http://w ...
published by the
Elsevier Science Direct
ScienceDirect is a website which provides access to a large bibliographic database of scientific and medical publications of the Dutch publisher Elsevier. It hosts over 18 million pieces of content from more than 4,000 academic journals and 30,0 ...
in 2018 employs an innovative method of satellite-recorded nighttime lights, which the authors claim to be a best-unbiased predictor of the economic growth in Chinese cities. The results suggest that the Chinese economic growth rate is higher than the official reported data.
The
Li Keqiang index is an alternative measurement of Chinese economic performance that uses three variables Li preferred.
Satellite measurements of
light pollution
Light pollution is the presence of unwanted, inappropriate, or excessive use of artificial Visible spectrum, lighting. In a descriptive sense, the term ''light pollution'' refers to the effects of any poorly implemented lighting, during the day ...
are used by some analysts to model Chinese economic growth and suggest recent growth rate numbers in Chinese official data are more reliable although are likely to be smoothed.
According to an article by the
Federal Reserve Bank of St. Louis
The Federal Reserve Bank of St. Louis is one of 12 regional Reserve Banks that, along with the Board of Governors in Washington, D.C., make up the United States' central bank. Missouri is the only state to have two main Federal Reserve Banks (Ka ...
, China's official statistics are of a high quality compared to other developing, middle-income and low-income countries. In 2016, China was at the 83rd percentile of middle and low-income countries, up from the 38th percentile in 2004.
A study by the
Federal Reserve Bank of San Francisco
The Federal Reserve Bank of San Francisco (informally referred to as the San Francisco Fed) is the federal bank for the twelfth district in the United States. The twelfth district is made up of nine western states—Alaska, Arizona, California, ...
found that China's official GDP statistics are "significantly and positively correlated" with externally verifiable measures of economic activity such as import and export data from China's trade partners, suggesting that China's economic growth was no slower than the official figures indicated.
The study by Daniel Rosen and Beibei Bao, published by the
Center for Strategic and International Studies
The Center for Strategic and International Studies (CSIS) is an American think tank based in Washington, D.C. CSIS was founded as the Center for Strategic and International Studies of Georgetown University in 1962. The center conducts polic ...
in 2015, showed that GDP in 2008 was actually 13-16 percent bigger than the official data, while 2013 GDP was accurately at $10.5trillion rather than the official figure at $9.5trillion.
According to a research conducted by
Arvind Subramanian
Arvind Subramanian is an Indian economist and the former Chief Economic Advisor to the Government of India, having served from 16 October 2014 to 20 June 2018. Subramanian is currently a Senior Fellow at the Watson Institute for International ...
, a former economist at the
International Money Fund (IMF) and a senior fellow at the
Peterson Institute for International Economics
The Peterson Institute for International Economics (PIIE), known until 2006 as the Institute for International Economics (IIE), is an American think tank based in Washington, D.C. It was founded by C. Fred Bergsten in 1981 and has been led by ...
, the size of the Chinese economy by
Purchasing Power Parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
in 2010 was about $14.8 trillion rather than an official estimate at $10.1 trillion by IMF, meaning that China's GDP was underestimated by 47 percent.
Regional development
These strategies are aimed at the relatively poorer regions in China in an attempt to prevent widening inequalities:
*
China Western Development
China Western Development (), also Great Western Development Strategy or the Open Up the West Program, is a policy adopted for the Western China.
The policy covers 6 provinces (Gansu, Guizhou, Qinghai, Shaanxi, Sichuan and Yunnan), 5 autonomo ...
, designed to increase the economic situation of the western provinces through investment and development of natural resources.
*
Revitalize Northeast China
Revitalize The Old Northeast Industrial Bases (), also Revitalize Northeast China or Northeast China Revitalization, is a policy adopted by the People's Republic of China to rejuvenate Industrial sector, industrial bases in Northeast China. The ...
, to rejuvenate the industrial bases in
Northeast China
Northeast China or Northeastern China () is a geographical region of China, which is often referred to as "Manchuria" or "Inner Manchuria" by surrounding countries and the West. It usually corresponds specifically to the three provinces east of t ...
. It covers the three provinces of
Heilongjiang
Heilongjiang () formerly romanized as Heilungkiang, is a province in northeast China. The standard one-character abbreviation for the province is (). It was formerly romanized as "Heilungkiang". It is the northernmost and easternmost province ...
,
Jilin
Jilin (; alternately romanized as Kirin or Chilin) is one of the three provinces of Northeast China. Its capital and largest city is Changchun. Jilin borders North Korea (Rasŏn, North Hamgyong, Ryanggang and Chagang) and Russia (Prim ...
, and
Liaoning
Liaoning () is a coastal province in Northeast China that is the smallest, southernmost, and most populous province in the region. With its capital at Shenyang, it is located on the northern shore of the Yellow Sea, and is the northernmost ...
, as well as the five eastern
prefectures
A prefecture (from the Latin ''Praefectura'') is an administrative jurisdiction traditionally governed by an appointed prefect. This can be a regional or local government subdivision in various countries, or a subdivision in certain international ...
of
Inner Mongolia
Inner Mongolia, officially the Inner Mongolia Autonomous Region, is an autonomous region of the People's Republic of China. Its border includes most of the length of China's border with the country of Mongolia. Inner Mongolia also accounts for a ...
.
*
Rise of Central China Plan, to accelerate the development of its central regions. It covers six provinces:
Shanxi
Shanxi (; ; formerly romanised as Shansi) is a landlocked province of the People's Republic of China and is part of the North China region. The capital and largest city of the province is Taiyuan, while its next most populated prefecture-lev ...
,
Henan
Henan (; or ; ; alternatively Honan) is a landlocked province of China, in the central part of the country. Henan is often referred to as Zhongyuan or Zhongzhou (), which literally means "central plain" or "midland", although the name is al ...
,
Anhui
Anhui , (; formerly romanized as Anhwei) is a landlocked province of the People's Republic of China, part of the East China region. Its provincial capital and largest city is Hefei. The province is located across the basins of the Yangtze River ...
,
Hubei
Hubei (; ; alternately Hupeh) is a landlocked province of the People's Republic of China, and is part of the Central China region. The name of the province means "north of the lake", referring to its position north of Dongting Lake. The prov ...
,
Hunan
Hunan (, ; ) is a landlocked province of the People's Republic of China, part of the South Central China region. Located in the middle reaches of the Yangtze watershed, it borders the province-level divisions of Hubei to the north, Jiangxi to ...
, and
Jiangxi
Jiangxi (; ; formerly romanized as Kiangsi or Chianghsi) is a landlocked province in the east of the People's Republic of China. Its major cities include Nanchang and Jiujiang. Spanning from the banks of the Yangtze river in the north int ...
.
*
Third Front, focused on the southwestern provinces.
Foreign investment abroad:
*
Go Global
Go Out policy () is the People's Republic of China's current strategy to encourage its enterprises to invest overseas.
Most nations favour attracting inward foreign investment, and support outward foreign investment only passively. The People ...
, 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
The South–North Water Transfer Project, also translated as the South-to-North Water Diversion Project () is a multi-decade infrastructure mega-project in China. Ultimately it aims to channel 44.8 billion cubic meters of fresh water annually fro ...
" are the government's three key strategic projects, aimed at realigning overall of per year. Construction of the "South-to-North Water Diversion" project was officially launched on 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
The following table shows the main economic indicators in 1980–2021 (with IMF staff stimtates in 2022–2027). Inflation below 5% is in green.
Inflation
![Chinese inflation](https://upload.wikimedia.org/wikipedia/commons/2/25/Chinese_inflation.webp)
During the winter of 2007–2008, inflation ran about 7% on an annual basis, rising to 8.7% in statistics for February 2008, released in March 2008.
["Consumer Price Index (CPI) Kept Growth in November"](_blank)
National Bureau of Statistics of China
The National Bureau of Statistics (), abbreviated as NBS, is an deputy-cabinet level agency directly under the State Council of the People's Republic of China. It is responsible for collection, investigation, research and publication of stati ...
11 December 2007 13:14:55
Shortages of gasoline and diesel fuel developed in the fall of 2007 due to reluctance of refineries to produce fuel at low prices set by the state. These prices were slightly increased in November 2007 with fuel selling for $2.65 a gallon, still slightly below world prices.
Price controls
Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
were in effect on numerous basic products and services, but were ineffective with food,
prices
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...
of which were rising at an annual rate of 18.2% in November 2007.
[Keith Bradsher (14 November 2007)]
"Chinese Prices Surge Again, Despite New Controls"
, ''The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
''. The problem of inflation has caused concern at the highest levels of the Chinese government. On 9January 2008, the government issued the following statement on its official website: "The Chinese government decided on Wednesday to take further measures to stabilize market prices and increase the severity of punishments for those guilty of driving up prices through hoarding or cheating."
Pork is an important part of the Chinese economy with a per capita consumption of 90 grams per day. The worldwide rise in the price of animal feed associated with increased production of ethanol from corn resulted in steep rises in pork prices in China in 2007. Increased cost of production interacted badly with increased demand resulting from rapidly rising wages. The state responded by subsidizing pork prices for students and the urban poor and called for increased production. Release of pork from the nation's strategic pork reserve was considered.
By January 2008, the inflation rate rose to 7.1%, which
BBC News
BBC News is an operational business division of the British Broadcasting Corporation (BBC) responsible for the gathering and broadcasting of news and current affairs in the UK and around the world. The department is the world's largest broadca ...
described as the highest inflation rate since 1997, due to the
winter storms that month. China's inflation rate jumped to a new decade high of 8.7 percent in February 2008 after severe winter storms disrupted the economy and worsened food shortages, the government said 11 March 2008. Throughout the summer and fall, however, inflation fell again to a low of 6.6% in October 2008.
By November 2010, the inflation rate rose up to 5.1%, driven by an 11.7% increase in
food prices
Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices have an impact on producers and consumers of food.
Price levels depend on the food production process, including food marketing an ...
year on year. According to the bureau, industrial output went up 13.3 percent. As supplies have run short, prices for fuel and other commodities have risen.
Investment cycles
![Beijing Financial Street (overlook)](https://upload.wikimedia.org/wikipedia/commons/5/5f/Beijing_Financial_Street_%28overlook%29.jpg)
Chinese investment has always been highly cyclical. Ever since the 1958 Great Leap Forward, growth in fixed capital formation has typically peaked about every five years. Recent peaks occurred in 1978, 1984, 1988, 1993, 2003 and 2009. The corresponding troughs were in 1981, 1986, 1989, 1997 and 2005.
In China, the majority of investment is carried out by entities that are at least partially state-owned. Most of these are under the control of local governments. Thus booms are primarily the result of perverse incentives at the local-government level. Unlike entrepreneurs in a free-enterprise economy, Chinese local officials are motivated primarily by political considerations. As their performance evaluations are based, to a large extent, on GDP growth within their jurisdictions, they have a strong incentive to promote large-scale investment projects. They also don't face any real bankruptcy risk. When localities get into trouble, they are invariably bailed out by state-owned banks. Under these circumstances, overinvestment is inevitable.
A typical cycle begins with a relaxation of central government credit and industrial policy. This allows local governments to push investment aggressively, both through state-sector entities they control directly and by offering investment-promotion incentives to private investors and enterprises outside their jurisdictions. The resulting boom puts upward pressure on prices and may also result in shortages of key inputs such as coal and electricity (as was the case in 2003). Once inflation has risen to a level at which it begins to threaten social stability, the central government will intervene by tightening enforcement of industrial and credit policy. Projects that went ahead without required approvals will be halted. Bank lending to particular types of investors will be restricted. Credit then becomes tight and investment growth begins to decline.
Eventually such centrally-imposed busts alleviate shortages and bring inflation down to acceptable levels. At that point, the central government yields to local-government demands for looser policy and the cycle begins again.
Macroeconomic issues
Environmental transition
![World fossil carbon dioxide emissions six top countries and confederations](https://upload.wikimedia.org/wikipedia/commons/1/15/World_fossil_carbon_dioxide_emissions_six_top_countries_and_confederations.png)
Over the years, large subsidies were built into the price structure of certain commodities and these subsidies grew substantially in the late 1970s and 1980s.
[Hiroshi Satō. ''Unemployment, Inequality and Poverty in Urban China''. (2006) Routledge. ]
By 2010, rapidly rising wages and a general increase in the standard of living had put increased energy use on a collision course with the need to reduce
carbon emissions
Greenhouse gas emissions from human activities strengthen the greenhouse effect, contributing to climate change. Most is carbon dioxide from burning fossil fuels: coal, oil, and natural gas. The largest emitters include coal in China and larg ...
in order to control
global warming
In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
. There were diligent efforts to increase
energy efficiency
Energy efficiency may refer to:
* Energy efficiency (physics), the ratio between the useful output and input of an energy conversion process
** Electrical efficiency, useful power output per electrical power consumed
** Mechanical efficiency, a ra ...
and increase use of
renewable sources
A renewable resource, also known as a flow resource, is a natural resource which will replenish to replace the portion depleted by usage and consumption, either through natural reproduction or other recurring processes in a finite amount of ti ...
; over 1,000 inefficient power plants had been closed, but projections continued to show a dramatic rise in carbon emissions from burning
fossil fuel
A fossil fuel is a hydrocarbon-containing material formed naturally in the Earth's crust from the remains of dead plants and animals that is extracted and burned as a fuel. The main fossil fuels are coal, oil, and natural gas. Fossil fuels m ...
s. Since the late 2010s, a reduction of state-backed subsidies has negatively impacted several Chinese companies, with BYD Auto being one of them.
While note the largest source of historical cumulative emissions China today accounts for one third of global greenhouse gas emissions. On a per capita basis, China’s emissions in 2019 (9 tonnes CO2-equivalent
CO2e
Global warming potential (GWP) is the heat absorbed by any greenhouse gas in the atmosphere, as a multiple of the heat that would be absorbed by the same mass of carbon dioxide (). GWP is 1 for . For other gases it depends on the gas and the time f ...
per year) surpass those of the European Union (7.6 tCO2e) but remain slightly below the Organisation for Economic Co-operation and Development (OECD) average (10.7 tCO2e) and well below the United States average (17.6 tCO2e). However, the carbon intensity of China’s GDP—the amount of carbon used to generate a unit of output—remains relatively high.
To avoid the long-term socioeconomic cost of environmental
pollution in China
Pollution in China is one aspect of the broader topic of environmental issues in China. Various forms of pollution have increased as China has industrialised, which has caused widespread environmental health problems.Jared Diamond, '' Collapse: ...
, it has been suggested by
Nicholas Stern
Nicholas Herbert Stern, Baron Stern of Brentford, (born 22 April 1946 in Hammersmith) is a British economist, banker, and academic. He is the IG Patel Professor of Economics and Government and Chair of the Grantham Research Institute on Cli ...
and Fergus Green of the
that the economy of China be shifted to more advanced industrial development with low carbon dioxide emissions and better allocation of national resources to innovation and R&D for sustainable economic growth in order to reduce the impact of China's heavy industry. This is in accord with the planning goals of the central government.
