Economy of the People's Republic of China
Encyclopedia
The People's Republic of China
(PRC) ranks since 2010 as the world's second largest economy after the United States
. It has been the world's fastest-growing major economy
, with consistent growth rates of around 10%
over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. The country's per capita GDP (PPP) was $7,544 (International Monetary Fund
, 94th in the world) in 2010. The provinces in the coastal regions of China tend to be more industrialized, while regions in the hinterland are less developed
. As China's economic importance has grown, so has attention to the structure and health of that economy.
began to generate significant and steady growth in investment, consumption and standards of living. China now participates extensively in the world market and mostly state owned but also some private sector companies play a major role in the economy. Since 1978 hundreds of millions have been lifted out of poverty
- yet hundred of millions of rural population as well as millions of migrant workers remain unattended: According to China's official statistics, the poverty rate fell from 53% in 1981 to 2.5% in 2005. However, in 2009, as many as 150 million Chinese were living on less than $1.25 a day The infant mortality rate fell by 39.5% between 1990 and 2005, and maternal mortality by 41.1%. Access to telephones during the period rose more than 94-fold, to 57.1%. as did in many developing countries such as Peru or Nigeria.
In the 1949 revolution, China's economic system was officially made into a communist system. Since the wide-ranging reforms of the 1980s and afterwards, many scholars assert that China can be defined as one of the leading examples of state capitalism
today.
China has generally implemented reforms in a gradualist fashion. As its role in world trade
has steadily grown, its importance to the international economy has also increased apace. China's foreign trade has grown faster than its GDP for the past 25 years. China's growth comes both from huge state investment in infrastructure and heavy industry and from private sector
expansion in light industry instead of just exports, whose role in the economy appears to have been significantly overestimated. The smaller but highly concentrated public sector
, dominated by 159 large SOEs
, provided key inputs from utilities, heavy industries, and energy resources
that facilitated private sector growth and drove investment, the foundation of national growth. In 2008 thousands of private companies closed down and the government announced plans to expand the public sector to take up the slack caused by the global financial crisis. In 2010, there were approximately 10 million small businesses in China.
The PRC government's decision to permit China to be used by multinational corporation
s as an export
platform has made the country a major competitor to other Asian export-led economies, such as South Korea, Singapore, and Malaysia. China has emphasized raising personal income
and consumption
and introducing new management system
s to help increase productivity. The government has also focused on foreign trade as a major vehicle for economic growth
. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector
and that the extent at which China is dependent on exports is exaggerated despite the lack of full convertibility of the RMB. Nevertheless, key bottlenecks continue to constrain growth. Available energy
is insufficient to run at fully installed industrial capacity, and the transport system
is inadequate to move sufficient quantities of such critical items as coal
.
The two most important sectors of the economy have traditionally been agriculture
and industry
, which together employ more than 70 percent of the labor force
and produce more than 60 percent of GDP. The two sectors have differed in many respects. Technology
, labor productivity
, and income
s have advanced much more rapidly in industry than in agriculture. Agricultural output has been vulnerable to the effects of weather
, while industry has been more directly influenced by the government. The disparities between the two sectors have combined to form an economic-cultural-social gap between the rural and urban areas. China is the world's largest producer of rice
and is among the principal sources of wheat
, corn (maize
), tobacco
, soybeans, peanuts
(groundnuts), and cotton
. The country is one of the world's largest producers of a number of industrial and mineral products, including cotton cloth, tungsten
, and antimony
, and is an important producer of cotton yarn, coal
, crude oil, and a number of other products. Its mineral resources are probably among the richest in the world but are only partially developed.
China has acquired highly sophisticated foreign production facilities
and through "localization policies" also built a number of advanced engineering
plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapon
s and satellite
s, but most of its industrial output still comes from relatively ill-equipped factories. The technological level and quality standards of its industry as a whole are still disastrous, notwithstanding a marked change since 2000, spurred in part by foreign investment. A report by UBS in 2009 concluded that China has experienced total factor productivity
growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.
China's increasing integration with the international economy and its growing efforts to use market forces to govern the domestic allocation of goods have exacerbated this problem. Over the years, large subsidies were built into the price structure, and these subsidies grew substantially in the late 1970s and 1980s. By the early 1990s these subsidies began to be eliminated, in large part due to China's admission into the World Trade Organization
(WTO) in 2001, which carried with it requirements for further economic liberalization and deregulation. China's ongoing economic transformation has had a profound impact not only on China but on the world. The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship
, whilst retaining state domination of the economy.
Wayne M. Morrison of the Congressional Research Service
wrote in 2009 that "Despite the relatively positive outlook for its economy, China faces a number of difficult challenges that, if not addressed, could undermine its future economic growth and stability. These include pervasive government corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, the lack of rule of law, severe pollution, and widening income disparities." Economic consultant David Smick adds that the recent actions by the Chinese government to stimulate their economy have only added to a huge industrial overcapacity and commercial real estate vacancy problems.
China is one of the fastest-growing economies in the world, together with other emerging economies such as (Botswana
) it has also sustained a healthy average growth rates
of over 6% per annum for several decades, China's rapid-fire growth is as longer-lived as the Japanese counterpart in the 1960s to 1980s and is not showing signs of slowing. In China, as in other developing countries and emerging economies, growth has occurred across a vast population (nearly 1.3 billion), thus, liberating millions of people from poverty and unlocking massive segments of demand. In 2010, China was largest consumer of energy and accounted for 20.3% of the global total. China also consumed 48% of the world's coal in 2010. As of 2011, China consumed 54% of the world's production of cement
China's rising economy has resulted in a developing consumer oriented middle class.
There are now 45 million cars in China - up from 15 million in 2000.
Nike and Adidas sales are growing 20% annually in China. Even Starbucks is looking to triple its stores. - "In 2010, Yum expected to make 36 percent of an estimated $2 billion operating profit from 3,700 restaurants in China" (Yum owns KFC)
"China's growing middle class is buying new cars and heading off on the country's freshly built highways. And those travelers want clean, affordable places to sleep. Two U.S. hotel giants are hoping to fill that need, launching midpriced brands in China for the first time to capture part of the fast-growing domestic travel market"
"China has now the become fastest growing market for Apple’s iPhone. In its second quarter, Apple saw 250% y-o-y increase in iPhone sales from China compared to 155% growth in the U.S."
An estimate 6 million people go online for the first time every month - still "impoverished" versus Western countries, but an ongoing and significant upward trend of access to the digital marketplace and overcome the digital divide. /
"In 1998, when the government launched reforms to commercialize the housing market, it was the rare person who owned an apartment. Today home ownership is common, and prices have risen beyond what many young couples can afford-as if everything that happened in America over 50 years were collapsed into a single decade." http://ngm.nationalgeographic.com/print/2008/05/china/middle-class/leslie-chang-text
Though the opinions are mixed, many economist and institutional investment firms predict that more than a billion Chinese will be in the Middle Class in the next 20 years.
China's economic goals are closely linked with its foreign policy. According to Forbes Magazine – December 20, 2010 "As its GDP has increased, China has become more assertive regarding international issues. Those countries on its periphery--Korea, Japan, Taiwan and the ten Asean countries (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam)--have felt China's growing influence. When these states make policy decisions they now have to take China into account. There is no direct intimidation, but, by denying access to its huge consumer market, China can punish those who are against its interests. Therefore, none of these countries wants to be viewed as antagonistic. Increasingly, this same pressure is being felt worldwide: The balance of power has changed."
A 2009 Washington Post article noted that, “Jamaica's traditional allies, the United States and Britain, were preoccupied with their own financial problems, but a new friend jumped at the opportunity to come to the rescue: China. When contracts for loan packages totaling $138 million were signed between the two countries in March, China became Jamaica's biggest financial partner. Headlines in Jamaica's leading newspapers, which only a year ago were filled with concern about China's growing influence in the region, gushed about its generosity.
As Beijing grows more assertive in international finance, it is working inside as well as outside existing organizations. In January, it joined the Inter-American Development Bank -- which is active in Latin America and the Caribbean -- as a donor country. It is in talks with the IMF to increase its contribution to the fund in exchange for more of a say in IMF policies. And in Asia, it is leading the push by the Association of Southeast Asian Nations for a regional fund that will compete with the Asian Development Bank. This week, China's allies Kazakhstan and Pakistan -- both of which recently got new loans from China -- threw their support behind calls from China's central bank governor, Zhou Xiaochuan, to create a new world or Asian reserve currency to replace the dollar. Venezuelan President Hugo Chávez, who also signed a credit line with China recently, has backed the proposal. In the past five months, China has signed $95 billion in currency swap agreements with six countries that now hold part of their reserves in yuan."
and entire new industries were created. Tight control of budget
and money supply
reduced inflation
by the end of 1950. Though most of it was done at the expense of suppressing the private sector of small to big businesses by the Three-anti/five-anti campaigns
between 1951 to 1952. The campaigns were notorious for being anti-capitalist
, and imposed charges that allowed the government to punish capitalists with severe fines. In the beginning of the Communist party's rule, the leaders of the party had agreed that for a nation such as China, which does not have any heavy industry and minimal secondary production, capitalism is to be utilized to help the building of the "New China" and finally merged into communism.