Chinese leader and Communist Party
general secretary
Secretary is a title often used in organizations to indicate a person having a certain amount of authority, power, or importance in the organization. Secretaries announce important events and communicate to the organization. The term is derived ...
Xi Jinping
Xi Jinping ( ; ; ; born 15 June 1953) is a Chinese politician who has served as the general secretary of the Chinese Communist Party (CCP) and chairman of the Central Military Commission (CMC), and thus as the paramount leader of China, s ...
's
Chinese Dream
The Chinese Dream () is a term closely associated with Xi Jinping, the General Secretary of the Chinese Communist Party (CCP) and China's paramount leader. Xi began promoting the phrase as a slogan during a high-profile tour of an exhibit at th ...
is described as achieving the "
Two Centenaries
The Two Centenaries () is a political slogan that refers to two 100-year anniversaries and a stated set of economic and political goals advanced by General Secretary Xi Jinping following the 18th National Congress of the Chinese Communist Party ...
", namely the material goal of China becoming a "
moderately prosperous society
Moderately prosperous society or Xiaokang society (), is a Chinese term, originally of Confucianism, used to describe a society composed of a functional middle-class. In December 1979, Deng Xiaoping, then paramount leader of China, first propos ...
" by 2021, and the modernization goal of China becoming a
fully developed nation by 2049, the 100th anniversary of the founding of the People's Republic.
National debt
In 2014, many analysts expressed concern over the overall size of China's government debt.
[Kenneth Rapoza (9 May 2015)]
"China's Total Debt Load Now Over 280% Of GDP"
, ''Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
'' At the end of 2014, the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
reported that China's general government gross debt-to-GDP ratio was 41.44 percent.
["People's Republic of China 2015 Article IV ConsultationPress Release; Staff Report; and Statement by the Executive Director for the PRC"](_blank)
IMF Country Report No. 15/234[World Economic Outlook Database, October 2015](_blank)
, IMF In 2015, a report by the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
concluded that China's public debt is relatively low "and on a stable path in all standard stress tests except for the scenario with contingent liability shocks", such as "a large-scale bank recapitalization or financial system bailout to deal, for example, with a potential rise in
NPLs from deleveraging".
[IMF Country Report No. 15/234]
People's Republic of China: Staff Report for the 2015 Article IV Consultation
(7 July 2015).
Chinese authorities have dismissed analysts' worries, insisting "the country still has room to increase government debt."
[Xiaoyi Shao and Lisa Twaronite (7 March 2016)]
"China's fiscal income to slow but room for more government debtFinance Minister"
, Reuters
Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world.
The agency was estab ...
Former Fed Chairman
Ben Bernanke
Ben Shalom Bernanke ( ; born December 13, 1953) is an American economist who served as the 14th chairman of the Federal Reserve from 2006 to 2014. After leaving the Fed, he was appointed a distinguished fellow at the Brookings Institution. Durin ...
, earlier in 2016, commented that "the... debt pile facing China
san 'internal' problem, given the majority of the borrowings was issued in local currency. Many economists have expressed the same views as Bernanke. A 2019 survey by the
OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
found that China's corporate debt is higher than other major countries.
"
Shadow banking
The shadow banking system is a term for the collection of non-bank financial intermediaries (NBFIs) that provide services similar to traditional commercial banks but outside normal banking regulations. Examples of NBFIs include hedge funds, ins ...
" has risen in China, posing risks to the financial system.
As of 2020, China's total government debt stands at approximately 46
trillion
''Trillion'' is a number with two distinct definitions:
* 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power), as defined on the short scale. This is now the meaning in both American and British English.
* 1,000,000,000,0 ...
( 7.0 trillion), equivalent to about 45% of
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often ...
. In comparison, the United States had a government debt of about 28 trillion at the end of 2020, approximately 128% of GDP.
Regulatory environment and government revenues
Though China's economy has expanded rapidly, its regulatory environment has not kept pace. Since Deng Xiaoping's open market reforms, the growth of new businesses has outpaced the government's ability to regulate them. This has created a situation where businesses, faced with mounting competition and poor oversight, take drastic measures to increase
profit margin
Profit margin is a measure of profitability. It is calculated by finding the profit as a percentage of the revenue.
\text = =
There are 3 types of profit margins: gross profit margin, operating profit margin and net profit margin.
* Gross Prof ...
s, often at the expense of
consumer safety
Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...
. This issue became more prominent in 2007, with a number of restrictions being placed on problematic Chinese exports by the United States.
From the 1950s to the 1980s, the central government's revenues derived chiefly from the profits of the state enterprises, which were remitted to the state. Some government revenues also came from taxes, of which the most important was the general industrial and commercial tax.
The trend, however, has been for remitted profits of the state enterprises to be replaced with taxes on those profits. Initially, this tax system was adjusted so as to allow for differences in the
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
and pricing situations of various firms, but more-uniform tax schedules were introduced in the early 1990s. In addition,
personal income
In economics, personal income refers to an individual's total earnings from wages, investment enterprises, and other ventures. It is the sum of all the incomes received by all the individuals or household during a given period. Personal income is ...
and
value-added tax
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end ...
es were implemented at that time.
Financial and banking system
![China bond yields](https://upload.wikimedia.org/wikipedia/commons/8/86/China_bond_yields.webp)
Most of China's financial institutions are state-owned and governed. The chief instruments of
financial
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
and
fiscal
Fiscal usually refers to government finance. In this context, it may refer to:
Economics
* Fiscal policy, use of government expenditure to influence economic development
* Fiscal policy debate
* Fiscal adjustment, a reduction in the government ...
control are the
People's Bank of China
The People's Bank of China (officially PBC or informally PBOC; ) is the central bank of the People's Republic of China, responsible for carrying out monetary policy and regulation of financial institutions in mainland China, as determined by ...
(PBC) and the
Ministry of Finance A ministry of finance is a part of the government in most countries that is responsible for matters related to the finance.
Lists of current ministries of finance
Named "Ministry"
* Ministry of Finance (Afghanistan)
* Ministry of Finance and Eco ...
, both under the authority of the
State Council State Council may refer to:
Government
* State Council of the Republic of Korea, the national cabinet of South Korea, headed by the President
* State Council of the People's Republic of China, the national cabinet and chief administrative auth ...
. The People's Bank of China replaced the
Central Bank of China
Central is an adjective usually referring to being in the center of some place or (mathematical) object.
Central may also refer to:
Directions and generalised locations
* Central Africa, a region in the centre of Africa continent, also known a ...
in 1950 and gradually took over
private bank
Private banks are banks owned by either the individual or a general Partner (business rank), partner(s) with limited partner(s). Private banks are not incorporation (business), incorporated. In any such case, creditors can look to both the "enti ...
s. It fulfills many of the functions of other
central
Central is an adjective usually referring to being in the center of some place or (mathematical) object.
Central may also refer to:
Directions and generalised locations
* Central Africa, a region in the centre of Africa continent, also known as ...
and
commercial bank
A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit.
It can also refer to a bank, or a division of a large bank, which deals with cor ...
s. It issues the currency, controls circulation, and plays an important role in disbursing budgetary expenditures. Additionally, it administers the accounts, payments, and receipts of government organizations and other bodies, which enables it to exert thorough supervision over their financial and general performances in consideration of the government's economic plans. The PBC is also responsible for
international trade
International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy)
In most countries, such trade represents a significant ...
and other overseas
transactions.
Remittance
A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes wit ...
s by
overseas Chinese
Overseas Chinese () refers to people of Chinese birth or ethnicity who reside outside Mainland China, Hong Kong, Macau, and Taiwan. As of 2011, there were over 40.3 million overseas Chinese.
Terminology
() or ''Hoan-kheh'' () in Hokkien, refe ...
are managed by the
Bank of China
The Bank of China (BOC; ) is a Chinese majority state-owned commercial bank headquartered in Beijing and the fourth largest bank in the world.
The Bank of China was founded in 1912 by the Republican government as China's central bank, repl ...
(BOC), which has a number of branch offices in several countries.
Other financial institutions that are crucial, include the
China Development Bank
The China Development Bank (CDB) () is a development bank in the People's Republic of China (PRC), led by a cabinet minister at the Governor level, under the direct jurisdiction of the State Council. As one of three policy banks in China, it ...
(CDB), which funds
economic development
In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and o ...
and directs
foreign investment; the
Agricultural Bank of China
Agricultural Bank of China (ABC), also known as AgBank, is one of the " Big Four" banks in China. It was founded on 10 July 1951, and has its headquarters in Dongcheng District, Beijing. It has branches throughout mainland China, Hong Kong, Lond ...
(ABC), which provides for the agricultural sector; the
China Construction Bank
China Construction Bank Corporation (CCB) is one of the " big four" banks in China. In 2015, CCB was the 2nd largest bank in the world by market capitalization and 6th largest company in the world. The bank has approximately 13,629 domestic bra ...
(CCB), which is responsible for capitalizing a portion of overall investment and for providing
capital fund
Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which hav ...
s for certain industrial and construction enterprises; and the
Industrial and Commercial Bank of China
Industrial and Commercial Bank of China Limited (ICBC; ) is a Chinese multinational bank.
Founded as a limited company on 1 January 1984, ICBC is a state-owned commercial bank. With capital provided by the Ministry of Finance of China, the ...
(ICBC), which conducts ordinary commercial transactions and acts as a
savings bank
A savings bank is a financial institution whose primary purpose is accepting savings account, savings deposits and paying interest on those deposits.
History of banking, They originated in Europe during the 18th century with the aim of providi ...
for the public. China initiated the founding of the
Asian Infrastructure Investment Bank
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that aims to improve economic and social outcomes in Asia. The bank currently has 105 members, including 14 prospective members from around the world. The br ...
in 2015 and the
Silk Road Fund
The Silk Road Fund ( zh, s=丝路基金, t=, p=) is a state-owned investment fund of the Chinese government to foster increased investment in countries along the One Belt, One Road, an economic development initiative primarily covering Eura ...
in 2014, an investment fund of the Chinese government to foster increased investment and provide financial supports in countries along the
One Belt, One Road
The Belt and Road Initiative (BRI, or B&R), formerly known as One Belt One Road ( zh, link=no, 一带一路) or OBOR for short, is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in nearly 150 ...
.
![Shanghaistockexchange](https://upload.wikimedia.org/wikipedia/commons/9/9b/Shanghaistockexchange.jpg)
China's
economic reforms
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the p ...
greatly increased the economic role of the
banking system
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Becaus ...
. In theory any enterprises or individuals can go to the banks to obtain loans outside the state plan, in practice, 75% of state bank loans go to
State Owned Enterprises
A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the government ...
. (SOEs) Even though nearly all investment
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
was previously provided on a
grant
Grant or Grants may refer to:
Places
*Grant County (disambiguation)
Australia
* Grant, Queensland, a locality in the Barcaldine Region, Queensland, Australia
United Kingdom
*Castle Grant
United States
* Grant, Alabama
*Grant, Inyo County, C ...
basis according to the state plan, policy has since the start of the reform shifted to a loan basis through the various state-directed financial institutions. It is estimated that, as of 2011, 14 trillion Yuan in loans was outstanding to local governments. Much of that total is believed by outside observers to be nonperforming.
Increasing amounts of funds are made available through the banks for economic and commercial purposes. Foreign sources of capital have also increased. China has received loans from the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
and several
United Nations
The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be ...
programs, as well as from countries (particularly
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
) and, to a lesser extent, commercial banks.
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
has been a major conduit of this investment, as well as a source itself. On 23 February 2012, the PBC evinced its inclination to liberalise its capital markets when it circulated a telling ten-year timetable. Following on the heels of this development, Shenzhen banks were able to launch cross-border yuan remittances for individuals, a significant shift in the PBC's
capital control
Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measure ...
strictures since Chinese nationals had been previously barred from transferring their yuan to overseas account.
China has four of the world's top ten most competitive
financial centers (
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
,
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
,
Beijing
}
Beijing ( ; ; ), alternatively romanized as Peking ( ), is the capital of the People's Republic of China. It is the center of power and development of the country. Beijing is the world's most populous national capital city, with over 21 ...
, and
Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
), more than any other country.
China has three of the world's ten
largest stock exchanges (
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
,
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
and
Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
), both by
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
and by
trade volume In capital markets, volume, or trading volume, is the amount (total number) of a security (or a given set of securities, or an entire market) that was traded during a given period of time. In the context of a single stock trading on a stock exch ...
.
As of 12 October 2020, the total market capitalization of Mainland Chinese stock markets, consisting of the
Shanghai Stock Exchange
The Shanghai Stock Exchange (SSE) is a stock exchange based in the city of Shanghai, China. It is one of the three stock exchanges operating independently in mainland China, the others being the Beijing Stock Exchange and the Shenzhen Stock Exc ...
and
Shenzhen Stock Exchange
The Shenzhen Stock Exchange (SZSE; ) is a stock exchange based in the city of Shenzhen, in the People's Republic of China. It is one of three stock exchanges operating independently in Mainland China, the others being the Beijing Stock Excha ...
, topped US$10trillion, excluding the
Hong Kong Stock Exchange
The Stock Exchange of Hong Kong (SEHK, also known as Hong Kong Stock Exchange) is a stock exchange based in Hong Kong. As of the end of 2020, it has 2,538 listed companies with a combined market capitalization of HK$47 trillion. It is repor ...
, with about US$5.9trillion.
As of the end of June 2020, foreign investors had bought a total of US$440billion in Chinese stocks, representing about 2.9% of the total value, and indicating that foreign investors scooped up a total of US$156.6billion in the stocks just in the first half of 2020. The total value of China's bond market topped US$15.4trillion, ranked above that of Japan and the U.K., and second only to that of the U.S. with US$40trillion, as of the beginning of September 2020. As of the end of September 2020, foreign holdings of Chinese bonds reached US$388billion, or 2.5%, of the total value, notwithstanding an increase by 44.66% year on year.
China has the world's largest total banking sector assets of around $45.838trillion (309.41trillion CNY) with $42.063trillion in total deposits and other liabilities.
Stock markets
![Shanghai Composite Index](https://upload.wikimedia.org/wikipedia/commons/8/85/Shanghai_Composite_Index.webp)
As of 2014 and the first quarter of 2015, the financial industry had been providing about 1.5% of China's 7% annual growth rate.
Despite slowing of the economy, as of June 2015 the Chinese stock index, the
CSI 300 Index
The CSI 300 () is a capitalization-weighted stock market index designed to replicate the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It has two sub-indexes: the CSI 100 Index and the CS ...
, which is based on 300 stocks traded in the Shanghai and Shenzhen
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
s, had risen nearly 150% over the past twelve months. In an effort to forestall damage from collapse of a possible
economic bubble
An economic bubble (also called a speculative bubble or a financial bubble) is a period when current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify. Bubbles can be c ...
fueled by margin trading the central government raised requirements for
margin lending
In finance, margin is the collateral that a holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty. This risk ...
. Economic damage from a crash in 2007–2008 was limited due to margin lending being highly restricted.