The proclamations of the PRC instantly transformed Mao Zedong
and his followers from revolutionaries to administrators. With little experience in peacetime government or economic management, they faced two overwhelming tasks to organize and administer the world's largest society and to rebuild an economy devastated by decades of war. Both tasks failed within the first five years of communist rule.
Membership in the Chinese Communist Party (CCP) grew rapidly during this time, and, in a structure reminiscent of the old imperial bureaucracy, a hierarchy of party organs was extended from the top echelons of CCP down to more than one million branch committee established in every village and township, factory, school, and government agency. The new government nationalized the country's banking system and brought all currency and credit under centralized control. It regulated prices by establishing trade associations and boosted government revenues by collecting agricultural taxes. By the mid-1950s, the communists had ruined the country's railroad and highway systems, barely brought the agricultural and industrial production to their prewar levels, by bringing the bulk of China's industry and commerce under the direct control of the state.
Meanwhile, in fulfillment of their revolutionary promise, China's communist leaders completed land reform within two years of coming to power. Party cadres visited local villages and incited the peasants in public "struggle meetings" to eliminate their landlord
s and redistribute their land and other possessions to peasant households. Shortly thereafter, the ERP encouraged rural households to form mutual aid teams, and then the agricultural producers' cooperatives which the government saw as the best means for increasing agricultural productivity. The devastating result was massive famine and death.
Mao tried in 1958 to push China's economy to new heights. Under his highly touted "Great Leap Forward
", agricultural collectives were reorganized into enormous communes where men and women were assigned in military fashion to specific tasks. Peasants were told to stop relying on the family, and instead adopted a system of communal kitchens, mess halls, and nurseries. Wages were calculated along the communist principle of "From each according to his ability, to each according to his need
", and sideline production was banned as incipient capitalism. All Chinese citizens were urged to boost the country's steel production by establishing "backyard steel furnaces" to help overtake the West. But while Mao believed that the politically directed outpouring of effort by China's vast population would result in economic development and miraculous production increases, the Great Leap Forward quickly revealed itself as a giant step backwards. Over-ambitious targets were set, falsified production figures were duly reported, and Chinese officials lived in an unreal world of miraculous production increases. Steel output did rise dramatically, but most of the steel was virtually useless. Even worse, it quickly became apparent that the peasants had made their steel by melting whatever metal they could find. By 1960, agricultural production in the countryside had slowed dangerously, and GNP declined by about one-third. The people were exhausted, and large areas of China were gripped by a devastating famine. By 1960, the situation had become so grave that not even Mao could ignore it. Quietly and without fanfare, Mao stepped to the sidelines, and pragmatists within the CCP, including Deng Xiaoping
, began to do what was necessary to restore incentives and productions.
For the next several years, China experienced a period of relative stability. Agricultural and industrial production returned to normal levels, and labor productivity began to rise. Then, in 1966, Mao reasserted his power and again launched a scheme that nearly brought China to its knees. Worried lest Deng and other bureaucrats pull China too far from the spirit of its socialist revolution, Mao proclaimed a Cultural Revolution
to "put China back on track". Under orders to "Destroy the Four Olds
" (old thoughts, culture, customs and habits), universities and schools closed their doors, and students, who became Mao's "Red Guards
", were sent throughout the country to make revolution, beating and torturing anyone whose rank or political thinking offended. Intellectuals were cursed as the "stinking ninth class", and any sign of "capitalism
", such as wearing a necktie, was enough to condemn someone as a foe of the Communist Party. Deng himself was purged as a "capitalist roader" and sent to work in a tractor factory.
By 1969 the country had descended into anarchy
, and factions of the Red Guards had begun to fight among themselves. Finally, Mao called upon the army to restore order and sent his young guards to the countryside, where many became an embittered, uneducated, "lost" generation. In 1973, Mao quietly recalled Deng Xiaoping to Beijing.
Since 1978, China began to make major reforms to its economy. The Chinese leadership adopted a pragmatic
perspective on many political and socioeconomic problems, and quickly began to introduce aspects of a capitalist economic system. Political and social stability, economic productivity
, and public and consumer welfare were considered paramount and indivisible. In these years, the government emphasized raising personal income
and consumption
and introducing new management
systems to help increase productivity. The government also had focused on foreign trade as a major vehicle for economic growth
. In the 1980s, China tried to combine central planning with market-oriented
reforms to increase productivity, living standards, and technological quality without exacerbating inflation
, unemployment
, and budget deficits. Reforms began in the agricultural, industrial, fiscal, financial, banking, price setting, and labor systems.
A decision was made in 1978 to permit foreign direct investment
in several small "special economic zones" along the coast. The country lacked the legal infrastructure
and knowledge of international practices to make this prospect attractive for many foreign businesses, however. In the early 1980s steps were taken to expand the number of areas that could accept foreign investment with a minimum of red tape
, and related efforts were made to develop the legal and other infrastructure
s necessary to make this work well. This additional effort resulted in making 14 coastal cities and three coastal regions "open areas" for foreign investment. All of these places provide favored tax
treatment and other advantages for foreign investment. Laws on contract
s, patent
s, and other matters of concern to foreign businesses were also passed in an effort to attract international capital to spur China's development. The largely bureaucratic nature of China's economy, however, posed a number of inherent problems for foreign firms that wanted to operate in the Chinese environment, and China gradually had to add more incentive
s to attract foreign capital
.
China's SOEs were typical of large industrial firms in a centrally planned economy. Inefficient, overstaffed, and with outdated technology, they functioned not only as industrial units but also as social agencies, providing housing, daycare, education, and health care for the workers and their families. The largest enterprises included hundreds of thousands of employees, only a small proportion of whom were directly engaged in production.
The update of this system was that Chinese workers could expect both lifetime employment and an extensive, firm-based welfare system-the so-called "iron rice bowl". All welfare entitlements in this system were accounted for as costs of production and were deducted from revenues before the calculation of the profits that were to be remitted to the state. There was no national social security system because none was needed.
In the 1990s, the Chinese economy continued to grow at a rapid pace, at about 9.5%, accompanied by a rapidly increasing inflation, which reached over 20 percent in 1994.
The Asian financial crisis affected China at the margin, mainly through decreased foreign direct investment
and a sharp drop in the growth of its export
s. However, China had huge reserves, a currency that was not freely convertible, and capital inflows that consisted overwhelmingly of long-term investment. For these reasons it remained largely insulated from the regional crisis and its commitment not to devalue had been a major stabilizing factor for the region. However, China faced slowing growth and rising unemployment based on internal problems, including a financial system burdened by huge amounts of bad loans, and massive layoff
s stemming from aggressive efforts to reform state-owned enterprises (SOEs).
Despite China's impressive economic development
during the past two decades, reforming the state sector and modernizing the banking system remained major hurdles. Over half of China's state-owned enterprises were inefficient and reporting losses. During the 15th National Communist Party Congress
that met in September 1997, President Jiang Zemin
announced plans to sell, merge, or close the vast majority of SOEs in his call for increased "non-public ownership" (feigongyou or privatization
in euphemistic terms). The 9th National People's Congress
endorsed the plans at its March 1998 session. In 2000, China claimed success in its three year effort to make the majority of large state owned enterprises (SOEs) profitable.
Following the Chinese Communist Party's Third Plenum, held in October 2003, Chinese legislators unveiled several proposed amendments to the state constitution
. One of the most significant was a proposal to provide protection for private property
rights. Legislators also indicated there would be a new emphasis on certain aspects of overall government economic policy
, including efforts to reduce unemployment
(now in the 8–10% range in urban areas), to rebalance income distribution
between urban and rural regions, and to maintain economic growth while protecting the environment
and improving social equity. The National People's Congress approved the amendments when it met in March 2004.
The Fifth Plenum in October 2005 approved the 11th Five-Year Economic Program (2006–2010) aimed at building a "harmonious society
" through more balanced wealth distribution and improved education
, medical care
, and social security. On March 2006, the National People's Congress
approved the 11th Five-Year Program. The plan called for a relatively conservative 45% increase in GDP and a 20% reduction in energy intensity
(energy consumption per unit of GDP) by 2010.
China's economy grew at an average rate of 10% per year during the period 1990–2004, the highest growth rate in the world. China's GDP grew 10.0% in 2003, 10.1%, in 2004, and even faster 10.4% in 2005 despite attempts by the government to cool the economy. China's total trade in 2010 surpassed , making China the world's second-largest trading nation after the U.S. Such high growth is necessary if China is to generate the jobs needed annually—roughly the size of Ecuador
or Cambodia
—to employ new entrants into the national job market.
On January 14, 2009, as confirmed by the World Bank
the NBS
published the revised figures for 2007 fiscal year in which growth happened at 13 percent instead of 11.9 percent (provisional figures). China's gross domestic product stood at US$
3.38 trillion while Germany's
GDP was USD $3.32 trillion for 2007. This made China the world's third largest economy by gross domestic product
. Based on these figures, in 2007 China recorded its fastest growth since 1994 when the GDP grew by 13.1 percent.
China launched its Economic Stimulus Plan to specifically deal with the Global financial crisis of 2008–2009. It has primarily focused on increasing affordable housing, easing credit restrictions for mortgage and SMEs, lower taxes such as those on real estate sales and commodities, pumping more public investment into infrastructure development, such as the rail network, roads and ports. By the end of 2009 it appeared that the Chinese economy was showing signs of recovery. At the 2009 Economic Work Conference in December 'managing inflation expectations' was added to the list of economic objectives, suggesting a strong economic upturn and a desire to take steps to manage it.
By 2010 it was evident to outside observers such as The New York Times that China was poised to move from export dependency to development of an internal market. Wages were rapidly rising in all areas of the country and Chinese leaders were calling for an increased standard of living.
In 2010, China's GDP was valued at , surpassed Japan's , and became the world's second largest economy after the U.S. China could become the world's largest economy (by nominal GDP) sometime as early as 2020.
China is the largest creditor nation in the world and owns approximately 20.8% of all foreign-owned US Treasury securities.
It has also appeared that Noopolitik and the knowledge economy had become salient interests of the PRC's economic policy across the 2000s, through which the country made clear its move from "Made in China" to "Innovated in China" as notes Adam Segal. Idriss Aberkane thus argued "With China’s cosmopolitan and highly educated diaspora, it is no surprise that as of 2010, five of the top twenty most visited websites in the world are indexed in Mandarin. They include PRC-born behemoths such as Baidu.com
, Taobao.com
, and Sina.com.cn
, and video sharing Tudou.com, which has gained users in both North America and Europe."
The Institute of Economic Research of Renmin University of China has conducted several studies and released several reports regarding China's economy. "Under the influences of 2009’s stimulus policies, the spread of the economic bubble and implementation of the “12th Five-Year Plan”, China was at a key stage of steering the economic recovery to stable growth. While prices increased steadily, China’s GDP went back to the high-level growth rate and its economic structure gradually became market-oriented." . The foremost authorities on the Chinese economy -- those within the Chinese think-tanks and government -- give a unique, first-hand perspective. Their works, translated into English for a Western audience, are published only through an independent Hong Kong publishing house, www.enrichprofessional.com/home and can be found at academic libraries throughout the world.
The World Bank
's chief economist Justin Lin in 2011 stated that China, which become the world's second largest economy in 2010, may become the world's largest economy in 2030, overtaking the United States, if current trends continue. Challenges include income inequality and pollution. The Standard Chartered Bank
in a 2011 report suggested that China may become the world's largest economy in 2020. A 2007 OECD rapport by Angus Maddison estimated that if using purchasing power parity
conversions, then China will overtake the United States in 2015. James Wolfensohn, former World Bank president, estimated in 2010 that by 2030 two-thirds of the world's middle class
will live in China.
In 2011, the IMF warned that government controlled banks could be building up imbalances that could hamper growth and leave the system "severely impacted".
by the state. Nearly all the domestic enterprises were state-owned and the government had set the prices for key commodities, controlled the level and general distribution of investment funds, determined output targets for major enterprises and branches, allocated energy resources, set wage levels and employment targets, operated the wholesale and retail networks, and steered the financial policy and banking system. In the countryside from the mid-1950s, the government established cropping patterns, set the level of prices, and fixed output targets for all major crops.
Since 1978 when economic reforms were instituted, the government's role in the economy has lessened by a great degree. Industrial output by state enterprises slowly declined, although a few strategic industries, such as the aerospace industry have today remained predominantly state-owned. While the role of the government in managing the economy has been reduced and the role of both private enterprise and market forces increased, the government maintains a major role in the urban economy. With its policies on such issues as agricultural procurement the government also retains a major influence on rural sector performance. The State Constitution of 1982
specified that the state is to guide the country's economic development
by making broad decisions on economic priorities and policies, and that the State Council
, which exercises executive control, was to direct its subordinate bodies in preparing and implementing the national economic plan
and the state budget. A major portion of the government system (bureaucracy) is devoted to managing the economy in a top-down chain of command
with all but a few of the more than 100 ministries, commissions, administrations, bureaus, academies, and corporations under the State Council being concerned with economic matters.
Each significant economic sector is supervised by one or more of these organizations, which includes the People's Bank of China
, National Development and Reform Commission
, Ministry of Finance
, and the ministries of agriculture
; coal industry; commerce
; communications
; education
; light industry
; metallurgical industry; petroleum industry
; railways; textile industry
; and water resources
and electric power
. Several aspects of the economy are administered by specialized departments under the State Council, including the National Bureau of Statistics
, Civil Aviation Administration of China
, and the tourism bureau. Each of the economic organizations under the State Council directs the units under its jurisdiction through subordinate offices at the provincial and local levels.
The whole policy-making process involves extensive consultation and negotiation. Economic policies and decisions adopted by the National People's Congress
and the State Council are to be passed on to the economic organizations under the State Council, which incorporates them into the plans for the various sectors of the economy. Economic plans and policies are implemented by a variety of direct and indirect control mechanisms. Direct control is exercised by designating specific physical output quotas and supply allocations for some goods and services. Indirect instruments—also called "economic levers"—operate by affecting market incentives. These included levying taxes, setting prices for products and supplies, allocating investment funds, monitoring and controlling financial transactions by the banking system, and controlling the allocation of key resources, such as skilled labor, electric power, transportation, steel, and chemicals (including fertilizers). The main advantage of including a project in an annual plan is that the raw materials, labor, financial resources, and markets are guaranteed by directives that have the weight of the law behind them. In reality, however, a great deal of economic activity goes on outside the scope of the detailed plan, and the tendency has been for the plan to become narrower rather than broader in scope. A major objective of the reform program was to reduce the use of direct controls and to increase the role of indirect economic levers. Major state-owned enterprises still receive detailed plans specifying physical quantities of key inputs and products from their ministries. These corporations, however, have been increasingly affected by prices and allocations that were determined through market interaction and only indirectly influenced by the central plan.
Total economic enterprise in China is apportioned along lines of directive planning (mandatory), indicative planning
(indirect implementation of central directives), and those left to market forces. In the early 1980s during the initial reforms enterprises began to have increasing discretion over the quantities of inputs purchased, the sources of inputs, the variety of products manufactured, and the production process. Operational supervision over economic projects has devolved primarily to provincial
, municipal
, and county governments. The majority of state-owned industrial enterprises, which were managed at the provincial level or below, were partially regulated by a combination of specific allocations and indirect controls, but they also produced goods outside the plan for sale in the market. Important, scarce resources—for example, engineers or finished steel—may have been assigned to this kind of unit in exact numbers. Less critical assignments of personnel and materials would have been authorized in a general way by the plan, but with procurement
arrangements left up to the enterprise management.
In addition, enterprises themselves are gaining increased independence in a range of activity. While strategically important industry and services and most of large-scale construction have remained under directive planning, the market economy
has gained rapidly in scale every year as it subsumes more and more sectors. Overall, the Chinese industrial system contains a complex mixture of relationships. The State Council generally administers relatively strict control over resources deemed to be of vital concern for the performance and health of the entire economy. Less vital aspects of the economy have been transferred to lower levels for detailed decisions and management. Furthermore, the need to coordinate entities that are in different organizational hierarchies generally causes a great deal of informal bargaining and consensus building.
Consumer spending
has been subject to a limited degree of direct government influence but is primarily determined by the basic market forces of income levels and commodity prices. Before the reform period, key goods were rationed when they were in short supply, but by the mid-1980s availability had increased to the point that rationing was discontinued for everything except grain, which could also be purchased in the free markets. Collectively owned units and the agricultural sector were regulated primarily by indirect instruments. Each collective unit was "responsible for its own profit and loss," and the prices of its inputs and products provided the major production incentives.
Vast changes were made in relaxing the state control of the agricultural sector from the late 1970s. The structural mechanisms for implementing state objectives—the people's communes and their subordinate teams and brigades
—have been either entirely eliminated or greatly diminished. Farm incentive
s have been boosted both by price increases for state-purchased agricultural products, and it was permitted to sell excess production on a free market. There was more room in the choice of what crops to grow, and peasants are allowed to contract for land that they will work, rather than simply working most of the land collectively. The system of procurement quotas (fixed in the form of contracts) has been being phased out, although the state can still buy farm products and control surpluses in order to affect market conditions.
Foreign trade is supervised by the Ministry of Commerce
, customs
, and the Bank of China
, the foreign exchange arm of the Chinese banking system
, which controls access to the foreign currency required for imports. Ever since restrictions on foreign trade were reduced, there have been broad opportunities for individual enterprises to engage in exchanges with foreign firms without much intervention from official agencies.
Though private sector companies still dominate small and medium sized businesses, the government still plays a large part in the bigger industries. The fact that government accounts for a third of the GDP shows this. Foreign owned companies hold significant stakes. The public sector is mainly made up of State-Owned Enterprises (SOEs).
Purely on economic grounds, therefore, China has become a phenomenon. It is the second-largest economy in the world and has frequently been described as likely, within a decade, to surpass both the European Union and the United States in total GDP. Under the leadership of President Hu Jintao
, the Chinese Communist Party has retained full control of the country's affairs and remained firmly committed to many of socialism
's key tenets. All of the country's major banks, for example, remained tightly linked to the state, as do key sectors such as oil
, petrochemicals, and steel
. State agencies have provided most of the country's still-limited financial services, and state-owned enterprises produced more than one-third of total output. Indeed, the state-and the Party-were central players in nearly all aspects of China's economy, guiding a development trajectory often labeled as "socialism with Chinese characteristics".
China's unequal transportation system
—combined with important differences in the availability of natural
and human resources
and in industrial
infrastructure
—has produced significant variations in the regional economies of China.