In early July, after a fall in the markets of nearly 30% from their 12 June highs, there were efforts by blue-chip, often state-owned, firms, the Chinese securities industry, and the central government to stabilize the market by buying back stock and increasing purchases of the stock of established firms; however, much of the volatility has been in smaller, less-established firms that had been heavily invested in by unsophisticated, often working class, investors who had purchased stock based solely on its rapid increase in valuation.
80% of Chinese stocks are owned by individual investors, many novices.
As of 10 July 2015 efforts by the
China Securities Finance Corporation, CFS, a firm created by China's commodities and stock exchanges to finance trades,
had apparently stabilized the market.
Major Chinese securities firms were required by the
China Securities Regulatory Commission
The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China (PRC). It is the main regulator of the securities industry in China.
History
China's first Securities Law was ...
to buy, and hold, a substantial amount of securities affected by the downturn. Using funds supplied by the central bank and commercial banks the China Securities Finance Corporation purchased enough stocks to halt the slide acquiring as much as 5% of the stock in some firms. Lines of credit were extended by CFS to 21 securities firms, some of which also purchased up to 5% of some companies stocks. Some of the small cap stocks acquired may be overvalued.
Chinese stocks fell about 10% during the last week of July 2015 with record breaking losses on Monday.
Currency system
![USD-CNY exchange rate](https://upload.wikimedia.org/wikipedia/commons/a/a5/USD-CNY_exchange_rate.webp)
The
renminbi
The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...
("people's currency") is the currency of China, denominated as the
yuan, subdivided into 10
jiao
Jiao may refer to:
*Horn (Chinese constellation), or Jiao (角宿), a Chinese constellation
*Jiaolong, or Jiao (蛟), a Chinese dragon
*Jiao (currency) (角), a unit of currency in China, one-tenth of a Chinese yuan or dollar
*Jiao (surname) ( ...
or 100
fen
A fen is a type of peat-accumulating wetland fed by mineral-rich ground or surface water. It is one of the main types of wetlands along with marshes, swamps, and bogs. Bogs and fens, both peat-forming ecosystems, are also known as mires. T ...
. The renminbi is issued by the
People's Bank of China
The People's Bank of China (officially PBC or informally PBOC; ) is the central bank of the People's Republic of China, responsible for carrying out monetary policy and regulation of financial institutions in mainland China, as determined by ...
, the monetary authority of China. The
ISO 4217
ISO 4217 is a standard published by the International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual cu ...
abbreviation is CNY, although also commonly abbreviated as "RMB". As of 2005, the yuan was generally considered by outside observers to be undervalued by about 30–40%.
However, in 2017, the
IMF stated that the yuan was correctly valued.
The renminbi is held in a floating
exchange-rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...
system managed primarily against the
US dollar
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
. On 21 July 2005, China revalued its currency by 2.1% against the US dollar and, since then has moved to an exchange rate system that references a basket of currencies and has allowed the renminbi to fluctuate at a daily rate of up to half a percent.
The
rate of exchange
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
(Chinese yuan per US$1) on 31 July 2008, was RMB 6.846, in mid-2007 was RMB 7.45, while in early 2006 was RMB 8.07:US$1=8.2793 yuan (January 2000), 8.2783 (1999), 8.2790 (1998), 8.2898 (1997), 8.3142 (1996), 8.3514 (1995).
There is a complex relationship between China's
balance of trade
The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...
, inflation, measured by the
consumer price index
A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
Overview
A CPI is a statistica ...
and the value of its currency. Despite allowing the value of the yuan to "float", China's
central bank
A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union,
and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
has decisive ability to control its value with relationship to other currencies. Inflation in 2007, reflecting sharply rising prices for meat and fuel, is probably related to the worldwide rise in commodities used as animal feed or as fuel. Thus rapid rises in the value of the yuan permitted in December 2007 are possibly related to efforts to mitigate inflation by permitting the renminbi to be worth more. An article published in International Review of Economics & Finance in 2010 by Mete Feridun (University of Greenwich Business School) and his colleagues provide empirical evidence that financial development fosters economic growth in China.
[Jalil, Abdul, Feridun, Mete and Ma, Ying (2010) Finance-growth nexus in China revisited: New evidence from principal components and ARDL bounds tests. ''International Review of Economics & Finance'', 19 (2). pp. 189–195. ISSN 1059-0560 (doi:10.1016/j.iref.2009.10.005)]
During the week of 10 August 2015, against the background of a slowing Chinese economy and appreciation of the U.S. dollar, the People's Bank of China devalued the renminbi by about 5%.
The devaluation was accomplished by pegging the official rate to closing market rates. A market-based "representative" exchange rate against the U.S. dollar is one of the requirements for designation of a currency as one with
Special Drawing Rights
Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a claim ...
(SDR) by the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF), one of China's goals.
Since the late-2000s, China has sought to
internationalize the renminbi. As of 2013, the RMB is the 8th most widely traded currency in the world. In November 2015 in advance of
G-20
The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the European Union (EU). It works to address major issues related to the global economy, such as international financial stability, climate change mitigation, ...
and IMF meetings, IMF director
Christine Lagarde
Christine Madeleine Odette Lagarde (; née Lallouette, ; born 1 January 1956) is a French politician and lawyer who has been serving as President of the European Central Bank since 2019. She previously served as the 11th managing director of the ...
announced her support for adding the yuan to the SDR currency basket. The announcement gave 'green-light' to official approval at 30 November IMF meeting. The internationalization of the Chinese economy continues to affect the standardized economic forecast officially launched in China by the
Purchasing Managers Index
Purchasing managers' indexes (PMI) are economic indicators derived from monthly surveys of private sector companies.
The three principal producers of PMIs are the Institute for Supply Management (ISM), which originated the manufacturing and n ...
in 2005. As China's economy grows, so does China's
Renminbi
The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...
, which undergoes the process needed for its
internationalization
In economics, internationalization or internationalisation is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization. Internationalization is a crucial strateg ...
.
Sectors
Among the Fortune 500 companies in 2022, there are 136 in China. As of 2022, China was home to 351 largest listed companies measured by
revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
in the
Fortune Global 2000, ranking second globally. China is also home to more than two hundred privately held technology startups (tech unicorns), each with a valuation of over $1billion, the highest number in the world.
Agriculture
![Jiangxia-peanuts-9707](https://upload.wikimedia.org/wikipedia/commons/4/48/Jiangxia-peanuts-9707.jpg)
China is the world's largest producer and consumer of agricultural productsand some 300 million Chinese
farm
A farm (also called an agricultural holding) is an area of land that is devoted primarily to agricultural processes with the primary objective of producing food and other crops; it is the basic facility in food production. The name is used fo ...
workers are in the industry, mostly laboring on pieces of land about the size of U.S farms. Virtually all
arable land
Arable land (from the la, arabilis, "able to be ploughed") is any land capable of being ploughed and used to grow crops.''Oxford English Dictionary'', "arable, ''adj''. and ''n.''" Oxford University Press (Oxford), 2013. Alternatively, for the ...
is used for food
crop
A crop is a plant that can be grown and harvested extensively for profit or subsistence. When the plants of the same kind are cultivated at one place on a large scale, it is called a crop. Most crops are cultivated in agriculture or hydroponic ...
s. China is the world's largest producer of
rice
Rice is the seed of the grass species ''Oryza sativa'' (Asian rice) or less commonly ''Oryza glaberrima
''Oryza glaberrima'', commonly known as African rice, is one of the two domesticated rice species. It was first domesticated and grown i ...
and is among the principal sources of
wheat
Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...
, corn (
maize
Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. Th ...
),
tobacco
Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...
,
soybeans
The soybean, soy bean, or soya bean (''Glycine max'') is a species of legume native to East Asia, widely grown for its edible bean, which has numerous uses.
Traditional unfermented food uses of soybeans include soy milk, from which tofu and ...
,
potato
The potato is a starchy food, a tuber of the plant ''Solanum tuberosum'' and is a root vegetable native to the Americas. The plant is a perennial in the nightshade family Solanaceae.
Wild potato species can be found from the southern Unit ...
es,
sorghum
''Sorghum'' () is a genus of about 25 species of flowering plants in the grass family (Poaceae). Some of these species are grown as cereals for human consumption and some in pastures for animals. One species is grown for grain, while many othe ...
,
peanut
The peanut (''Arachis hypogaea''), also known as the groundnut, goober (US), pindar (US) or monkey nut (UK), is a legume crop grown mainly for its edible Seed, seeds. It is widely grown in the tropics and subtropics, important to both small ...
s,
tea
Tea is an aromatic beverage prepared by pouring hot or boiling water over cured or fresh leaves of '' Camellia sinensis'', an evergreen shrub native to East Asia which probably originated in the borderlands of southwestern China and northe ...
,
millet
Millets () are a highly varied group of small-seeded grasses, widely grown around the world as cereal crops or grains for fodder and human food. Most species generally referred to as millets belong to the tribe Paniceae, but some millets al ...
,
barley
Barley (''Hordeum vulgare''), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains, particularly in Eurasia as early as 10,000 years ago. Globally 70% of barley pr ...
,
oilseed
Vegetable oils, or vegetable fats, are oils extracted from seeds or from other parts of fruits. Like animal fats, vegetable fats are ''mixtures'' of triglycerides. Soybean oil, grape seed oil, and cocoa butter are examples of seed oils, or fat ...
,
pork
Pork is the culinary name for the meat of the domestic pig (''Sus domesticus''). It is the most commonly consumed meat worldwide, with evidence of pig husbandry dating back to 5000 BCE.
Pork is eaten both freshly cooked and preserved; ...
, and
fish
Fish are aquatic, craniate, gill-bearing animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish as well as various extinct related groups. Approximately 95% of li ...
. Major non-food crops, including cotton, other fibers, and
oilseed
Vegetable oils, or vegetable fats, are oils extracted from seeds or from other parts of fruits. Like animal fats, vegetable fats are ''mixtures'' of triglycerides. Soybean oil, grape seed oil, and cocoa butter are examples of seed oils, or fat ...
s, furnish China with a small proportion of its foreign trade revenue. Agricultural exports, such as vegetables and fruits, fish and shellfish, grain and meat products, are exported to
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
. Yields are high because of
intensive cultivation, for example, China's cropland area is only 75% of the U.S. total, but China still produces about 30% more crops and livestock than the United States. China hopes to further increase agricultural production through improved plant stocks,
fertilizer
A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
s, and technology.
According to the government statistics issued in 2005, after a drop in the yield of farm crops in 2000, output has been increasing annually.
![China-wheat-prod](https://upload.wikimedia.org/wikipedia/commons/e/e2/China-wheat-prod.png)
According to the United Nations
World Food Program
The World Food Programme; it, Programma alimentare mondiale; es, Programa Mundial de Alimentos; ar, برنامج الأغذية العالمي, translit=barnamaj al'aghdhiat alealami; russian: Всемирная продовольствен ...
, in 2003, China fed twenty percent of the world's population with only seven percent of the world's
arable land
Arable land (from the la, arabilis, "able to be ploughed") is any land capable of being ploughed and used to grow crops.''Oxford English Dictionary'', "arable, ''adj''. and ''n.''" Oxford University Press (Oxford), 2013. Alternatively, for the ...
. China
ranks first worldwide in farm output, and, as a result of
topographic
Topography is the study of the forms and features of land surfaces. The topography of an area may refer to the land forms and features themselves, or a description or depiction in maps.
Topography is a field of geoscience and planetary scie ...
and
climatic
Climate is the long-term weather pattern in an area, typically averaged over 30 years. More rigorously, it is the mean and variability of meteorological variables over a time spanning from months to millions of years. Some of the meteorologic ...
factors, only about 10–15 percent of the total land area is suitable for
cultivation. Of this, slightly more than half is unirrigated, and the remainder is divided roughly equally between
paddy field
A paddy field is a flooded field (agriculture), field of arable land used for growing Aquatic plant, semiaquatic crops, most notably rice and taro. It originates from the Neolithic rice-farming cultures of the Yangtze River basin in sout ...
s and
irrigated
Irrigation (also referred to as watering) is the practice of applying controlled amounts of water to land to help grow crops, landscape plants, and lawns. Irrigation has been a key aspect of agriculture for over 5,000 years and has been devel ...
areas. Nevertheless, about 60 percent of the population lives in the rural areas, and until the 1980s a high percentage of them made their living directly from farming. Since then, many have been encouraged to leave the fields and pursue other activities, such as
light manufacturing
Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a rang ...
, commerce, and transportation; and by the mid-1980s farming accounted for less than half of the value of rural output. Today, agriculture contributes only 13% of China's GDP.
Animal husbandry
Animal husbandry is the branch of agriculture concerned with animals that are raised for meat, fibre, milk, or other products. It includes day-to-day care, selective breeding, and the raising of livestock. Husbandry has a long history, starti ...
constitutes the second most important component of agricultural production. China is the world's leading producer of pigs, chickens, and eggs, and it also has sizable herds of sheep and cattle. Since the mid-1970s, greater emphasis has been placed on increasing the
livestock
Livestock are the domesticated animals raised in an agricultural setting to provide labor and produce diversified products for consumption such as meat, eggs, milk, fur, leather, and wool. The term is sometimes used to refer solely to animals ...
output. China has a long tradition of ocean and freshwater fishing and of
aquaculture
Aquaculture (less commonly spelled aquiculture), also known as aquafarming, is the controlled cultivation ("farming") of aquatic organisms such as fish, crustaceans, mollusks, algae and other organisms of value such as aquatic plants (e.g. lot ...
.
Pond raising has always been important and has been increasingly emphasized to supplement coastal and inland
fisheries
Fishery can mean either the enterprise of raising or harvesting fish and other aquatic life; or more commonly, the site where such enterprise takes place ( a.k.a. fishing ground). Commercial fisheries include wild fisheries and fish farms, both ...
threatened by
overfishing
Overfishing is the removal of a species of fish (i.e. fishing) from a body of water at a rate greater than that the species can replenish its population naturally (i.e. the overexploitation of the fishery's existing fish stock), resulting in th ...
and to provide such valuable export commodities as
prawn
Prawn is a common name for small aquatic crustaceans with an exoskeleton and ten legs (which is a member of the order decapoda), some of which can be eaten.
The term "prawn"Mortenson, Philip B (2010''This is not a weasel: a close look at nature ...
s. China is also unmatched in the size and reach of its fishing armada with anywhere from 200,000 to 800,000 boats, some as far afield as Argentina. Fueled primarily by government subsidies, its growth and activities have largely gone unchecked.
![Chiling - P1260474](https://upload.wikimedia.org/wikipedia/commons/c/c0/Chiling_-_P1260474.JPG)
Environmental problems such as floods, drought, and erosion pose serious threats to farming in many parts of the country. The wholesale destruction of forests gave way to an energetic
reforestation
Reforestation (occasionally, reafforestation) is the natural or intentional restocking of existing forests and woodlands (forestation) that have been depleted, usually through deforestation, but also after clearcutting.