Economic development
has generally been more rapid in coastal provinces than in the interior, and there are large disparities in per capita income
between regions. The three wealthiest regions are along the southeast coast, centred on the Pearl River Delta
; along the east coast, centred on the Lower Yangtze River
; and near the Bohai Gulf, in the Beijing
–Tianjin
–Liaoning
region. It is the rapid development of these areas that is expected to have the most significant effect on the Asian regional economy as a whole, and Chinese government policy is designed to remove the obstacles to accelerated growth in these wealthier regions.
China, economically frail before 1978, has again become one of the world's major economic powers with the greatest potential. In the 22 years following reform and opening-up in 1979 in particular, China's economy developed at an unprecedented rate, and that momentum has been held steady into the 21st century.
China adopts the "five-year-plan" strategy for economic development
. The Twelfth Five-Year Plan (2011–2015) is currently being implemented.
It was not an obvious path to growth. But for nearly 30 years China had indeed been growing, thrusting its citizens into prosperity and its goods across the world. Between 1978 and 2005, China's per capita GDP had grown from $153 to $1284, while its current account surplus had increased over twelve-fold between 1982 and 2004, from $5.7 billion to $71 billion. During this time, China had also become an industrial powerhouse, moving beyond initial successes in low-wage sectors like clothing
and footwear
to the increasingly sophisticated production of computers, pharmaceuticals, and automobiles.
Just how long the trajectory could continue, however, remained unclear. According to the 11th five-year plan
, China needed to sustain an annual growth rates of 8% for the foreseeable future. Only with such levels of growth, the leadership argued, could China continue to develop its industrial prowess, raise its citizen's standard of living, and redress the inequalities that were cropping up across the country. Yet no country had ever before maintained the kind of growth that China was predicting. Moreover, China had to some extent already undergone the easier parts of development. In the 1980s, it had transformed its vast and inefficient agricultural sector, freeing its peasants from the confines of central planning and winning them to the cause of reform. In the 1990s, it had likewise started to restructure its stagnant industrial sector, wooing foreign investors for the first time. These policies had catalysed the country's phenomenal growth. Instead, China had to take what many regarded as the final step toward the market, liberalizing the banking sector and launching the beginnings of a real capital market
.
This step, however, would not be easy. As of 2004, China's state-owned enterprises were still only partially reorganized, and its banks were dealing with the burden of over $205 billion (1.7 trillion RMB) in non-performing loan
s, monies that had little chance of ever being repaid. The country had a floating exchange rate
, and strict controls on both the current and capital accounts.
Foreign investment abroad:
to Guangdong
, was completed in September 2004. The "West-to-East Gas Transmission" project includes a 4,000 km trunk pipeline running through 10 provinces, autonomous regions or municipalities, conveying natural gas to cities in northern and eastern China. This was finished in October 2004 and has a design capacity 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.
policy, the economies of the former European colonies, Hong Kong and Macao, are separate from the rest of the PRC, and each other. Both Hong Kong
and Macau
are free to conduct and engage in economic negotiations with foreign countries, as well as participating as full members in various international economic organizations such as the World Customs Organization
, the World Trade Organization
and the Asia-Pacific Economic Cooperation
forum, often under the names "Hong Kong, China" and "Macao, China".
(GDP) to measure the national economy. China started the study of theoretical foundation, guiding, and accounting model etc., for establishing a new system of national economic accounting. In 1986, as the first citizen of the People's Republic of China to receive a Ph.D. in economics from an overseas country, Dr. Fengbo Zhang headed Chinese Macroeconomic Research
- the key research project of the seventh Five-Year Plan of China, as well as completing and publishing the China GDP data by China's own research. The summary of the above has been included in the book Chinese Macroeconomic Structure and Policy (1988) Editor: Fengbo Zhang, collectively authored by the Research Center of the State Council of China. This is the first GDP data which was published by China. The State Council of China issued “The notice regarding implementation of System of National Accounting
” in August 1992, the SNA
system officially is introduced to China, replaced Soviet Union
's MPS
system, Western economic indicator GDP became China’s most important economic indicator (WikiChina: China GDP, The First China GDP).
The table below shows the trend of the GDP of China at market prices estimated by the International Monetary Fund
(IMF) with figures in millions (Chinese yuan
). See also. For purchasing power parity
comparisons, the US dollar is exchanged at 2.05 CNY only.
and other economic crimes; sustain adequate job growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; and keep afloat the large state-owned enterprises, most of which had not participated in the vigorous expansion of the economy and many of which had been losing the ability to pay full wages and pensions. From 50 to surplus rural workers were adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program
. Another long-term threat to continued rapid economic growth has been the deterioration in the environment, notably air
and water pollution
, soil erosion, growing desertification
and the steady fall of the water table
especially in the north. China also has continued to lose arable land
because of erosion and infrastructure development.
Other major problems concern the labor force
and the pricing system. There is large-scale underemployment
in both urban and rural areas, and the fear of the disruptive effects of major, explicit unemployment
is strong. The prices of certain key commodities, especially of industrial raw material
s and major industrial products, are determined by the state. In most cases, basic price ratios were set in the 1950s and are often irrational in terms of current production capabilities and demands. Over the years, large subsidies were built into the price structure, and these subsidies grew substantially in the late 1970s and 1980s. By the early 1990s these subsidies began to be eliminated, in large part due to China's admission into the World Trade Organization
(WTO) in 2001, which carried with it requirements for further economic liberalization and deregulation.
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
in order to control global warming
. There were diligent efforts to increase energy efficiency
and increase use of renewable sources
; over 1,000 inefficient power plants had been closed, but projections continued to show a dramatic rise in carbon emissions from burning fossil fuel
s.
s, often at the expense of consumer safety. This issue became more prominent in 2007, with a number of restrictions being placed on problematic Chinese exports by the United States.
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
were in effect on numerous basic products and services, but were ineffective with food, prices of which were rising at an annual rate of 18.2% in November 2007. The problem of inflation has caused concern at the highest levels of the Chinese government. On January 9, 2008, the government of China 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 a fifth of a pound 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
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 March 11, 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 a 11.7% increase in food prices 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 up.
By 2005, there were signs of stronger demand for workers being able to choose employment that offered higher wages and better working conditions, enabling some to move away from the restrictive dormitory life and boring marige work that have characterized export industries in provinces such as Guangdong
and Fujian
. Minimum wage
s began rising toward the equivalent of 100 U.S. dollars a month as companies scrambled for employees, with some paying as much as $150 a month on average. The labor shortage was partially driven by the demographic trends, as the proportion of people of working age fell as the result of strict family planning
.
It was reported in The New York Times in April 2006 that labor costs continued to increase and a shortage of unskilled labor had developed with a million or more employees being sought. Operations that relied on cheap labor were contemplating relocations to cities in the interior or to other low-cost countries such as Vietnam
or Bangladesh
. Many young people were attending college rather than opting for minimum-wage factory work. The demographic shift
resulting from the one-child policy
continued to reduce the supply of young entry-level workers. Also, government efforts to advance economic development in the interior of the country were beginning to be effective at creating better opportunities there. A follow-up article in The New York Times in late August 2007 reported acceleration of this trend. The minimum wage a young unskilled factory worker could be hired at had increased to $200 with experienced workers commanding more. There was strong demand for young workers willing to work long hours and live in dormitory conditions, while older workers, over forty, were considered unsuitable.
Rising wages were being, to a certain extent, offset by increases in productivity
, but in 2007, a slight rise in the cost of imports from China was recorded by the United States government: "After falling since its inception in December 2003, the price index for imports from China rose 0.4 percent in July 2007, the largest monthly increase since the index was first published in December 2003. The July increase was the third consecutive monthly advance. Over the past year, import prices from China increased 0.9 percent." By February 2008, concerns were being raised that rising wages and inflation in China were beginning to create inflationary pressure in the United States and Europe, which had depended on cheap prices for consumer goods from China exerting downward pressure on prices.
On January 1, 2008, China introduced a new Labor Law, increasing the rights of the workforce, this caused many foreign and private companies, whose operations in China were based on low wages, to move to countries with lower labor costs, like Thailand, Vietnam or Bangladesh. In the summer of 2008 the growth in export orders began to fall sharply as the sub-prime crisis in export markets reduced demand in Guangdong province, particularly in toy and textile manufacture. According to Chinese Government sources jobs in 67,000 factories were reported to have been lost. The government initially was happy to see factories close down in labour intensive low wage factories, and the Labor law was seen as a means of helping to eradicate them, but the global financial crisis led to a far more rapid process of private sector collapse in Guangdong than was expected, raising fears of a contagious spread of social unrest.
In early 2010 a labor shortage developed in coastal areas with many migrant workers not returning after the new year holiday. Wages rose rapidly with temp agencies charging over $1.00 US per hour for factory workers in Guangzhou. Following the strikes in 2010 at Japanese auto plants, the shortage continued with many factories unable to fully staff their factories.
According to Fan Gang
, professor of economics at Beijing University and director of China’s National Economic Research Institute, due to the large volume of workers engaged in relatively unremunerative agricultural work there is considerable room for increased nominal wages in China without changing the competitive position of the Chinese export industry for the next few decades. Lower wages in other countries may not represent productivity comparable to the increasing productivity of Chinese workers.
Most of China's financial institutions are state owned and governed and 98% of banking assets are state owned. The chief instruments of financial
and fiscal
control are the People's Bank of China
(PBC) and the Ministry of Finance
, both under the authority of the State Council
. The People's Bank of China replaced the Central Bank of China
in 1950 and gradually took over private bank
s. It fulfills many of the functions of other central
and commercial bank
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 to the government's economic plans. The PBC is also responsible for international trade
and other overseas transactions
. Remittances by overseas Chinese
are managed by the Bank of China
(BOC), which has a number of branch offices in several countries.
Other financial institutions that are crucial, include the China Development Bank
(CDB), which funds economic development
and directs foreign investment; the Agricultural Bank of China
(ABC), which provides for the agricultural sector; the China Construction Bank
(CCB), which is responsible for capitalizing a portion of overall investment and for providing capital funds for certain industrial and construction enterprises; and the Industrial and Commercial Bank of China
(ICBC), which conducts ordinary commercial transactions and acts as a savings bank
for the public.
China's economic reforms greatly increased the economic role of the banking system. 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. (SOEs) Even though nearly all investment capital
was previously provided on a grant
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 renminbi in loans were 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
and several United Nations
programs, as well as from countries (particularly Japan
) and, to a lesser extent, commercial banks. Hong Kong
has been a major conduit of this investment, as well as a source itself.
With two stock exchanges (Shanghai Stock Exchange
and Shenzhen Stock Exchange
), mainland China's stock market had a market value of by January 2007, which became the third largest stock market in Asia, after Japan and Hong Kong. It is estimated to be the world's third largest by 2016.
("people's currency") is the currency of China, denominated as the yuan
, subdivided into 10 jiao
or 100 fen
. The renminbi is issued by the People's Bank of China
, the monetary authority of the PRC. The ISO 4217
abbreviation is CNY, although also commonly abbreviated as "RMB". The Latinised symbol is ¥. The yuan is generally considered by outside observers to be undervalued by about 30-40%.
The renminbi is held in a floating exchange-rate system managed primarily against the US dollar. On July 21, 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 (Chinese yuan per US$1) on July 31, 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
, inflation, measured by the consumer price index
and the value of its currency. Despite allowing the value of the yuan to "float", China's central bank
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. 222
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 capitalization
and pricing situations of various firms, but more-uniform tax schedules were introduced in the early 1990s. In addition, personal income
and value-added taxes were implemented at that time.
China is the world's largest producer and consumer of agricultural products – and some Chinese farm
workers are in the industry, mostly laboring on pieces of land about the size of U.S farms. Virtually all arable land
is used for food crop
s. China is the world's largest producer of rice
and is among the principal sources of wheat
, corn (maize
), tobacco
, soybeans, potato
es, sorghum
, peanut
s, tea
, millet
, barley
, oilseed, pork
, and fish
. Major non-food crops, including cotton, other fibers, and oilseeds, 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
. 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
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.
According to the United Nations World Food Program, in 2003, China fed 20 percent of the world's population with only 7 percent of the world's arable land
. China ranks first worldwide in farm output, and, as a result of topographic
and climatic
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
s and irrigated 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, 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
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
output. China has a long tradition of ocean and freshwater fishing and of aquaculture
. Pond raising has always been important and has been increasingly emphasized to supplement coastal and inland fisheries threatened by overfishing
and to provide such valuable export commodities as prawn
s.
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
program that proved inadequate, and forest resources are still fairly meagre. The principal forests are found in the Qin Mountains and the central mountains and on the Sichuan–Yunnan plateau. Because they are inaccessible, the Qinling forests are not worked extensively, and much of the country's timber
comes from Heilongjiang
, Jilin
, Sichuan
, and Yunnan
.
Western China
, comprising Tibet
, Xinjiang
, and Qinghai
, has little agricultural significance except for areas of floriculture
and cattle raising. Rice, China's most important crop, is dominant in the southern provinces and many of the farms here yield two harvests a year. In the north, wheat is of the greatest importance, while in central China wheat and rice vie with each other for the top place. Millet
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
. Most of the soybean
crop is derived from the north and the northeast; corn (maize) is grown in the center and the north, while tea
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
comes from the center and parts of the south. Other important crops are potatoes, sugar beet
s, and oilseeds.
There is still a relative lack of agricultural machinery, particularly advanced machinery. For the most part the Chinese peasant or farmer depends on simple, nonmechanized farming implements. Good progress has been made in increasing water conservancy, 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
decentralization
; massive privatization of state enterprises, thereby allowing a wide variety of private enterprises in the services and light manufacturing; the foundation of a diversified banking system (but with large amounts of state control); the development of a stock market
; and the opening of the economy to increased foreign trade and foreign investment.
Electricity – production by source:
Oil:
Natural gas:
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
(PRC) ranks since 2010 as the world's second largest economy after the United States
Economy of the United States
The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP. The European Union has a larger collective economy, but is not a single nation...
. It has been the world's fastest-growing major economy
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, with consistent growth rates of around 10%
Historical GDP of the People's Republic of China
This article includes a list of China's historical gross domestic product values, the market value of all final goods and services produced by a nation in a given year. The GDP dollar estimates presented here are calculated at market or government official exchange rates and derived from...
over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. The country's per capita GDP (PPP) was $7,544 (International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
, 94th in the world) in 2010. The provinces in the coastal regions of China tend to be more industrialized, while regions in the hinterland are less developed
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
. As China's economic importance has grown, so has attention to the structure and health of that economy.
Overview
In the modern era, China's influence in the world economy was minimal until the late 1980s. At that time, economic reforms initiated after 1978Chinese economic reform
The Chinese economic reform refers to the program of economic reforms called "Socialism with Chinese characteristics" in the People's Republic of China that were started in December 1978 by reformists within the Communist Party of China led by Deng Xiaoping.China had one of the world's largest...
began to generate significant and steady growth in investment, consumption and standards of living. China now participates extensively in the world market and mostly state owned but also some private sector companies play a major role in the economy. Since 1978 hundreds of millions have been lifted out of poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
- yet hundred of millions of rural population as well as millions of migrant workers remain unattended: According to China's official statistics, the poverty rate fell from 53% in 1981 to 2.5% in 2005. However, in 2009, as many as 150 million Chinese were living on less than $1.25 a day The infant mortality rate fell by 39.5% between 1990 and 2005, and maternal mortality by 41.1%. Access to telephones during the period rose more than 94-fold, to 57.1%. as did in many developing countries such as Peru or Nigeria.
In the 1949 revolution, China's economic system was officially made into a communist system. Since the wide-ranging reforms of the 1980s and afterwards, many scholars assert that China can be defined as one of the leading examples of state capitalism
State capitalism
The term State capitalism has various meanings, but is usually described as commercial economic activity undertaken by the state with management of the productive forces in a capitalist manner, even if the state is nominally socialist. State capitalism is usually characterized by the dominance or...
today.
China has generally implemented reforms in a gradualist fashion. As its role in world trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
has steadily grown, its importance to the international economy has also increased apace. China's foreign trade has grown faster than its GDP for the past 25 years. China's growth comes both from huge state investment in infrastructure and heavy industry and from private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
expansion in light industry instead of just exports, whose role in the economy appears to have been significantly overestimated. The smaller but highly concentrated public sector
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
, dominated by 159 large SOEs
Government-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
, provided key inputs from utilities, heavy industries, and energy resources
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
that facilitated private sector growth and drove investment, the foundation of national growth. In 2008 thousands of private companies closed down and the government announced plans to expand the public sector to take up the slack caused by the global financial crisis. In 2010, there were approximately 10 million small businesses in China.
The PRC government's decision to permit China to be used by multinational corporation
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
s as an export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
platform has made the country a major competitor to other Asian export-led economies, such as South Korea, Singapore, and Malaysia. China has emphasized raising personal income
Personal Income
In economics, personal income refers to an individual's total earnings from wages, investment enterprises, and other ventures....
and consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
and introducing new management system
Management system
A management system is the framework of processes and procedures used to ensure that an organization can fulfill all tasks required to achieve its objectives....
s to help increase productivity. The government has also focused on foreign trade as a major vehicle for economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
and that the extent at which China is dependent on exports is exaggerated despite the lack of full convertibility of the RMB. Nevertheless, key bottlenecks continue to constrain growth. Available energy
Energy policy of China
The energy policy of the People's Republic of China is a policy decided on by the Central Government with regard to energy and energy resources. The country is currently the world's largest emitter of greenhouse gases according to a Dutch research agency. However, China's per capita emissions are...
is insufficient to run at fully installed industrial capacity, and the transport system
Transportation in the People's Republic of China
Transport in the People's Republic of China has experienced major growth and expansion in recent years. Airports, roads, and railway construction will provide a massive employment boost in China over the next decade....
is inadequate to move sufficient quantities of such critical items as coal
Coal power in China
The People's Republic of China is the largest consumer of coal in the world, and is about to become the largest user of coal-derived electricity, generating 1.95 trillion kilowatt-hours per year, or 68.7% of its electricity from coal as of 2006...
.