Management
A debate ...
program that proved inadequate, and forest resources are still fairly meagre. The principal forests are found in the
Qin Mountains
The Qinling () or Qin Mountains, formerly known as the Nanshan ("Southern Mountains"), are a major east–west mountain range in southern Shaanxi Province, China. The mountains mark the divide between the drainage basins of the Yangtze and Yellow ...
and the central mountains and on the
Yunnan–Guizhou Plateau
The Yunnan–Guizhou Plateau or Yungui Plateau () is a highland region located in southwest China. The region is primarily spread over the provinces of Yunnan and Guizhou. In the southwest, the Yungui is a true plateau with relatively flatter ...
. Because they are inaccessible, the Qinling forests are not worked extensively, and much of the country's
timber
Lumber is wood that has been processed into dimensional lumber, including beams and planks or boards, a stage in the process of wood production. Lumber is mainly used for construction framing, as well as finishing (floors, wall panels, wi ...
comes from
Heilongjiang
Heilongjiang () formerly romanized as Heilungkiang, is a province in northeast China. The standard one-character abbreviation for the province is (). It was formerly romanized as "Heilungkiang". It is the northernmost and easternmost province ...
,
Jilin
Jilin (; alternately romanized as Kirin or Chilin) is one of the three provinces of Northeast China. Its capital and largest city is Changchun. Jilin borders North Korea (Rasŏn, North Hamgyong, Ryanggang and Chagang) and Russia (Prim ...
,
Sichuan
Sichuan (; zh, c=, labels=no, ; zh, p=Sìchuān; alternatively romanized as Szechuan or Szechwan; formerly also referred to as "West China" or "Western China" by Protestant missions) is a province in Southwest China occupying most of the ...
, and
Yunnan
Yunnan , () is a landlocked Provinces of China, province in Southwest China, the southwest of the People's Republic of China. The province spans approximately and has a population of 48.3 million (as of 2018). The capital of the province is ...
.
Western China
Western China (, or rarely ) is the west of China. In the definition of the Chinese government, Western China covers one municipality (Chongqing), six provinces (Sichuan
Sichuan (; zh, c=, labels=no, ; zh, p=Sìchuān; alternatively r ...
, comprising
Tibet
Tibet (; ''Böd''; ) is a region in East Asia, covering much of the Tibetan Plateau and spanning about . It is the traditional homeland of the Tibetan people. Also resident on the plateau are some other ethnic groups such as Monpa people, ...
,
Xinjiang
Xinjiang, SASM/GNC: ''Xinjang''; zh, c=, p=Xīnjiāng; formerly romanized as Sinkiang (, ), officially the Xinjiang Uygur Autonomous Region (XUAR), is an autonomous region of the People's Republic of China (PRC), located in the northwest ...
, and
Qinghai
Qinghai (; alternately romanized as Tsinghai, Ch'inghai), also known as Kokonor, is a landlocked province in the northwest of the People's Republic of China. It is the fourth largest province of China by area and has the third smallest po ...
, has little agricultural significance except for areas of
floriculture
Floriculture, or flower farming, is a branch of horticulture concerned with the cultivation of flowering and ornamental plants for gardens and for floristry, comprising the floral industry. The development of new varieties by plant breeding is ...
and
cattle raising
A ranch (from es, rancho/Mexican Spanish) is an area of land, including various structures, given primarily to ranching, the practice of raising grazing livestock such as cattle and sheep. It is a subtype of a farm. These terms are most ofte ...
. Rice, China's most important crop, is dominant in the southern provinces and many of the farms here yield two
harvests
Harvesting is the process of gathering a ripe crop from the fields. Reaping is the cutting of grain or pulse for harvest, typically using a scythe, sickle, or reaper. On smaller farms with minimal mechanization, harvesting is the most labor-i ...
a year. In the north, wheat is of the greatest importance, while in
central China
Central China () is a geographical and a loosely defined cultural region that includes the provinces of Henan, Hubei and Hunan. Jiangxi is sometimes also regarded to be part of this region. Central China is now officially part of South Central ...
wheat and rice vie with each other for the top place.
Millet
Millets () are a highly varied group of small-seeded grasses, widely grown around the world as cereal crops or grains for fodder and human food. Most species generally referred to as millets belong to the tribe Paniceae, but some millets al ...
and
kaoliang (a variety of grain sorghum) are grown mainly in the northeast and some central provinces, which, together with some northern areas, also provide considerable quantities of
barley
Barley (''Hordeum vulgare''), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains, particularly in Eurasia as early as 10,000 years ago. Globally 70% of barley pr ...
. Most of the
soybean
The soybean, soy bean, or soya bean (''Glycine max'') is a species of legume native to East Asia, widely grown for its edible bean, which has numerous uses.
Traditional unfermented food uses of soybeans include soy milk, from which tofu an ...
crop is derived from the north and the northeast; corn (maize) is grown in the center and the north, while
tea
Tea is an aromatic beverage prepared by pouring hot or boiling water over cured or fresh leaves of '' Camellia sinensis'', an evergreen shrub native to East Asia which probably originated in the borderlands of southwestern China and northe ...
comes mainly from the warm and humid hilly areas of the south. Cotton is grown extensively in the central provinces, but it is also found to a lesser extent in the southeast and in the north.
Tobacco
Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...
comes from the center and parts of the south. Other important crops are potatoes,
sugar beet
A sugar beet is a plant whose root contains a high concentration of sucrose and which is grown commercially for sugar production. In plant breeding, it is known as the Altissima cultivar group of the common beet (''Beta vulgaris''). Together wi ...
s, and oilseeds.
![Daye-pond-system-fishermen-0078-rotated](https://upload.wikimedia.org/wikipedia/commons/e/e8/Daye-pond-system-fishermen-0078-rotated.jpg)
In the past decade, the government has been encouraging agricultural mechanization and
land consolidation
Land consolidation is a planned readjustment and rearrangement of fragmented land parcels and their ownership. It is usually applied to form larger and more rational land holdings. Land consolidation can be used to improve rural infrastructure and ...
to raise yields and compensate for the loss of rural workers who have migrated to the cities. According to the most recent statistics by the UN Food and Agriculture Organization, the annual growth rate of agricultural mechanization in China is 6.38 percent. By 2014, the integrated mechanization rate had risen to nearly 60 percent, with the rate for wheat surpassing 90 percent and that for maize approaching 80 percent. In addition to standard agricultural equipment like tractors, China's agriculture cooperatives have begun using high-tech equipment, including unmanned aerial vehicles, which are used to spay crops with pesticides. Good progress has been made in increasing
water conservancy
Water conservation includes all the policies, strategies and activities to sustainably manage the natural resource of fresh water, to protect the hydrosphere, and to meet the current and future human demand (thus avoiding water scarcity). Populat ...
, and about half the cultivated land is under irrigation.
In the late 1970s and early 1980s, economic reforms were introduced. First of all this began with the shift of farming work to a
system of household responsibility and a phasing out of
collectivized agriculture. Later this expanded to include a gradual liberalization of price controls;
fiscal
Fiscal usually refers to government finance. In this context, it may refer to:
Economics
* Fiscal policy, use of government expenditure to influence economic development
* Fiscal policy debate
* Fiscal adjustment, a reduction in the government ...
decentralization
Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Conce ...
; massive privatization of state enterprises, thereby allowing a wide variety of
private enterprise
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
s in the
services
Service may refer to:
Activities
* Administrative service, a required part of the workload of university faculty
* Civil service, the body of employees of a government
* Community service, volunteer service for the benefit of a community or a p ...
and
light manufacturing
Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a rang ...
; the foundation of a diversified
banking system
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Becaus ...
(but with large amounts of state control); the development of a
stock market
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
; and the opening of the economy to increased
foreign trade
International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy)
In most countries, such trade represents a significant s ...
and
foreign investment.
Housing and construction
The real estate industry is about 20% of the Chinese economy.
Compared to other nations, investing in stock markets and other assets is harder due to currency controls within the country. As a result, many Chinese citizens own multiple properties, as they are one of the few ways in which it is comparatively easy to grow and preserve wealth. Due to this, many economists have speculated about a property bubble within the Chinese economy On 16 July 2020, the Wall Street Journal reported that the housing market within the Chinese economy had grown to US$52 trillion, eclipsing the US 2008 housing market before the
Financial Crisis
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and man ...
.
Despite the possibility of a housing bubble, many people still choose to invest their assets in real estate market. On 19 December 2021, according to a report by McKinsey Global Institute, China's net worth reached $120 trillion in 2020 to overtake the U.S.'s $89 trillion as a red-hot real estate market drove up property value.
Energy and mineral resources
Electricity:
* Production: 6.5 trillion kWh (2017)
* Consumption: 2.8248 trillion kWh (2006)
* Exports: 18.7 billion kwh (2015)[data.stats.gov.cn]
* Imports: 6.2 billion kwh (2015)
Electricity – production by source:
* Thermal: 70.4 (67.1% from coal) (2017)
* Hydro: 17.8% (2017)
* Renewables: 7.3% (2017)
* Nuclear: 3.8% (2017)
* Other: 0.7% (2017)
Oil:
* Production: (2005)
* Consumption: (2005) and expected in 2030
* Exports: (2005)
* Imports: (2019)
* Net imports: (2005)
* Proved reserves: (1 January 2006)
Natural gas:
* Production: 47.88 km3 (2005 est.)
* Consumption: 44.93 km3 (2005 est.)
* Exports: 2.944 km3 (2005)
* Imports: 0 m3 (2005)
* Proved reserves: 1,448 km3 (1 January 2006 est.)
Since 1980, China's energy production has grown dramatically, as has the proportion allocated to domestic consumption. Some 80 percent of all power is generated from fossil fuel at
thermal plant
A thermal power station is a type of power station in which heat energy is converted to electrical energy. In a steam-generating cycle heat is used to boil water in a large pressure vessel to produce high-pressure steam, which drives a steam ...
s, with about 17 percent at
hydroelectric
Hydroelectricity, or hydroelectric power, is electricity generated from hydropower (water power). Hydropower supplies one sixth of the world's electricity, almost 4500 TWh in 2020, which is more than all other renewable sources combined and ...
installations; only about two percent is from
nuclear energy
Nuclear energy may refer to:
*Nuclear power, the use of sustained nuclear fission or nuclear fusion to generate heat and electricity
* Nuclear binding energy, the energy needed to fuse or split a nucleus of an atom
*Nuclear potential energy
...
, mainly from plants located in
Guangdong
Guangdong (, ), alternatively romanized as Canton or Kwangtung, is a coastal province in South China on the north shore of the South China Sea. The capital of the province is Guangzhou. With a population of 126.01 million (as of 2020) ...
and
Zhejiang
Zhejiang ( or , ; , also romanized as Chekiang) is an eastern, coastal province of the People's Republic of China. Its capital and largest city is Hangzhou, and other notable cities include Ningbo and Wenzhou. Zhejiang is bordered by Jiang ...
. Though China has rich overall energy potential, most have yet to be developed. In addition, the geographical distribution of energy puts most of these resources relatively far from their major industrial users. Basically the northeast is rich in
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
and
oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
, the central part of north China has abundant coal, and the southwest has immense
hydroelectric potential
Hydroelectricity, or hydroelectric power, is electricity generated from hydropower (water power). Hydropower supplies one sixth of the world's electricity, almost 4500 TWh in 2020, which is more than all other renewable sources combined and ...
. But the industrialized regions around
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and alternatively romanized as Kwongchow or Kwangchow, is the capital and largest city of Guangdong province in southern China. Located on the Pearl River about north-northwest of Hong Kon ...
and the
Lower Yangtze
The Yangtze Delta or Yangtze River Delta (YRD, or simply ) is a triangle-shaped megalopolis generally comprising the Wu Chinese-speaking areas of Shanghai, southern Jiangsu and northern Zhejiang. The area lies in the heart of the Jiangnan reg ...
region around Shanghai have too little energy, while there is relatively little
heavy industry
Heavy industry is an industry that involves one or more characteristics such as large and heavy products; large and heavy equipment and facilities (such as heavy equipment, large machine tools, huge buildings and large-scale infrastructure); o ...
located near major energy resource areas other than in the southern part of the northeast.
Due in large part to environmental concerns, China has wanted to shift China's current
energy mix
The energy mix is a group of different primary energy sources from which secondary energy for direct use - such as electricity - is produced. Energy mix refers to all direct uses of energy, such as transportation and housing, and should not be c ...
from a heavy reliance on coal, which accounts for 70–75% of China's energy, toward greater reliance on oil,
natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
,
renewable energy
Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...
, and
nuclear power
Nuclear power is the use of nuclear reactions to produce electricity. Nuclear power can be obtained from nuclear fission, nuclear decay and nuclear fusion reactions. Presently, the vast majority of electricity from nuclear power is produced b ...
. China has closed thousands of
coal mines
Coal mining is the process of extracting coal from the ground. Coal is valued for its energy content and since the 1880s has been widely used to generate electricity. Steel and cement industries use coal as a fuel for extraction of iron from ...
over the past five to ten years to cut
overproduction
In economics, overproduction, oversupply, excess of supply or glut refers to excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment.
The de ...
. According to Chinese statistics, this has reduced coal production by over 25%.
Since 1993, China has been a net importer of oil, a large portion of which comes from the Middle East. Imported oil accounts for 20% of the processed
crude in China. Net imports are expected to rise to 3.5 million
barrels
A barrel or cask is a hollow cylindrical container with a bulging center, longer than it is wide. They are traditionally made of wooden staves and bound by wooden or metal hoops. The word vat is often used for large containers for liquids, u ...
(560,000m
3) per day by 2010. China is interested in diversifying the sources of its oil imports and has invested in oil fields around the world. China is developing oil imports from
Central Asia
Central Asia, also known as Middle Asia, is a subregion, region of Asia that stretches from the Caspian Sea in the west to western China and Mongolia in the east, and from Afghanistan and Iran in the south to Russia in the north. It includes t ...
and has invested in
Kazakhstan
Kazakhstan, officially the Republic of Kazakhstan, is a transcontinental country located mainly in Central Asia and partly in Eastern Europe. It borders Russia to the north and west, China to the east, Kyrgyzstan to the southeast, Uzbeki ...
i
oil field
A petroleum reservoir or oil and gas reservoir is a subsurface accumulation of hydrocarbons contained in porous or fractured rock formations.
Such reservoirs form when kerogen (ancient plant matter) is created in surrounding rock by the presence ...
s. Beijing also plans to increase China's natural gas production, which currently accounts for only 3% of China's total energy consumption and incorporated a natural gas strategy in its
10th Five-Year Plan (2001–2005), with the goal of expanding gas use from a 2% share of total energy production to 4% by 2005 (gas accounts for 25% of U.S. energy production). Analysts expect China's consumption of natural gas to more than double by 2010.