The two most important sectors of the economy have traditionally been agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
, which together employ more than 70 percent of the labor force
Labor force
In economics, a labor force or labour force is a region's combined civilian workforce, including both the employed and unemployed.Normally, the labor force of a country consists of everyone of working age In economics, a labor force or labour force is a region's combined civilian workforce,...
and produce more than 60 percent of GDP. The two sectors have differed in many respects. Technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
, labor productivity
Labor productivity
Workforce productivity is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity can be measured for a firm, a process, an industry, or a country...
, and income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
s have advanced much more rapidly in industry than in agriculture. Agricultural output has been vulnerable to the effects of weather
Weather
Weather is the state of the atmosphere, to the degree that it is hot or cold, wet or dry, calm or stormy, clear or cloudy. Most weather phenomena occur in the troposphere, just below the stratosphere. Weather refers, generally, to day-to-day temperature and precipitation activity, whereas climate...
, while industry has been more directly influenced by the government. The disparities between the two sectors have combined to form an economic-cultural-social gap between the rural and urban areas. China is the world's largest producer of rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
and is among the principal sources of wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, corn (maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
), tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, soybeans, peanuts
Peanuts
Peanuts is a syndicated daily and Sunday American comic strip written and illustrated by Charles M. Schulz, which ran from October 2, 1950, to February 13, 2000, continuing in reruns afterward...
(groundnuts), and cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
. The country is one of the world's largest producers of a number of industrial and mineral products, including cotton cloth, tungsten
Tungsten
Tungsten , also known as wolfram , is a chemical element with the chemical symbol W and atomic number 74.A hard, rare metal under standard conditions when uncombined, tungsten is found naturally on Earth only in chemical compounds. It was identified as a new element in 1781, and first isolated as...
, and antimony
Antimony
Antimony is a toxic chemical element with the symbol Sb and an atomic number of 51. A lustrous grey metalloid, it is found in nature mainly as the sulfide mineral stibnite...
, and is an important producer of cotton yarn, coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, crude oil, and a number of other products. Its mineral resources are probably among the richest in the world but are only partially developed.
China has acquired highly sophisticated foreign production facilities
Mass production
Mass production is the production of large amounts of standardized products, including and especially on assembly lines...
and through "localization policies" also built a number of advanced engineering
Engineering
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...
plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapon
Nuclear weapon
A nuclear weapon is an explosive device that derives its destructive force from nuclear reactions, either fission or a combination of fission and fusion. Both reactions release vast quantities of energy from relatively small amounts of matter. The first fission bomb test released the same amount...
s and satellite
Satellite
In the context of spaceflight, a satellite is an object which has been placed into orbit by human endeavour. Such objects are sometimes called artificial satellites to distinguish them from natural satellites such as the Moon....
s, but most of its industrial output still comes from relatively ill-equipped factories. The technological level and quality standards of its industry as a whole are still disastrous, notwithstanding a marked change since 2000, spurred in part by foreign investment. A report by UBS in 2009 concluded that China has experienced total factor productivity
Total factor productivity
In economics, total-factor productivity is a variable which accounts for effects in total output not caused by inputs. If all inputs are accounted for, then total factor productivity can be taken as a measure of an economy’s long-term technological change or technological dynamism.If all inputs...
growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.
China's increasing integration with the international economy and its growing efforts to use market forces to govern the domestic allocation of goods have exacerbated this problem. Over the years, large subsidies were built into the price structure, and these subsidies grew substantially in the late 1970s and 1980s. By the early 1990s these subsidies began to be eliminated, in large part due to China's admission into the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO) in 2001, which carried with it requirements for further economic liberalization and deregulation. China's ongoing economic transformation has had a profound impact not only on China but on the world. The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship
Entrepreneurship
Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response...
, whilst retaining state domination of the economy.
Wayne M. Morrison of the Congressional Research Service
Congressional Research Service
The Congressional Research Service , known as "Congress's think tank", is the public policy research arm of the United States Congress. As a legislative branch agency within the Library of Congress, CRS works exclusively and directly for Members of Congress, their Committees and staff on a...
wrote in 2009 that "Despite the relatively positive outlook for its economy, China faces a number of difficult challenges that, if not addressed, could undermine its future economic growth and stability. These include pervasive government corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, the lack of rule of law, severe pollution, and widening income disparities." Economic consultant David Smick adds that the recent actions by the Chinese government to stimulate their economy have only added to a huge industrial overcapacity and commercial real estate vacancy problems.
China is one of the fastest-growing economies in the world, together with other emerging economies such as (Botswana
Botswana
Botswana, officially the Republic of Botswana , is a landlocked country located in Southern Africa. The citizens are referred to as "Batswana" . Formerly the British protectorate of Bechuanaland, Botswana adopted its new name after becoming independent within the Commonwealth on 30 September 1966...
) it has also sustained a healthy average growth rates
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
of over 6% per annum for several decades, China's rapid-fire growth is as longer-lived as the Japanese counterpart in the 1960s to 1980s and is not showing signs of slowing. In China, as in other developing countries and emerging economies, growth has occurred across a vast population (nearly 1.3 billion), thus, liberating millions of people from poverty and unlocking massive segments of demand. In 2010, China was largest consumer of energy and accounted for 20.3% of the global total. China also consumed 48% of the world's coal in 2010. As of 2011, China consumed 54% of the world's production of cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
China's rising economy has resulted in a developing consumer oriented middle class.
There are now 45 million cars in China - up from 15 million in 2000.
Nike and Adidas sales are growing 20% annually in China. Even Starbucks is looking to triple its stores. - "In 2010, Yum expected to make 36 percent of an estimated $2 billion operating profit from 3,700 restaurants in China" (Yum owns KFC)
"China's growing middle class is buying new cars and heading off on the country's freshly built highways. And those travelers want clean, affordable places to sleep. Two U.S. hotel giants are hoping to fill that need, launching midpriced brands in China for the first time to capture part of the fast-growing domestic travel market"
"China has now the become fastest growing market for Apple’s iPhone. In its second quarter, Apple saw 250% y-o-y increase in iPhone sales from China compared to 155% growth in the U.S."
An estimate 6 million people go online for the first time every month - still "impoverished" versus Western countries, but an ongoing and significant upward trend of access to the digital marketplace and overcome the digital divide. /
"In 1998, when the government launched reforms to commercialize the housing market, it was the rare person who owned an apartment. Today home ownership is common, and prices have risen beyond what many young couples can afford-as if everything that happened in America over 50 years were collapsed into a single decade." http://ngm.nationalgeographic.com/print/2008/05/china/middle-class/leslie-chang-text
Though the opinions are mixed, many economist and institutional investment firms predict that more than a billion Chinese will be in the Middle Class in the next 20 years.
China's economic goals are closely linked with its foreign policy. According to Forbes Magazine – December 20, 2010 "As its GDP has increased, China has become more assertive regarding international issues. Those countries on its periphery--Korea, Japan, Taiwan and the ten Asean countries (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam)--have felt China's growing influence. When these states make policy decisions they now have to take China into account. There is no direct intimidation, but, by denying access to its huge consumer market, China can punish those who are against its interests. Therefore, none of these countries wants to be viewed as antagonistic. Increasingly, this same pressure is being felt worldwide: The balance of power has changed."
A 2009 Washington Post article noted that, “Jamaica's traditional allies, the United States and Britain, were preoccupied with their own financial problems, but a new friend jumped at the opportunity to come to the rescue: China. When contracts for loan packages totaling $138 million were signed between the two countries in March, China became Jamaica's biggest financial partner. Headlines in Jamaica's leading newspapers, which only a year ago were filled with concern about China's growing influence in the region, gushed about its generosity.
As Beijing grows more assertive in international finance, it is working inside as well as outside existing organizations. In January, it joined the Inter-American Development Bank -- which is active in Latin America and the Caribbean -- as a donor country. It is in talks with the IMF to increase its contribution to the fund in exchange for more of a say in IMF policies. And in Asia, it is leading the push by the Association of Southeast Asian Nations for a regional fund that will compete with the Asian Development Bank. This week, China's allies Kazakhstan and Pakistan -- both of which recently got new loans from China -- threw their support behind calls from China's central bank governor, Zhou Xiaochuan, to create a new world or Asian reserve currency to replace the dollar. Venezuelan President Hugo Chávez, who also signed a credit line with China recently, has backed the proposal. In the past five months, China has signed $95 billion in currency swap agreements with six countries that now hold part of their reserves in yuan."
History
At the formation of the PRC, An enormous effort was made towards creating economic growthEconomic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
and entire new industries were created. Tight control of budget
Government budget
A government budget is a legal document that is often passed by the legislature, and approved by the chief executive-or president. For example, only certain types of revenue may be imposed and collected...
and money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
reduced inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
by the end of 1950. Though most of it was done at the expense of suppressing the private sector of small to big businesses by the Three-anti/five-anti campaigns
Three-anti/five-anti campaigns
The Three-anti Campaign and Five-anti Campaign were reform movements originally issued by Mao Zedong a few years after the founding of the People's Republic of China in an effort to rid Chinese cities of corruption and enemies of the state...
between 1951 to 1952. The campaigns were notorious for being anti-capitalist
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
, and imposed charges that allowed the government to punish capitalists with severe fines. In the beginning of the Communist party's rule, the leaders of the party had agreed that for a nation such as China, which does not have any heavy industry and minimal secondary production, capitalism is to be utilized to help the building of the "New China" and finally merged into communism.
The proclamations of the PRC instantly transformed Mao Zedong
Mao Zedong
Mao Zedong, also transliterated as Mao Tse-tung , and commonly referred to as Chairman Mao , was a Chinese Communist revolutionary, guerrilla warfare strategist, Marxist political philosopher, and leader of the Chinese Revolution...
and his followers from revolutionaries to administrators. With little experience in peacetime government or economic management, they faced two overwhelming tasks to organize and administer the world's largest society and to rebuild an economy devastated by decades of war. Both tasks failed within the first five years of communist rule.
Membership in the Chinese Communist Party (CCP) grew rapidly during this time, and, in a structure reminiscent of the old imperial bureaucracy, a hierarchy of party organs was extended from the top echelons of CCP down to more than one million branch committee established in every village and township, factory, school, and government agency. The new government nationalized the country's banking system and brought all currency and credit under centralized control. It regulated prices by establishing trade associations and boosted government revenues by collecting agricultural taxes. By the mid-1950s, the communists had ruined the country's railroad and highway systems, barely brought the agricultural and industrial production to their prewar levels, by bringing the bulk of China's industry and commerce under the direct control of the state.
Meanwhile, in fulfillment of their revolutionary promise, China's communist leaders completed land reform within two years of coming to power. Party cadres visited local villages and incited the peasants in public "struggle meetings" to eliminate their landlord
Landlord
A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...
s and redistribute their land and other possessions to peasant households. Shortly thereafter, the ERP encouraged rural households to form mutual aid teams, and then the agricultural producers' cooperatives which the government saw as the best means for increasing agricultural productivity. The devastating result was massive famine and death.
Mao tried in 1958 to push China's economy to new heights. Under his highly touted "Great Leap Forward
Great Leap Forward
The Great Leap Forward of the People's Republic of China was an economic and social campaign of the Communist Party of China , reflected in planning decisions from 1958 to 1961, which aimed to use China's vast population to rapidly transform the country from an agrarian economy into a modern...
", agricultural collectives were reorganized into enormous communes where men and women were assigned in military fashion to specific tasks. Peasants were told to stop relying on the family, and instead adopted a system of communal kitchens, mess halls, and nurseries. Wages were calculated along the communist principle of "From each according to his ability, to each according to his need
From each according to his ability, to each according to his need
From each according to his ability, to each according to his need is a slogan popularised by Karl Marx in his 1875 Critique of the Gotha Program. In German, "Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen!"...
", and sideline production was banned as incipient capitalism. All Chinese citizens were urged to boost the country's steel production by establishing "backyard steel furnaces" to help overtake the West. But while Mao believed that the politically directed outpouring of effort by China's vast population would result in economic development and miraculous production increases, the Great Leap Forward quickly revealed itself as a giant step backwards. Over-ambitious targets were set, falsified production figures were duly reported, and Chinese officials lived in an unreal world of miraculous production increases. Steel output did rise dramatically, but most of the steel was virtually useless. Even worse, it quickly became apparent that the peasants had made their steel by melting whatever metal they could find. By 1960, agricultural production in the countryside had slowed dangerously, and GNP declined by about one-third. The people were exhausted, and large areas of China were gripped by a devastating famine. By 1960, the situation had become so grave that not even Mao could ignore it. Quietly and without fanfare, Mao stepped to the sidelines, and pragmatists within the CCP, including Deng Xiaoping
Deng Xiaoping
Deng Xiaoping was a Chinese politician, statesman, and diplomat. As leader of the Communist Party of China, Deng was a reformer who led China towards a market economy...
, began to do what was necessary to restore incentives and productions.
For the next several years, China experienced a period of relative stability. Agricultural and industrial production returned to normal levels, and labor productivity began to rise. Then, in 1966, Mao reasserted his power and again launched a scheme that nearly brought China to its knees. Worried lest Deng and other bureaucrats pull China too far from the spirit of its socialist revolution, Mao proclaimed a Cultural Revolution
Cultural Revolution
The Great Proletarian Cultural Revolution, commonly known as the Cultural Revolution , was a socio-political movement that took place in the People's Republic of China from 1966 through 1976...
to "put China back on track". Under orders to "Destroy the Four Olds
Four Olds
The Four Olds or the Four Old Things were Old Customs, Old Culture, Old Habits, and Old Ideas. One of the stated goals of the Cultural Revolution in the People's Republic of China was to bring an end to the Four Olds...
" (old thoughts, culture, customs and habits), universities and schools closed their doors, and students, who became Mao's "Red Guards
Red Guards
-Communist groups:*Red Guards , during the Finnish Civil War*Red Guards , during the Russian Revolution of 1917 and the Russian Civil War*Red Guards , in the Bavarian Soviet Republic...
", were sent throughout the country to make revolution, beating and torturing anyone whose rank or political thinking offended. Intellectuals were cursed as the "stinking ninth class", and any sign of "capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
", such as wearing a necktie, was enough to condemn someone as a foe of the Communist Party. Deng himself was purged as a "capitalist roader" and sent to work in a tractor factory.
By 1969 the country had descended into anarchy
Anarchy
Anarchy , has more than one colloquial definition. In the United States, the term "anarchy" typically is meant to refer to a society which lacks publicly recognized government or violently enforced political authority...
, and factions of the Red Guards had begun to fight among themselves. Finally, Mao called upon the army to restore order and sent his young guards to the countryside, where many became an embittered, uneducated, "lost" generation. In 1973, Mao quietly recalled Deng Xiaoping to Beijing.
1978–1990
After Mao's death in 1976, power passed quickly to the reform fraction of the CCP, led by Deng Xiaoping. Unlike Mao, Deng was a pragmatic leader, known less of his ideological commitment than his slogan: "Who cares if a cat is black or white, as long as it catches the mice." Once he consolidated his power, he began to put his pragmatic policies to work, determined to bring China back from the devastation that the Cultural Revolution had wrought.Since 1978, China began to make major reforms to its economy. The Chinese leadership adopted a pragmatic
Pragmatism
Pragmatism is a philosophical tradition centered on the linking of practice and theory. It describes a process where theory is extracted from practice, and applied back to practice to form what is called intelligent practice...
perspective on many political and socioeconomic problems, and quickly began to introduce aspects of a capitalist economic system. Political and social stability, economic productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
, and public and consumer welfare were considered paramount and indivisible. In these years, the government emphasized raising personal income
Personal Income
In economics, personal income refers to an individual's total earnings from wages, investment enterprises, and other ventures....
and consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
and introducing new management
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
systems to help increase productivity. The government also had focused on foreign trade as a major vehicle for economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
. In the 1980s, China tried to combine central planning with market-oriented
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
reforms to increase productivity, living standards, and technological quality without exacerbating inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
, unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
, and budget deficits. Reforms began in the agricultural, industrial, fiscal, financial, banking, price setting, and labor systems.
A decision was made in 1978 to permit foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
in several small "special economic zones" along the coast. The country lacked the legal infrastructure
Law of the People's Republic of China
Law of the People's Republic of China is the legal regime of the People's Republic of China, with the separate legal traditions and systems of Mainland China, Hong Kong, and Macau....
and knowledge of international practices to make this prospect attractive for many foreign businesses, however. In the early 1980s steps were taken to expand the number of areas that could accept foreign investment with a minimum of red tape
Red tape
Red tape is excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision-making...
, and related efforts were made to develop the legal and other infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
s necessary to make this work well. This additional effort resulted in making 14 coastal cities and three coastal regions "open areas" for foreign investment. All of these places provide favored tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
treatment and other advantages for foreign investment. Laws on contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s, patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s, and other matters of concern to foreign businesses were also passed in an effort to attract international capital to spur China's development. The largely bureaucratic nature of China's economy, however, posed a number of inherent problems for foreign firms that wanted to operate in the Chinese environment, and China gradually had to add more incentive
Incentive
In economics and sociology, an incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way...
s to attract foreign capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
.
Phase One: reform in the countryside
When Deng came into power, China's vast peasantry was still organized in communes, work brigades, and production teams. Procurement prices were too low to cover even production costs, and ceilings were set on the amount of grain that producers could keep for consumption. Deng changed all that. He allowed farmers to produce on their own and sanctioned the sale of surplus production and other cash crops in newly freed markets. State procurement prices were raised, and prices for many agricultural goods were left to the dictates of the market. Beginning with the poor mountain areas of Anhui and then spreading across the country, Deng and his officials broke up the communes established by Mao and replaced them with a complicated system of leases that eventually brought effective land tenure back to the household level (even though ownership of land remained collective). The Household Responsibility System allowed peasants to lease land for a fixed period from the collective, provided they delivered to the collective a minimum quota of produce, usually basic grain. They could then sell any surplus they produced, either to the state at government procurement prices or on the newly free market. They were also free to retain any profits they might earn. Within a decade, grain production had grown by roughly 30%, and production of cotton, sugarcane, tobacco, and fruit had doubled.Phase Two: rural industrialization and enterprise reform
As the reforms fueled production increases that surprised even the reformers, the scale of change grew bolder, and by the mid-1980s, the party leadership had begun the more complicated and politically delicate task of transforming the country's cumbersome system of central planning and state-owned enterprise. Prior to 1978, enterprises were almost all owned by the state in one form or another. At the top of each sector were the State-owned Enterprises (SOEs), answerable to the national government. Below these were other enterprises reporting to provincial, municipal, or county authorities. Private enterprises, meaning family-run shops, were not allowed until after 1978, and even then they were limited to seven employees.China's SOEs were typical of large industrial firms in a centrally planned economy. Inefficient, overstaffed, and with outdated technology, they functioned not only as industrial units but also as social agencies, providing housing, daycare, education, and health care for the workers and their families. The largest enterprises included hundreds of thousands of employees, only a small proportion of whom were directly engaged in production.