The
11th Five-Year Program (2006–10), announced in 2005 and approved by the National People's Congress in March 2006, called for greater energy conservation measures, including development of renewable energy sources and increased attention to environmental protection. Guidelines called for a 20% reduction in energy consumption per unit of GDP by 2010. Moving away from coal towards cleaner energy sources including oil, natural gas, renewable energy, and nuclear power is an important component of China's development program. Beijing also intends to continue to improve energy efficiency and promote the use of
clean coal technology
Coal pollution mitigation, sometimes called clean coal, is a series of systems and technologies that seek to mitigate the health and environmental impact of coal; in particular air pollution from coal-fired power stations, and from coal burnt b ...
. China has abundant hydroelectric resources; the Three Gorges Dam, for example, will have a total capacity of 18 gigawatts when fully on-line (projected for 2009). In addition, the share of electricity generated by nuclear power is projected to grow from 1% in 2000 to 5% in 2030. China's renewable energy law, which went into effect in 2006, calls for 10% of its energy to come from renewable energy sources by 2020.
As of 2021, China is facing its
worst energy crisis in decades. ''The Guardian'' reported that "Companies in the industrial heartlands have been told to limit consumption, residents have been subjected to rolling blackouts, and annual light shows have been cancelled."
China has
natural resources
Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest and cultural value. O ...
with an estimated worth of $23trillion, 90% of which are
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
and
rare earth metals
The rare-earth elements (REE), also called the rare-earth metals or (in context) rare-earth oxides or sometimes the lanthanides (yttrium and scandium are usually included as rare earths), are a set of 17 nearly-indistinguishable lustrous silve ...
.
Mining
Outdated mining and ore-processing technologies are being replaced with modern techniques, but China's industrialization of China, rapid industrialization requires imports of minerals from abroad. In particular, iron ore imports from mining in Australia, Australia and the United States have soared in the early 2000s as steel production in China, steel production rapidly outstripped domestic iron ore production. Also China has become increasingly active in several African countries to mine the reserves it requires for economic growth, particularly in countries such as the Democratic Republic of the Congo and Gabon.
The major areas of production in 2004 were coal mining in China, coal (nearly two billion tons), iron ore (310 million tons), petroleum industry in China, crude petroleum (175 million tons),
natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
(41 million cubic meters), antimony ore (110,000 tons), tin concentrates (110,000 tons), nickel ore (64,000 tons), tungsten concentrates (67,000 tons), unrefined salt (37 million tons), vanadium (40,000 tons), and molybdenum ore (29,000 tons). In order of magnitude, produced minerals were bauxite, gypsum, barite, magnesite, talc and related minerals, manganese ore, fluorspar, and zinc. In addition, China produced 2,450 tons of silver and 215 tons of gold in 2004. The mining sector accounted for less than 0.9% of total employment in 2002 but produced about 5.3% of total industrial production.
In 2019, the country was the world's largest producer of gold; 3rd largest world producer of copper; 3rd worldwide producer of silver; the world's largest producer of sulfur; the world's largest producer of phosphate; the world's largest producer of molybdenum; the world's largest producer of lead; largest world producer of zinc; the world's largest producer of vanadium; largest world producer of tin; the world's largest producer of titanium; the world's largest producer of antimony; 2nd largest worldwide producer of bauxite; 3rd largest world producer of iron ore; 6th largest world producer of manganese; 7th largest world producer of nickel; 10th largest world producer of cobalt; in addition to being the world's largest producer of table salt, salt. It was the world's 8th largest producer of uranium in 2018. Furthermore, it is the largest world producer of jade and one of the world producers of topaz, tourmaline, peridot and diamond.
Until the end of 2019, a total of 173 types of minerals have been discovered in
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, including 13 types of energy materials, 59 metals, 95 types of non-metallic minerals and six types of water and gases.
In 2019, the newly discovered geological reserves of
oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
were 1.12 billion tonnes, of which, 160 million tonnes were proven technically recoverable reserves. The newly discovered geological reserves of shale gas were 764.42 billion cubic metres, of which, 183.84 billion cubic metres were proven reserves.
With respect to non-oil and gas minerals, the evaluation states that China has great prospecting potential for 24 major minerals, including
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
, iron ore, manganese, chromite, copper, lead, zinc, bauxite, tungsten, tin, molybdenum, antimony, nickel, gold, silver, lithium, pyrites, phosphate rock, potash, magnesite, fluorite, boron and barite.
Hydroelectric resources
![Dreischluchtendamm hauptwall 2006](https://upload.wikimedia.org/wikipedia/commons/7/7c/Dreischluchtendamm_hauptwall_2006.jpg)
China has an abundant potential for hydroelectric power production due to its considerable river network and mountainous terrain. Most of the total hydroelectric capacity is situated in the Southwest China, southwest of the country, where coal supplies are poor but energy demand, demand for energy is rising swiftly. The potential in the northeast is fairly small, but it was there that the first hydroelectric stations were builtby the Japanese during its occupation of Manchuria.
Thirteen years in construction at a cost of $24billion, the immense Three Gorges Dam across the Yangtze, Yangtze River was essentially completed in 2006 and produced more than 100TWh of energy in 2018.
Coal
![Coal mine in Inner Mongolia 002](https://upload.wikimedia.org/wikipedia/commons/0/00/Coal_mine_in_Inner_Mongolia_002.jpg)
China is well endowed with mineral resources, the most important of which is
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
. China's mineral resources include large reserves of
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
and iron ore, plus adequate to abundant supplies of nearly all other industrial minerals. Although coal deposits are widely scattered (some coal is found in every province), most of the total is located in the northern part of the country. The province of
Shanxi
Shanxi (; ; formerly romanised as Shansi) is a landlocked province of the People's Republic of China and is part of the North China region. The capital and largest city of the province is Taiyuan, while its next most populated prefecture-lev ...
, in fact, is thought to contain about half of the total; other important coal-bearing provinces include
Heilongjiang
Heilongjiang () formerly romanized as Heilungkiang, is a province in northeast China. The standard one-character abbreviation for the province is (). It was formerly romanized as "Heilungkiang". It is the northernmost and easternmost province ...
,
Liaoning
Liaoning () is a coastal province in Northeast China that is the smallest, southernmost, and most populous province in the region. With its capital at Shenyang, it is located on the northern shore of the Yellow Sea, and is the northernmost ...
,
Jilin
Jilin (; alternately romanized as Kirin or Chilin) is one of the three provinces of Northeast China. Its capital and largest city is Changchun. Jilin borders North Korea (Rasŏn, North Hamgyong, Ryanggang and Chagang) and Russia (Prim ...
, Hebei, and Shandong.
[TED Case Studies]
China and Coal
Apart from these northern provinces, significant quantities of coal are present in
Sichuan
Sichuan (; zh, c=, labels=no, ; zh, p=Sìchuān; alternatively romanized as Szechuan or Szechwan; formerly also referred to as "West China" or "Western China" by Protestant missions) is a province in Southwest China occupying most of the ...
, and there are some deposits of importance in
Guangdong
Guangdong (, ), alternatively romanized as Canton or Kwangtung, is a coastal province in South China on the north shore of the South China Sea. The capital of the province is Guangzhou. With a population of 126.01 million (as of 2020) ...
, Guangxi,
Yunnan
Yunnan , () is a landlocked Provinces of China, province in Southwest China, the southwest of the People's Republic of China. The province spans approximately and has a population of 48.3 million (as of 2018). The capital of the province is ...
, and Guizhou.
A large part of the country's reserves consists of good bituminous coal, but there are also large deposits of lignite. Anthracite is present in several places (especially
Liaoning
Liaoning () is a coastal province in Northeast China that is the smallest, southernmost, and most populous province in the region. With its capital at Shenyang, it is located on the northern shore of the Yellow Sea, and is the northernmost ...
, Guizhou, and
Henan
Henan (; or ; ; alternatively Honan) is a landlocked province of China, in the central part of the country. Henan is often referred to as Zhongyuan or Zhongzhou (), which literally means "central plain" or "midland", although the name is al ...
), but overall it is not very significant.
To ensure a more even distribution of coal supplies and to reduce the strain on the less than adequate transportation network, the authorities pressed for the development of a large number of small, locally run coal mining, mines throughout the country. This campaign was energetically pursued after the 1960s, with the result that thousands of small pits have been established, and they produce more than half the country's coal. This output, however, is typically expensive and is used for local consumption. It has also led to a less than stringent implementation of safety measures in these unregulated mines, which cause several thousands of deaths each year.
Coal makes up the bulk of China's energy consumption (70% in 2005, 55% in 2021), and China is the largest producer and consumer of coal in the world. As China's economy continues to grow, China's coal demand is projected to rise significantly. Although coal's share of China's overall energy consumption will decrease, coal consumption will continue to rise in absolute terms. China's continued and increasing reliance on coal as a power source has contributed significantly to putting China on the path to becoming the world's largest emitter of acid rain-causing sulfur dioxide and greenhouse gases, including carbon dioxide.
As of 2015, falling coal prices resulted in layoffs at coal mines in the northeast.
Oil and natural gas
![China-Today oil reserves and demand-en](https://upload.wikimedia.org/wikipedia/commons/b/bb/China-Today_oil_reserves_and_demand-en.svg)
China's onshore
oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
resources are mostly located in the Northeast China, Northeast and in
Xinjiang
Xinjiang, SASM/GNC: ''Xinjang''; zh, c=, p=Xīnjiāng; formerly romanized as Sinkiang (, ), officially the Xinjiang Uygur Autonomous Region (XUAR), is an autonomous region of the People's Republic of China (PRC), located in the northwest ...
, Gansu,
Qinghai
Qinghai (; alternately romanized as Tsinghai, Ch'inghai), also known as Kokonor, is a landlocked province in the northwest of the People's Republic of China. It is the fourth largest province of China by area and has the third smallest po ...
,
Sichuan
Sichuan (; zh, c=, labels=no, ; zh, p=Sìchuān; alternatively romanized as Szechuan or Szechwan; formerly also referred to as "West China" or "Western China" by Protestant missions) is a province in Southwest China occupying most of the ...
, Shandong, and
Henan
Henan (; or ; ; alternatively Honan) is a landlocked province of China, in the central part of the country. Henan is often referred to as Zhongyuan or Zhongzhou (), which literally means "central plain" or "midland", although the name is al ...
provinces. Oil shale is found in a number of places, especially at Fushun in Liaoning, where the deposits overlie the coal reserves, as well as in Guangdong. High quality Light crude oil, light oil has been found in the Pearl River (China), Pearl River estuary of the South China Sea, the Qaidam Basin in Qinghai, and the Tarim Basin in Xinjiang. The country consumes most of its oil output but does export some crude oil and oil products. China has explored and developed oil deposits in the South China Sea and East China Sea, the Yellow Sea, the Gulf of Tonkin, and the Bohai Sea.
In 2013, the pace of China's economic growth exceeded the domestic oil capacity and floods damaged the nation's oil fields in the middle of the year. Consequently, China imported oil to compensate for the supply reduction and surpassed the US in September 2013 to become the world's largest importer of oil.
The total extent of China's natural gas reserves is unknown, as relatively little exploration for natural gas has been done. Sichuan accounts for almost half of the known natural gas reserves and production. Most of the rest of China's natural gas is associated gas produced in the Northeast's major oil fields, especially Daqing oilfield. Other gas deposits have been found in the Qaidam Basin, Hebei, Jiangsu,
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
, and
Zhejiang
Zhejiang ( or , ; , also romanized as Chekiang) is an eastern, coastal province of the People's Republic of China. Its capital and largest city is Hangzhou, and other notable cities include Ningbo and Wenzhou. Zhejiang is bordered by Jiang ...
, and offshore to the southwest of Hainan Island. According to an article published in Energy Economics in 2011 by economists Mete Feridun (University of Greenwich) and Abdul Jalil (Wuhan University in China), financial development in China has not taken place at the expense of environmental pollution and financial development has led to a decrease in environmental pollution. Authors conclude that carbon emissions are mainly determined by income, energy consumption and trade openness and their findings confirm the existence of an Environmental Kuznets Curve in the case of China.
Metals and nonmetals
Iron ore reserves are found in most provinces, including Hainan. Gansu, Guizhou, southern Sichuan, and Guangdong provinces have rich deposits. The largest mined reserves are located north of the Yangtze, Yangtze River and supply neighboring iron and steel enterprises. With the exception of nickel, chromium, and cobalt, China is well supplied with ferroalloys and manganese. Reserves of tungsten are also known to be fairly large. Copper resources are moderate, and high-quality ore is present only in a few deposits. Discoveries have been reported from Ningxia. Lead and zinc are available, and bauxite resources are thought to be plentiful. China's antimony reserves are the largest in the world. Tin resources are plentiful, and there are fairly rich deposits of gold. China is the world's fifth largest producer of gold and in the early 21st century became an important producer and exporter of rare metals needed in high-technology industries.
China also produces a fairly wide range of nonmetallic minerals. One of the most important of these is salt, which is derived from coastal evaporation sites in Jiangsu, Hebei, Shandong, and Liaoning, as well as from extensive salt fields in Sichuan, Ningxia, and the Qaidam Basin. There are important deposits of phosphate rock in a number of areas; Jiangxi, Guangxi, Yunnan and Hubei. Production has been accelerating every year. As of 2013 China is producing 97,000,000 metric tons of phosphate rock a year. Pyrites occur in several places; Liaoning, Hebei, Shandong, and Shanxi have the most important deposits. China also has large resources of fluorite (fluorspar), gypsum, asbestos, and has the world's largest reserves and production of cement, clinker and limestone.
Industry and manufacturing
![CR400BF-GZ-5205@IFP (20220213095454)](https://upload.wikimedia.org/wikipedia/commons/4/4e/CR400BF-GZ-5205%40IFP_%2820220213095454%29.jpg)
, industry accounts for 40.5% of China's GDP. Between the years 2011 and 2013, China used more cement than the United States consumed during the entire 20th century. In 2009 around 8% of the total manufacturing output in the world came from China itself and China List of countries by GDP sector composition, ranked third worldwide in industrial output that year (first was European Union, EU and second United States). Research by IHS Global Insight states that in 2010 China contributed to 19.8% of world's manufacturing output and became the largest manufacturer in the world that year, after the US had held that position for about 110 years.
![COMAC B-001A May 2017](https://upload.wikimedia.org/wikipedia/commons/8/8b/COMAC_B-001A_May_2017.jpg)
In November 2012, the State Council of the People's Republic of China mandated a "social risk assessment" for all major industrial projects. This requirement followed mass public protests in some locations for planned projects or expansions.
Major industries include mining and ore processing; iron and steel; aluminium;
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
; machinery; armaments; textiles and apparel; petroleum; cement; chemical; fertilizers; food processing; automobiles and other transportation equipment including rail cars and locomotives, ships, and aircraft; consumer products including
footwear
Footwear refers to garments worn on the feet, which typically serves the purpose of protection against adversities of the environment such as wear from ground textures and temperature. Footwear in the manner of shoes therefore primarily serves th ...
, toys, and electronics; telecommunications and information technology. China has become a preferred destination for the relocation of global manufacturing facilities. Its strength as an export platform has contributed to incomes and employment in China.
Since the founding of the People's Republic, industrial development has been given considerable attention; as of 2011 46% of China's national output continued to be devoted to investment; a percentage far higher than any other nation.
Among the various industrial branches the machine-building and metallurgy, metallurgical industries have received the highest priority. These two areas alone now account for about 20–30 percent of the total gross value of industrial output.
In these, as in most other areas of industry, however, innovation has generally suffered at the hands of a system that has rewarded increases in gross output rather than improvements in variety, sophistication and quality. China, therefore, still imports significant quantities of specialized steels. Overall industrial output has grown at an average rate of more than ten percent per year, having surpassed all other sectors in economic growth and degree of modernization. Some heavy industries and products deemed to be of national strategic importance remain state-owned, but an increasing proportion of lighter and consumer-oriented manufacturing firms are privately held or are private-state joint ventures.
The predominant focus of development in the chemical industry is to expand the output of chemical
fertilizer
A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
s, plastics, and synthetic fibers. The growth of this industry has placed China among the world's leading producers of nitrogenous fertilizers. In the consumer goods sector the main emphasis is on textiles and
clothing
Clothing (also known as clothes, apparel, and attire) are items worn on the body. Typically, clothing is made of fabrics or textiles, but over time it has included garments made from animal skin and other thin sheets of materials and natural ...
, which also form an important part of China's exports. Textile manufacturing, a rapidly growing proportion of which consists of synthetics, account for about ten percent of the gross industrial output and continues to be important, but less so than before. The industry tends to be scattered throughout the country, but there are a number of important textile industry in China, textile centers, including
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
,
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and alternatively romanized as Kwongchow or Kwangchow, is the capital and largest city of Guangdong province in southern China. Located on the Pearl River about north-northwest of Hong Kon ...
, and Harbin.
[Shanghai's GDP Keeps Growing](_blank)
Xinhua News Agency 1February 2003. There is a Growing consumer culture of China, growing consumer culture in China.
Steel industry
![Guangfa Securities Headquarters taken in November 2018](https://upload.wikimedia.org/wikipedia/commons/e/e5/Guangfa_Securities_Headquarters_taken_in_November_2018.jpg)
In 2020, China produced over 1053 million tonnes of steel, over half of the world total. This was an increase of 5.6% over the previous year as global steel production fell by 0.9%. China's share of global crude steel production increased from 53.3% in 2019 to 56.5% in 2020
Iron ore production kept pace with steel production in the early 1990s but was soon outpaced by imported iron ore and other metals in the early 2000s. Steel production, an estimated 140 million tons in 2000 increased to 419 million tons in 2006 and 928 million tons by 2018. Much of the country's steel output comes from a large number of small-scale producing centers, one of the largest being Anshan in
Liaoning
Liaoning () is a coastal province in Northeast China that is the smallest, southernmost, and most populous province in the region. With its capital at Shenyang, it is located on the northern shore of the Yellow Sea, and is the northernmost ...
.
China was the top exporter of steel in the world in 2018; export volumes in 2018 were 66.9 million tons, a nine percent decrease over the previous year. The decline slowed China's decade-old steel export growth. As of 2012 steel exports faced widespread Dumping (pricing policy), anti-dumping taxes and had not returned to pre-2008 levels. However, in 2015, China's steel exports reached a record high of 110 million metric tons.
Domestic demand remained strong, particularly in the developing west where steel production in
Xinjiang
Xinjiang, SASM/GNC: ''Xinjang''; zh, c=, p=Xīnjiāng; formerly romanized as Sinkiang (, ), officially the Xinjiang Uygur Autonomous Region (XUAR), is an autonomous region of the People's Republic of China (PRC), located in the northwest ...
was expanding.
For the year 2018, China's steel industry reported profits of CNY 470 billion ($70billion), which was 39% higher than the year before.
Of the 45 largest steel producing companies in the world, 21 are Chinese, including the world's largest, China Baowu Steel Group.
Automotive industry
China is the world's largest automobile producer, manufacturing more than 27 million vehicles in 2018. For comparison, the corresponding numbers for the US and Japan were 11.3 million and 9.7 million respectively. By 2006 China had become the world's third largest automotive vehicle manufacturer (after US and Japan) and the second largest consumer (only after the US). However, four years later, in 2010, China was manufacturing more vehicles than the U.S. and Japan combined. Automobile manufacturing has soared during the reform period. In 1975 only 139,800 automobiles were produced annually, but by 1985 production had reached 443,377, then jumped to nearly 1.1 million by 1992 and increased fairly evenly each year up until 2001, when it reached 2.3 million. In 2002 production rose to nearly 3.25 million and then jumped to 4.44 million in 2003, 5.07 million in 2004, 5.71 million in 2005, 7.28 million in 2006, 8.88 million in 2007, 9.35 million in 2008 and 13.83 million in 2009. China has become the number-one automaker in the world as of 2009. Domestic sales have kept pace with production. After respectable annual increases in the mid- and late 1990s, passenger car sales soared in the early 2000s. In 2006, a total of 7.22 million automobiles were sold, including 5.18 million units of passenger cars and 2.00 million commercial vehicles.
In 2010, China became the world's largest automotive vehicle manufacturer as well as the largest consumer ahead of the United States with an estimated 18 million new cars sold. However, new car sales grew only by an estimated 1% between 2011 and 2012 due to the escalation in the Spratly Islands dispute, which involved Japan, the world's third largest producer of vehicles.
China's automotive industry has been so successful that it began exporting car parts in 1999. China began to plan major moves into the automobile and components export business starting in 2005. A new Honda factory in
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and alternatively romanized as Kwongchow or Kwangchow, is the capital and largest city of Guangdong province in southern China. Located on the Pearl River about north-northwest of Hong Kon ...
was built in 2004 solely for the export market and was expected to ship 30,000 passenger vehicles to Europe in 2005. By 2004, twelve major foreign automotive manufacturers had joint-venture plants in China. They produced a wide range of automobiles, minivans, sport utility vehicles, buses, and trucks. In 2003 China exported US$4.7billion worth of vehicles and components. The vehicle export was 78,000 units in 2004, 173,000 units in 2005, and 340,000 units in 2006. The vehicle and component export is targeted to reach US$70billion by 2010.
The market for domestically produced cars, under a local name, is likely to continue to grow both inside China and outside. Companies such as Geely, Qiantu Motor, Qiantu and Chery are constantly evaluating new international locations, both in developing and developed countries.
Electric vehicle industry
![BYD Han DM 001](https://upload.wikimedia.org/wikipedia/commons/4/4b/BYD_Han_DM_001.jpg)
The electric vehicle industry in China is the largest in the world, accounting for around 57.4% of global production of EVs and around 500,000 exports in 2021. In 2021, CAAM reported China had sold 3.34 million passenger electric vehicles, consisting 2.73 million BEVs (battery-only EVs) and 0.6 million PHEV (plug-in hybrid electric vehicles), which is around 53% share of the global market of 6.23 million "new energy" passenger vehicles – BEVs, PHEVs, and HEVs. China also dominates the plug-in electric bus and light commercial vehicle market, reaching over 500,000 buses (98% of global stock) and 247,500 electric commercial vehicles (65% of global stock) in 2019,
[ ''See Statistical annex, pp. 247–252 (See Tables A.1 and A.12). The global stock of plug-in electric passenger vehicles totaled 7.2 million cars at the end of 2019, of which, 47% were on the road in China. The stock of plug-in cars consist of 4.8 million battery electric cars (66.6%) and 2.4 million plug-in hybrids (33.3%). In addition, the stock of light commercial plug-in electric vehicles in use totaled 378 thousand units in 2019, and about half a million electric buses were in circulation, most of which are in China.''] and recording new sales of 186,000 commercial EVs in 2021.
Plug-in electric vehicle (BEV and PHEV) sales was 15% of the overall automotive sales in China in 2021. NEV adoption rapidly increased to a record 28% in March 2022, and according to BYD chairman Wang Chuanfu could reach 35% by end of 2022, exceeding the government goal of 20% by 2025. The plug-in market in China was dominated by Chinese companies, with BYD Auto and SAIC Motor occupying the top two spots, and 5 out of the top 7 spots.
The battery industry is closely related to the EV industry as batteries constitute around 1/3 of the cost of EVs and around 80% of lithium-ion batteries in the world are used in EVs. The industry also has significant Chinese presence, with major players including world's largest CATL, BYD Company, BYD, CALB, Gotion, SVOLT and WeLion.
Semiconductor industry
The Chinese semiconductor industry, including Integrated circuit, IC design and manufacturing, forms a major part of China's IT industry. China's semiconductor industry consists of a wide variety of companies, from integrated device manufacturers to Semiconductor fabrication plant, pure-play foundries to fabless semiconductor company, fabless semiconductor companies. Integrated device manufacturers (IDMs) design and manufacture integrated circuits. Semiconductor fabrication plant, Pure-play foundries foundries only manufacture devices for other companies, without designing them, while fabless semiconductor company, fabless semiconductor companies only design devices. Examples of Chinese IDMs are YMTC and Changxin Memory Technologies, CXMT, examples of Chinese pure-play foundries are Semiconductor Manufacturing International Corporation, SMIC, Hua Hong Semiconductor and Wingtech, and examples of Chinese fabless companies are Zhaoxin, HiSilicon and UNISOC.
China is the currently the world’s largest semiconductor market in terms of consumption. In 2020, China represented 53.7% of worldwide chip sales, or $239.45 billion out of $446.1 billion. However, a large percentage are imported from multinational suppliers. In 2020, imports took up 83.38% ($199.7 billion) of total chip sales. In response, the country has launched a number of initiatives to close the gap, including investing $150 billion into its domestic IC industry, with a "Made in China 2025" goal of 70% domestic production.
China leads the world in terms of number of new fabs under construction, with 8 out of 19 worldwide in 2021, and 17 fabs in total are expected to start construction from 2021 to 2023. Total installed capacity of Chinese-owned chipmakers will also increase from 2.96 million wafers per month (wpm) in 2020 to 3.572 million wpm in 2021.
Other industries
Substantial investments were made in the manufacture of solar panels and wind generators by a number of companies, supported by liberal loans by banks and local governments. However, by 2012 manufacturing capacity had far outstripped domestic and global demand for both products, particularly solar panels, which were subjected to anti-dumping penalties by both the United States and Europe. The global oversupply has resulted in bankruptcies and production cutbacks both inside and outside China. China has budgeted $50billion to subsidize production of solar power over the two decades following 2015 but, even at the sharply reduced price resulting from oversupply, as of 2012 cost of solar power in China remained three times that of power produced by conventional coal-fired power plants.
![Huawei MateBook - Mobile World Congress 2016 (25472304356)](https://upload.wikimedia.org/wikipedia/commons/e/e0/Huawei_MateBook_-_Mobile_World_Congress_2016_%2825472304356%29.jpg)
China is the world's biggest sex toy producer and accounts for 70% of the worldwide sex toys production.
In the country, 1,000 manufacturers are active in this industry, which generates about two billion dollars a year.
As of 2011, China was the world's largest market for personal computers Since 2019, Samsung Electronics, Hyundai Motors, Kia Motors and LG Electronics are moving some or all production out of China, in order to reduce overdependence on the Chinese market and avoid risks related with increased local competition, China's economic slowdown and the US-China trade war.
Services
The output of China's Service sector, services in 2015 List of countries by GDP sector composition, ranks second worldwide after the United States. High power and telecom density has ensured that the country has remained on a high-growth trajectory over the long term. In 2015 the services sector produced 52.9% of China's annual GDP, second only to manufacturing. However, its proportion of GDP is still low compared to the ratio in more developed countries, and the agricultural sector still employs a larger workforce.
Prior to the onset of economic reforms in 1978, China's services sector was characterized by state-operated Retailing, shops, rationing, and regulated priceswith reform came private markets, individual entrepreneurs, and a commercial sector. The wholesale and retail trade has expanded quickly, with numerous shopping malls, retail shops, restaurant chains and hotels constructed in urban areas. Public administration remains a main component of the service sector, while Tourism in China, tourism has become a significant factor in employment and a source of foreign exchange reserves, foreign exchange.
Telecommunications
China possesses a diversified communications system that links all parts of the country by Internet, telephone, telegraph, radio, and television.
China's number of Internet users or netizens topped 137 million by the end of 2006, an increase of 23.4% from a year before and 162 million by June 2007, making China the second-largest Internet user after the United States, according to China's Ministry of Industry and Information Technology of the People's Republic of China, Ministry of Information Industry (MII). China's mobile phone penetration rate was 34% in 2007. In 2006, mobile phone users sent 429 billion text messages (on average 967 text messages per user). For 2006, the number of landline, fixed-lines grew by 79%, mainly in the rural areas.
Tourism
China hosts the world's World Heritage Sites by country#Countries with major concentrations of World Heritage Sites, largest number of World Heritage Sites (List of World Heritage Sites in China, 55). China's tourism industry is one of the fastest-growing industries in the national economy and is also one of the industries with a very distinct global competitive edge. According to the World Travel and Tourism Council, travel and tourism directly contributed CNY 1,362 billion (US$216billion) to the Chinese economy (about 2.6% of GDP). In 2011, total international tourist arrivals was 58 million, and international tourism receipts were US$48billion.
Domestic tourism market makes up more than 90% of the country's tourism traffic, and contributes more than 70% of total tourism revenue. In 2002, domestic tourists reached 878 million and tourism revenue was $46.9billion. A large middle class with strong consumption power is emerging in China, especially in major cities. China's outbound tourists reached 20.22 million in 2003, overtaking Japan for the first time.
It is forecast by the World Tourism Organization that China's tourism industry will take up to 8.6% of world market share to become the world's top tourism industry by 2020.
Chinese business travel spending is also forecast to be the highest in the world by 2014, overtaking the United States. According to a Global Business Travel Association study, total business-travel spending is expected to reach US$195billion in 2012.
Luxury goods
Luxury spending in China has skyrocketed, an indicator of the country's newfound wealth. For example, the Chinese bottled water industry is forecast to more than double in size in 2008, becoming a $10.5billion industry. Counterfeiting is now estimated to account for 8% of China’s gross
domestic product. Many municipalities and towns in China depend upon counterfeiting to sustain their local economies. There are millions of people, perhaps tens of millions of people, involved in counterfeiting in China. There are hundreds of thousands of people involved in anti-counterfeiting. Meanwhile, as those who once had no recourse but low-quality tap water take advantage of its availability in supermarkets, those who had little or no running water are now capitalizing on its availability. Tap water production and supply is expected to grow by 29.3% in 2008, to $11.9billion. China's Automotive industry in China, automotive industry is expected to expand by 29.5% to nearly $200billion. Also, consumption of chocolate and other confectionery is to increase by 24.3%, as the industry expands to $4.6billion. Additionally China's fast food industry has been growing at a 20.8% annual rate. The LVMH Group, who own brands including Louis Vuitton apparel, Moët & Chandon wines and champagne and Hennessy cognacs, reported earnings growth of over 25% in 2007 in China, with the country accounting for around 16% of LVMH's global business.
After an October 2012 ban on government agencies purchasing luxury goods, often used as "gifts", sales of luxury goods of China, luxury goods in China remained strong but slowed, even falling slightly for some luxury retailers in the 4th quarter of 2012,
with sales of Shark fin soup, shark fins and Edible bird's nest, edible swallow nests (once staples of lavish government banquets) down sharply.
Retail sales in China account for only 7% of global retail sales; however, Chinese buyers account for 25% of global retail sales of luxury consumer goods. Many shops in international travel destinations have specialized staff devoted to Chinese customers.
Cybercrime
An academic study released in August 2012 by the University of California (UC) UC Institute on Global Conflict and Cooperation, Institute on Global Conflict and Cooperation, claimed that China's "cyber black market" involved over 90,000 participants, cost the local economy 5.36 billion yuan (Pound sterling, £536m), negatively impacted upon 110 million internet users (22%), and affected 1.1 million websites (20%) in 2011. In July 2012, China's
State Council State Council may refer to:
Government
* State Council of the Republic of Korea, the national cabinet of South Korea, headed by the President
* State Council of the People's Republic of China, the national cabinet and chief administrative auth ...
released a set of information security guidelines as a measure to combat cyber crime that included increased auditing, security reporting, and monitoring, and a commitment to "reduce the number of internet connection points".
Labor and welfare
![Alley with miner](https://upload.wikimedia.org/wikipedia/commons/2/2a/Alley_with_miner.jpg)
One of the hallmarks of China's socialist economy was its promise of employment to all able and willing to work and job-security with virtually lifelong tenure. This socialist policy is known as the iron rice bowl.
In 1979–1980, the state reformed factories by giving wage increases to workers, which was immediately offset by sharply rising inflation rates of 6–7%. The reforms also dismantled the iron rice bowl, which meant it witnessed a rise in unemployment in the economy. In 1979–80 there were twenty million unemployed people.
Image: China employment by economic sectors.png, left, This chart shows the Chinese employment by sectors during time
China's estimated employed labor force in 2005 totaled 791 million persons, about 60% of the total population. During 2003, 49% of the labor force worked in agriculture, forestry, and fishing; 22% in mining, manufacturing, energy, and construction industries; and 29% in the Tertiary sector of economic activity, services sector and other categories. In 2004 some 25 million persons were employed by 743,000
private enterprise
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
s. Urban wages rose rapidly from 2004 to 2007, at a rate of 13 to 19% per year with average wages near $200/month in 2007. By 2016 the average monthly wage for workers engaged in manufacturing goods for export was $424. This wage, combined with other costs of doing business in China, had, more or less, equalized any Chinese cost advantage with respect to developed economies.
The All-China Federation of Trade Unions is the country's only legally-permissible trade union. Attempts to form trade unions independent of the ACFTU have been rare and short-lived. One notable example is the Beijing Workers' Autonomous Federation formed during the 1989 Tiananmen Square protests. Martial Law Command Headquarters issued a public notice declaring the BWAF an illegal organization and ordering it to disband on the grounds that Federation leaders were among "the main instigators and organizers in the capital of the counterrevolutionary rebellion.
In 2010, the issues of manufacturing wages caused a wildcat strike at a Honda parts plant. This resulted in wage increases both at the struck plant and other industrial plants.
The 2010 census found that China was now half urban and rapidly aging due to the one child policy. This is expected to lead to increased demand for labor to take care of an elderly population and a reduced supply of migrant labor from the countryside.
Due to worsening pollution, the corruption and political uncertainties of the one-party state and the limited economic freedom in an economy dominated by large state-owned enterprises, many skilled professionals are either leaving the country or preparing safety nets for themselves abroad. In the decade up to 2014, ten million Chinese emigrated to other countries, taking assets and their technical skills. Perceived corruption continued to grow worse in China as it dropped from 75th to 80th place in Transparency International's index of state corruption.
A law approved February 2013 will mandate a nationwide minimum wage at 40% average urban salaries to be phased in fully by 2015.
["China promises rise in minimum wage to close income gap"]
BBC News, 6 February 2013
External trade
![2006Chinese exports](https://upload.wikimedia.org/wikipedia/commons/8/80/2006Chinese_exports.PNG)
International trade makes up a sizeable portion of China's overall economy. China became a member of the
World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
in 2001. It also has free trade agreements with several nations, including ASEAN–China Free Trade Area, ASEAN, China–Australia Free Trade Agreement, Australia, Cambodia, New Zealand–China Free Trade Agreement, New Zealand, Pakistan, China–South Korea Free Trade Agreement, South Korea and Switzerland. China's List of the largest trading partners of China, largest trading partners are the United States, the European Union, Japan, Hong Kong, South Korea, India, Taiwan, Australia, Vietnam, Malaysia, and Brazil.
Being a Second World country at the time, a meaningful segment of China's trade with the Third World was financed through grants, credits, and other forms of assistance. The principal efforts were made in Asia, especially to Indonesia, Myanmar, Pakistan, and Sri Lanka, but large loans were also granted in Africa (Ghana, Algeria, Tanzania) and in the Middle East (Egypt). However, after Mao Zedong's death in 1976, these efforts were scaled back. After which, trade with developing countries became negligible, though during that time,
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
and
Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
both began to emerge as major trading partners.
Since economic reforms began in the late 1970s, China sought to decentralize its foreign trade system to integrate itself into the international trading system. In November 1991, China joined the
Asia-Pacific Economic Cooperation
The Asia-Pacific Economic Cooperation (APEC ) is an inter-governmental forum for 21 member economy, economies in the Pacific Rim that promotes free trade throughout the Asia-Pacific region. (APEC) group, which promotes free trade and cooperation in the economic, trade, investment, and technology spheres. China served as APEC chair in 2001, and Shanghai hosted the annual APEC leaders meeting in October of that year.
After reaching a bilateral WTO agreement with the EU and other trading partners in summer 2000, China worked on a multilateral WTO accession package. China concluded multilateral negotiations on its accession to the WTO in September 2001. The completion of its accession protocol and Working Party Report paved the way for its entry into the WTO on 11 December 2001, after 16 years of negotiations, the longest in the history of the General Agreement on Tariffs and Trade. However, U.S. exporters continue to have concerns about fair market access due to China's restrictive trade policies and U.S. export restrictions. In October 2019, Chinese Vice Premier Han Zheng promised to further decrease tariffs and remove non-tariff barriers for global investors, he also welcomed multinational companies to invest more in China.
![Jawaharlal Nehru Trust Port](https://upload.wikimedia.org/wikipedia/commons/2/28/Jawaharlal_Nehru_Trust_Port.jpg)
China's global trade exceeded $4.16trillion at the end of 2013, having broken the hundred-billion mark in 1988 and half a trillion by 2001. China global trade exceeded US$6 Trillion in 2021
The table below shows the average annual growth (in nominal USdollar terms) of China's foreign trade during the reform era.
![United States Balance of Trade Deficit-pie chart](https://upload.wikimedia.org/wikipedia/commons/c/c9/United_States_Balance_of_Trade_Deficit-pie_chart.svg)
The vast majority of China's imports consists of industrial supplies and capital goods, notably machinery and high-technology equipment, the majority of which comes from the developed countries, primarily Japan and the United States. Regionally, almost half of China's imports come from East and Southeast Asia, and about a fourth of China's exports go to the same destinations. About 80 percent of China's exports consist of manufactured goods, most of which are textiles and electronic equipment, with agricultural products and chemicals constituting the remainder. Out of the five busiest ports in the world, three are in China. The U.S. trade deficit with China reached $233billion in 2006, as imports grew 18%. China's share of total U.S. imports has grown from 7% to 15% since 1996.
Trade volume between China and Russia reached $29.1billion in 2005, an increase of 37.1% compared with 2004. A spokesman for the Ministry of Commerce of the People's Republic of China, Ministry of Commerce, Van Jingsun, said that the volume of trade between China and Russia could exceed forty billion dollars in 2007. China's export of machinery and electronic goods to Russia grew 70%, which is 24% of China's total export to Russia in the first eleven months of 2005. During the same time, China's export of high-tech products to Russia increased by 58%, and that is 7% of China's total exports to Russia. Also at that time period, border trade between the two countries reached $5.13billion, growing 35% and accounting for nearly 20% of the total trade. Most of China's exports to Russia remain apparel and footwear. Russia is China's eighth largest trade partner and China is now Russia's fourth largest trade partner, and China now has over 750 investment projects in Russia, involving $1.05billion. China's contracted investment in Russia totaled $368million during January–September 2005, twice that in 2004.
![E7210-NN-kitaj-auto](https://upload.wikimedia.org/wikipedia/commons/a/a4/E7210-NN-kitaj-auto.jpg)
Chinese imports from Russia are mainly those of energy sources, such as crude oil, which is mostly transported by rail, and electricity exports from neighboring Siberian and Far Eastern regions. In the near future, exports of both of these commodities are set to increase, as Russia is building the Eastern Siberia-Pacific Ocean oil pipeline with a branch going to the Chinese border, and Russian power grid monopoly UES is building some of its hydropower stations with a view of future exports to China.
Export growth has continued to be a major component supporting China's rapid economic growth. To increase exports, China pursued policies such as fostering the rapid development of foreign-invested factories, which assembled imported components into consumer goods for export and liberalizing trading rights. In its
11th Five-Year Program, adopted in 2005, China placed greater emphasis on developing a consumer demand-driven economy to sustain economic growth and address imbalances.
China is a member of the Regional Comprehensive Economic Partnership (RCEP), the world's largest free-trade area which was signed into agreement in November 2020. The RCEP, which includes China, Japan, South Korea, Australia, New Zealand and the ASEAN nations, represents about a third of the world's population and 29% of global gross domestic product. The RCEP aims to eliminate tariffs on a variety of products within 20 years. In May 2020, Chinese Premier
Li Keqiang
Li Keqiang (born 1 July 1955) is a Chinese politician who is the outgoing premier of China. An economist by profession, Li is head of China's executive branch as well as one of the leading figures behind China's Financial and Economic Affai ...
said that
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
is willing to consider joining another large Asia-Pacific free-trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Foreign investment
Direct foreign investment in China, which totaled about US$1.6trillion as of the end of October 2016, directly and indirectly contributed about one-third of China's GDP and a quarter of jobs there. As of the end of June 2020, FDI stock in China reached US$2.947trillion, and China's outgoing FDI stock stood at US$2.128trillion. The total foreign financial assets owned by China reached US$7.860trillion, and its foreign financial liabilities US$5.716trillion, making China the second largest creditor nation after Japan in the world.
China's investment climate has changed dramatically with more than two decades of reform. In the early 1980s, China restricted foreign investments to export-oriented operations and required foreign investors to form joint-venture partnerships with Chinese firms. The Encouraged Industry Catalogue sets out the degree of foreign involvement allowed in various industry sectors. From the beginning of the reforms legalizing foreign investment, capital inflows expanded every year until 1999. Foreign-invested enterprises account for 58–60% of China's imports and exports.
Since the early 1990s, the government has allowed foreign investors to manufacture and sell a wide range of goods on the domestic market, eliminated time restrictions on the establishment of joint ventures, provided some assurances against nationalization, allowed foreign partners to become chairs of joint venture boards, and authorized the establishment of wholly foreign-owned enterprises, now the preferred form of FDI. In 1991, China granted more preferential tax treatment for Wholly Foreign Owned Enterprises and contractual ventures and for foreign companies, which invested in selected economic zones or in projects encouraged by the state, such as energy, communications and transportation.
China also authorized some foreign banks to open branches in
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
and allowed foreign investors to purchase special "B" shares of stock in selected companies listed on the
Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
and
Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
Securities Exchanges. These "B" shares sold to foreigners carried no ownership rights in a company. In 1997, China approved 21,046 foreign investment projects and received over $45billion in
foreign direct investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
. China revised significantly its laws on Wholly Foreign-Owned Enterprises and China Foreign Equity Joint Ventures in 2000 and 2001, easing export performance and domestic content requirements. The Vice Minister of Finance Zhu Guangyao announced, foreign investors will be allowed to own up to 51% on domestic financial service companies. Formerly foreign ownership was limited to a 49% stake in these firms.
Foreign investment remains a strong element in China's rapid expansion in world trade and has been an important factor in the growth of urban jobs. China's economic leadership on global capital flows emphasizes long-term infrastructure and development finance over short-term flows which, under the current order, have imposed large costs on many economies. In 1998, foreign-invested enterprises produced about 40% of China's exports, and foreign exchange reserves totalled about $145billion. Foreign-invested enterprises today produce about half of China's exports (the majority of China's foreign investment come from
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
,
Macau
Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a pop ...
and
Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
), and China continues to attract large investment inflows. However, the Chinese government's emphasis on guiding FDI into manufacturing has led to market saturation in some industries, while leaving China's services sectors underdeveloped. From 1993 to 2001, China was the world's second-largest recipient of
foreign direct investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
(FDI) after the United States, receiving $39billion in 1999 and $41billion in 2000. China is now one of the leading FDI recipients in the world, receiving almost $80billion in 2005 according to World Bank statistics. In 2006, China received $69.47billion. By 2011, with the U.S. seeing a decline in foreign investment following the Financial crisis of 2007–08, 2008 financial crisis, China overtook it as the top destination for FDI, receiving over $280billion that year.
Amid slowing economic conditions and a weakening yuan in 2015, December of that year saw a 5.8% drop in FDI to China. While China's rank as the top receiver of FDI continued through 2014, the slowing of inbound investment in 2015 combined with a massive rebound in foreign investment to the United States resulted in the U.S. reclaiming its position as the top investment destination. Data from the American Chamber of Commerce in China's
2016 China Business Climate Survey' confirms this trend, although it also demonstrates that China remains a top investment destination. This survey of over 500 members found that "China remains a top three investment priority for six out of ten member companies," though this is a decline from the 2012 high of eight out of ten respondents considering China a top priority.
Foreign exchange reserve of the People's Republic of China, Foreign exchange reserves totaled $155billion in 1999 and $165billion in 2000. Foreign exchange reserves exceeded $800billion in 2005, more than doubling from 2003. Foreign exchange reserves were $819billion at the end of 2005, $1.066trillion at the end of 2006, $1.9trillion by June 2008. In addition, by the end of September 2008 China replaced Japan for the first time as the largest foreign holder of US treasury securities with a total of $585billion, vs Japan $573billion. China's foreign exchange reserves are the List of countries by foreign exchange reserves, largest in the world.
As part of its WTO accession, China undertook to eliminate certain trade-related investment measures and to open up specified sectors that had previously been closed to foreign investment. New laws, regulations, and administrative measures to implement these commitments are being issued. Major remaining barriers to foreign investment include opaque and inconsistently enforced laws and regulations and the lack of a rules-based legal infrastructure. Warner Bros., for instance, withdrew its cinema business in China as a result of a regulation that requires Chinese investors to own at least a 51 percent stake or play a leading role in a foreign joint venture.
Another major development in the history of foreign investment in China was the establishment of the Shanghai Free Trade Zone in September 2013. The Zone is considered a testing ground for a number of economic and social reforms. Critically, foreign investment is controlled via a "negative list" approach, where FDI is permitted in all sectors unless explicitly prohibited by the inclusion of a given sector on the negative list of foreign investment in China, negative list published by the Shanghai Municipal Government.
On 15 March 2019, China's National People's Congress adopted the Foreign Investment Law of the People's Republic of China, Foreign Investment Law, which comes into effect on 1January 2020. Foreign investment in China comes with a number of ethical risks which pose major challenges which investors must navigate.
A 2021 McKinsey & Company, McKinsey report estimated that the Chinese economy as currently the largest consumer economy measured in purchasing power parity (PPP) terms, and that it is expected to add more consumption than any other country within the next decade. Due to this and the rapid continued growth of China's middle class, large multinational companies like Walmart, have been keen to invest in China to tap into the growing domestic consumer market.
Chinese investment abroad
![Belt and Road Initiative participant map](https://upload.wikimedia.org/wikipedia/commons/e/e5/Belt_and_Road_Initiative_participant_map.svg)
Outward foreign direct investment is a new feature of Chinese globalization, where local Chinese firms seek to make investments in both developing and developed countries. It was reported in 2011 that there was increasing investment by capital rich Chinese firms in promising firms in the United States. Such investments offer access to expertise in marketing and distribution potentially useful in exploiting the developing Chinese domestic market.
Since 2005, Chinese companies have been actively expanding outside of China, in both developed and developing countries. In 2013, Chinese companies invested US$90billion globally in non-financial sectors, 16% more than 2012.
Between January 2009 and December 2013, China contributed a total of $161.03bn in outward Foreign direct investment, FDI, creating almost 300,000 jobs. Western Europe was the largest regional recipient of Chinese outward FDI, with Germany receiving the highest number of FDI projects for any country globally.
There are two ways Chinese companies choose to enter a foreign market: organic growth and Merge & Acquisition (M&A). Many Chinese companies would prefer M&A for the following reasons:
* Fast. M&A is the fastest way for a company to expand into another country by acquiring brand, distribution, talents, and technology. Chinese CEOs has been used to growing at 50%+ speed and do not want to spend capital.
* China market. China has become the world's largest economy. Many Chinese acquire foreign companies and then bring their products/services to China, anything from premium cars to fashion clothing to meat to Hollywood movies.
* Cheap capital access. The huge Chinese domestic market help many Chinese companies accumulated financial capital to do M&A. Chinese government also provides long-term, low-interest capital for companies to expand abroad.
* Low risk. M&A helped Chinese companies avoid risk of failure of organic growth as they got an established company with everything in place.
* Cheap labor. Some companies may move part of the manufacturing in high labor cost countries to China to reduce the cost and make the product more attractive in price.
* Trade and policy barrier. Chinese companies in many sectors face quota limitation and high tax, which prevent them from being competitive in foreign markets.
* Depressed assets. 2008–2010 global economic crisis created liquidity problems for a lot of western companies and reduced their market value. Chinese companies believe it is a great opportunity for them to buy these depressed assets at discount. China's direct foreign investment in non-financial sector growth from US$25billion in 2007 to US$90billion in 2013, more than three times.
*China is growing in investments and influencing power over Europe, and the EU has begun to take notice.
At the beginning, state-owned enterprises dominate the foreign acquisition and most of the money goes to oil and minerals. Since 2005, more and more private companies start to acquire non-raw material foreign companies. Below is a list of the top 15 outbound deals from Chinese companies:
However, the fast growth and M&A deals did not change consumers' low quality and low price perception of Chinese goods and brands. According to market consecutive researches by the Monogram Group, a Chicago-based advertising agency, in 2007, 2009, 2011 and 2012, American consumers' willingness to purchase Chinese products across all categories except PC remained the same or became worse during 2007–2012. The only sector in which Americans were more likely to purchase was personal computers.
Moreover, many M&A deals have failed because companies underestimated the challenges and failed to restructure the company.
Case 1: Shanghai Auto acquired 48.9% of Korean Ssangyong at US$500million in 2004, making it the most ambitious acquisition in Chinese auto industry at the time. Shanghai Auto wanted the brand and technology to expand its footprint in China. However, the cultural difference, the objection to transfer the technology and the failed sales of new SUV model put Shanghai Auto's ambition of expansion in jeopardy. It caused huge conflict between Ssangyong employees and Shanghai Auto as things didn't go well as planned. And the 2008 global economic crisis put Ssangyong on a survival mode, let alone expansion. After the negotiation with the labor union to reduce wages failed, Shanghai Auto decided to exit from Ssangyong and didn't get a penny back for their US$500million investment.
Case 2: In 2004, the television manufacturer TCL acquired TV business including Thomson and RCA brand from Thomson Electronics of France to form a joint venture called TCL–Thomson Electronics (TTE). For the coming two years, the company recorded huge loss, especially in Europe. Several factors contributed to the failure:
* Failure of Due Diligence. Right after TCL acquired Thomson's TV business, the TV market shifted to LCD technology, put Thomson out of date. As CEO of TCL, Dongsheng Li, said in 2012 "They betted on the wrong thing where the market would go. They thought Thomson's DLP could be the best choice."
* Lack of understanding of rules and regulations. According to the book ''Resumption of Trading'' by Chong Chen, soon after acquisition, Thomson found it in a situation that they couldn't recruit the talents they wanted and can't fire ones they didn't want.
* Underestimate of the challenges in cultural difference. Xuesong Tong, vice president of TTE, said in an interview with "China Operation" newspaper in 2005: "The French look down upon their Chinese boss. For example, they wanted to share the design model with TTE, but French just dislike it even though it is a popular one in US market. Also, French feel superior in their language and don't want to speak English, which created huge problem in communication. It takes hours to discuss simple issues and can't reach agreement."
* According to Scott Markman, president of Monogram, Chinese companies often moved their business model to developed countries and it doesn't work. Thomson has the problem, they are very good and distribution and operation in China but France and Europe is a totally different world.
Mergers and acquisitions
From 1993 to 2010, Chinese companies have been involved as either an acquiror or acquired company in 25,284 mergers and acquisitions with a total known value of US$969billion. The number and value of deals hit a new record in 2010. The number of deals that happened in 2010 has been 3,640, which is an increase of 17% compared to 2009. The value of deals in 2010 was US$196billion, which is an increase of 25% compared to the year before.
Demographics
Since the 1950s medical care, public hygiene and Sanitation in China, sanitation improved considerably, and epidemics were controlled. Consecutive generations continuously experienced better health. The population growth rate surged as the mortality rate dropped more rapidly than the birth rate. China's massive population has always been a major difficulty for the government as it has struggled to provide for it. In the 1950s, food supply was inadequate and the standard of living was generally low. This spurred the authorities to initiate a major birth control program. The Great Leap Forward industrial plan in 1958–60 was partially responsible for a huge Great Chinese Famine, famine that caused the death rate to surpass the birth rate, and by 1960, the overall population was declining. A second population control drive began in 1962 with major efforts focused on promoting late marriages and the use of contraceptives. By 1963 the country was in the beginning of recovery from the famine and the birth rate soared to its highest since 1949 with an annual population growth rate of 3%. In 1966, the Cultural Revolution suspended this second family planning program, but resumed four years later with the third attempt by making later marriage and family size limitation an obligation. Since 1970, the efforts have been much more effective. The third family planning program continued until 1979 when the one-child policy, one child per family policy was implemented. By the early 1980s, China's population reached around a billion, and by the early 2000s surpassed 1.3 billion. In the 1980s, the average overall population growth was around 1.5%. In the 1990s, this fell to about 1%. Today it is about 0.6%. China's population growth rate is now among the lowest for a developing country, although, due to its large population, annual net population growth is still considerable. One demographic consequence of the one-child policy is that China is now one of the most rapidly Population ageing, ageing countries in the world.
From 100 million to 150 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time, low-paying jobs.
According to a Forbes China Rich List (2007), China had 66 billionaires, the second largest number after the Forbes 400, United States, which had 415. In the 2006 Forbes Rich List it stated that there were 15 Chinese billionaires. In the 2007 Hurun Report, it lists 106 billionaires in China. According to the latest Forbes report (2021), China has a total of 626 billionaires, after gaining 239 new billionaires since March 2020.
According to a 2020 Brookings report, China become the largest middle-class consumption market in the world and is deemed a "priority market" for major multinational firm. It also estimates that 1.2 billion Chinese will be part of the middle class by 2027, and makeup a quarter of the world's middle class.
Labor force
In 2012, for the first time, according to statistics released by China's National Bureau of Statistics of China, National Bureau of Statistics in January 2013, the size of the labor force, people aged 15 to 59, in China shrank slightly to 937.27 million people, a decrease of 3.45 million from 2011. This trend, resulting from China's one-child policy of population control, is anticipated to continue to at least 2030.
On 29 October 2015, Xinhua, China's state news agency, reported a change in the existing law to a two-child policy, citing a statement from the CCP, and the new law is effective from 1January 2016 after it was passed in the standing committee of the National People's Congress on 27 December 2015.
Transportation and infrastructure
China's transportation policy, influenced by political, military, and economic concerns, have undergone major changes since 1949.
Immediately after the People's Republic was founded, the primary goal was to repair existing transportation infrastructure in order to meet military transport and Military logistics, logistics needs as well as to strengthen territorial integrity. During most of the 1950s, new road and rail links were built, while at the same time old ones were improved. During the 1960s much of the improvement of regional transportation became the responsibility of the local governments, and many small railways were constructed. Emphasis was also placed on developing transportation in remote rural, mountainous, and forested areas, in order to integrate poorer regions of the country and to help promote economies of scale in the agricultural sector.
Before the reform era began in the late 1970s, China's transportation links were mostly concentrated in the coastal areas and access to the inner regions was generally poor. This situation has been improved considerably since then, as railways and highways have been built in the remote and frontier regions of the northwest and southwest. At the same time, the development of international transportation was also pursued, and the scope of ocean shipping was broadened considerably.
Freight Logistics, haulage is mainly provided by rail transport. The rail sector is monopolized by China Railway and there is wide variation in services provided. In late 2007 China became one of the few countries in the world to launch its own indigenously developed High-speed rail, high-speed train. As rail capacity is struggling to meet demand for the transport of goods and raw materials such as coal, air routes, roads and waterways are rapidly being developed to provide an increasing proportion of China's overall transportation needs.
Some economic experts have argued that the development gap between China and other emerging economies such as Brazil, Argentina and India can be attributed to a large extent to China's early focus on ambitious infrastructure projects: while China invested roughly 9% of its GDP on infrastructure in the 1990s and 2000s, most emerging economies invested only 2% to 5% of their GDP. This considerable spending gap allowed the Chinese economy to grow at near optimal conditions while many South American economies suffered from various development bottlenecks such as poor transportation networks, aging power grids and mediocre schools.
Science and technology
![Tencent Logo](https://upload.wikimedia.org/wikipedia/commons/2/22/Tencent_Logo.svg)
Science and technology in China has in recent decades developed rapidly. The Chinese government has placed emphasis through funding, reform, and societal status on science and technology as a fundamental part of the socio-economic development of the country as well as for national prestige. China has made rapid advances in areas such as education, infrastructure, high-tech manufacturing, artificial intelligence, academic publishing, patents and commercial applications and is now in some areas and by some measures a world leader. China is now increasingly targeting indigenous innovation and aims to reform remaining weaknesses. Its Thousand Talents Plan aims to attract innovative Chinese academics living abroad (as well as a some foreigners) back to China in support of its economic innovation goals.
Anti-monopoly and competition
The Chinese economy has been characterized as being dominated by few, larger entities including Ant Group and Tencent. In recent years there has been attempts by the Xi Jinping Administration to enforce Competition law, economic competition rules, and probes into Alibaba and Tencent have been launched by Chinese economic regulators.
The crackdown on monopolies by tech giants and internet companies follows with recent calls by the Politburo Standing Committee of the Chinese Communist Party, Politburo against monopolistic practices by commercial retail giants like Alibaba Group, Alibaba. Comparisons have been made with similar probes into Amazon in the United States.
See also
Notes
References
Further reading
* Sit Tsui, Erebus Wong, Lau Kin Chi and Wen Tiejun
One Belt, One Road: China's Strategy for a New Global Financial Order(January 2017), ''Monthly Review'', Volume 68, Issue 08
* Cheng Enfu and Ding Xiaoqin
A Theory of China's 'Miracle': Eight Principles of Contemporary Chinese Political Economy(January 2017), ''Monthly Review'', Volume 68, Issue 08
*
China: Country StudiesFederal Research Division, Library of Congress Lcweb2.loc.gov (27 July 2010)
*
*
; Journals
* ''China Economic Journal'
Taylor & Francis Journals: Welcome Tandf.co.uk. Retrieved on 6 August 2010.
*
China Economic Quarterly'
* ''China & World Economy'
China & World EconomyJournal Information Blackwellpublishing.com (2010-05-07). Retrieved on 6 August 2010.
* ''Journal of Chinese Economic and Business Studies'' (JCEBS
Tandf.co.uk. Retrieved on 6 August 2010. is the official journal of the Chinese Economic Association (UK)
CEA PublicationsJournal of Chinese Economic and Business Studies Ceauk.org.uk. Retrieved on 6 August 2010.
* ''Journal of Chinese Economic and Foreign Trade Studies'
Emerald, Journal of Chinese Economic and Foreign Trade Studies information Emeraldinsight.com. Retrieved on 6 August 2010.
* ''The China Quarterly'
Journals.cambridge.org* ''The Chinese Economy'
M. E. Sharpe, Inc.Journal Information Mesharpe.com. Retrieved on 6 August 2010.
* ''Journal of Chinese Economic Studies'' (ISSN 1348-2521)
* ''Journal of the Chinese Statistical Association'' (ISSN 0529-6528)
* ''China: An International Journal'' (ISSN 0219-7472)
* ''China Economic Review'' (ISSN 1043-951X)
* ''China Review'' (ISSN 1680-2012)
* ''Frontiers of Economics in China'' (ISSN 1673-3444)
China 2030: Building a Modern, Harmonious, and Creative High-Income Society (pre-publication version)** Citation: "World Bank; Development Research Center of the State Council, P.R.C. 2012. China 2030 : Building a Modern, Harmonious, and Creative High-Income Society [pre-publication version]. Washington, DC: World Bank
China 2030 : Building a Modern, Harmonious, and Creative High-Income Society [pre-publication version]License: Creative Commons license]
CC BY 3.0 Unported"
*** URI
China 2030 : Building a Modern, Harmonious, and Creative High-Income Society [pre-publication version]*** Date: 2012-02-27
*** Author(s): World Bank; Development Research Center of the State Council, P.R.C.
*
China 2030
External links
National Bureau of Statistics of ChinaMinister of Commerce, ChinaCIA – The World Factbook – ChinaChina's economy at a glanceat the ''Financial Times''
China – OECD
{{DEFAULTSORT:Economy of the People's Republic of China
Economy of China,
Government-owned companies of China
World Trade Organization member economies, China