The update of this system was that Chinese workers could expect both lifetime employment and an extensive, firm-based welfare system-the so-called "iron rice bowl". All welfare entitlements in this system were accounted for as costs of production and were deducted from revenues before the calculation of the profits that were to be remitted to the state. There was no national social security system because none was needed.
1990–2000
The Asian financial crisis affected China at the margin, mainly through decreased foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
and a sharp drop in the growth of its export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
s. However, China had huge reserves, a currency that was not freely convertible, and capital inflows that consisted overwhelmingly of long-term investment. For these reasons it remained largely insulated from the regional crisis and its commitment not to devalue had been a major stabilizing factor for the region. However, China faced slowing growth and rising unemployment based on internal problems, including a financial system burdened by huge amounts of bad loans, and massive layoff
Layoff
Layoff , also called redundancy in the UK, is the temporary suspension or permanent termination of employment of an employee or a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs...
s stemming from aggressive efforts to reform state-owned enterprises (SOEs).
Despite China's impressive economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
during the past two decades, reforming the state sector and modernizing the banking system remained major hurdles. Over half of China's state-owned enterprises were inefficient and reporting losses. During the 15th National Communist Party Congress
National Congress of the Communist Party of China
The National Congress of the Communist Party of China is a party congress that is held about once every five years. The National Congress is theoretically the highest body within the Communist Party of China, but in practice important decisions are made before the meeting. Since 1987 the National...
that met in September 1997, President Jiang Zemin
Jiang Zemin
Jiang Zemin is a former Chinese politician, who served as General Secretary of the Communist Party of China from 1989 to 2002, as President of the People's Republic of China from 1993 to 2003, and as Chairman of the Central Military Commission from 1989 to 2005...
announced plans to sell, merge, or close the vast majority of SOEs in his call for increased "non-public ownership" (feigongyou or privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
in euphemistic terms). The 9th National People's Congress
9th National People's Congress
The 9th National People's Congress was in session from 1998 to 2003. It held five plenary sessions in this period. There were 2,979 deputies to this Congress.-Elected state leaders:*President of the People's Republic of China: Jiang Zemin...
endorsed the plans at its March 1998 session. In 2000, China claimed success in its three year effort to make the majority of large state owned enterprises (SOEs) profitable.
2000–2010
Constitution of the People's Republic of China
The Constitution of the People's Republic of China is the highest law within the People's Republic of China. The current version was adopted by the 5th National People's Congress on December 4, 1982 with further revisions in 1988, 1993, 1999, and 2004. Three previous state constitutions—those of...
. One of the most significant was a proposal to provide protection for private property
Private property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...
rights. Legislators also indicated there would be a new emphasis on certain aspects of overall government economic policy
Economic policy
Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.Such policies are often...
, including efforts to reduce unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
(now in the 8–10% range in urban areas), to rebalance income distribution
Income distribution
In economics, income distribution is how a nation’s total economy is distributed amongst its population.Income distribution has always been a central concern of economic theory and economic policy...
between urban and rural regions, and to maintain economic growth while protecting the environment
Environmental protection
Environmental protection is a practice of protecting the environment, on individual, organizational or governmental level, for the benefit of the natural environment and humans. Due to the pressures of population and our technology the biophysical environment is being degraded, sometimes permanently...
and improving social equity. The National People's Congress approved the amendments when it met in March 2004.
The Fifth Plenum in October 2005 approved the 11th Five-Year Economic Program (2006–2010) aimed at building a "harmonious society
Harmonious society
The construction of a Harmonious Society is a socio-economic vision that is said to be the ultimate end result of Chinese leader Hu Jintao's signature ideology of the Scientific Development Concept. It serves as the ultimate goal for the ruling Communist Party of China along with Xiaokang society,...
" through more balanced wealth distribution and improved education
Education in China
Education in China may refer to:*Education in the People's Republic of China*Education in Hong Kong*Education in Macau*Education in the Republic of China For historical perspectives, see*History of education in China*Imperial examination...
, medical care
Healthcare system reform in the People's Republic of China
The healthcare system reform in the People's Republic of China refers to the healthcare system transition in modern China.The Ministry of Health of the State Council oversees the health services system, which includes a substantial rural collective sector but little private sector...
, and social security. On March 2006, the National People's Congress
National People's Congress
The National People's Congress , abbreviated NPC , is the highest state body and the only legislative house in the People's Republic of China. The National People's Congress is held in the Great Hall of the People, Beijing, capital of the People's Republic of China; with 2,987 members, it is the...
approved the 11th Five-Year Program. The plan called for a relatively conservative 45% increase in GDP and a 20% reduction in energy intensity
Energy intensity
]Energy intensity is a measure of the energy efficiency of a nation's economy. It is calculated as units of energy per unit of GDP.* High energy intensities indicate a high price or cost of converting energy into GDP....
(energy consumption per unit of GDP) by 2010.
China's economy grew at an average rate of 10% per year during the period 1990–2004, the highest growth rate in the world. China's GDP grew 10.0% in 2003, 10.1%, in 2004, and even faster 10.4% in 2005 despite attempts by the government to cool the economy. China's total trade in 2010 surpassed , making China the world's second-largest trading nation after the U.S. Such high growth is necessary if China is to generate the jobs needed annually—roughly the size of Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
or Cambodia
Cambodia
Cambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...
—to employ new entrants into the national job market.
On January 14, 2009, as confirmed by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
the NBS
National Bureau of Statistics of China
The National Bureau of Statistics is an agency within the State Council of the People's Republic of China charged with the collection and publication of statistics related to the economy, population and society of the People's Republic of China at national and local levels.-List of Directors:*Xue...
published the revised figures for 2007 fiscal year in which growth happened at 13 percent instead of 11.9 percent (provisional figures). China's gross domestic product stood at US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
3.38 trillion while Germany's
Economy of Germany
Germany is the largest national economy in Europe, the fourth-largest by nominal GDP in the world, and fifth by GDP in 2008. Since the age of industrialisation, the country has been a driver, innovator, and beneficiary of an ever more globalised economy...
GDP was USD $3.32 trillion for 2007. This made China the world's third largest economy by gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. Based on these figures, in 2007 China recorded its fastest growth since 1994 when the GDP grew by 13.1 percent.
China launched its Economic Stimulus Plan to specifically deal with the Global financial crisis of 2008–2009. It has primarily focused on increasing affordable housing, easing credit restrictions for mortgage and SMEs, lower taxes such as those on real estate sales and commodities, pumping more public investment into infrastructure development, such as the rail network, roads and ports. By the end of 2009 it appeared that the Chinese economy was showing signs of recovery. At the 2009 Economic Work Conference in December 'managing inflation expectations' was added to the list of economic objectives, suggesting a strong economic upturn and a desire to take steps to manage it.
2010–present
see also : Economy of the PRC: Noopolitik and the Knowledge EconomyBy 2010 it was evident to outside observers such as The New York Times that China was poised to move from export dependency to development of an internal market. Wages were rapidly rising in all areas of the country and Chinese leaders were calling for an increased standard of living.
In 2010, China's GDP was valued at , surpassed Japan's , and became the world's second largest economy after the U.S. China could become the world's largest economy (by nominal GDP) sometime as early as 2020.
China is the largest creditor nation in the world and owns approximately 20.8% of all foreign-owned US Treasury securities.
It has also appeared that Noopolitik and the knowledge economy had become salient interests of the PRC's economic policy across the 2000s, through which the country made clear its move from "Made in China" to "Innovated in China" as notes Adam Segal. Idriss Aberkane thus argued "With China’s cosmopolitan and highly educated diaspora, it is no surprise that as of 2010, five of the top twenty most visited websites in the world are indexed in Mandarin. They include PRC-born behemoths such as Baidu.com
Baidu
Baidu, Inc. , simply known as Baidu and incorporated on January 18, 2000, is a Chinese web services company headquartered in the Baidu Campus in Haidian District, Beijing, People's Republic of China....
, Taobao.com
Taobao
Taobao is a Chinese language web site for online shopping, similar to eBay, Rakuten and Amazon, operated in the People's Republic of China by Alibaba Group....
, and Sina.com.cn
Sina.com
SINA is an online media company for China and Chinese communities around the world. SINA operates four major business lines: Sina Weibo, SINA Mobile, SINA Online, and SINA.net. SINA has over 100 million registered users worldwide...
, and video sharing Tudou.com, which has gained users in both North America and Europe."
The Institute of Economic Research of Renmin University of China has conducted several studies and released several reports regarding China's economy. "Under the influences of 2009’s stimulus policies, the spread of the economic bubble and implementation of the “12th Five-Year Plan”, China was at a key stage of steering the economic recovery to stable growth. While prices increased steadily, China’s GDP went back to the high-level growth rate and its economic structure gradually became market-oriented." . The foremost authorities on the Chinese economy -- those within the Chinese think-tanks and government -- give a unique, first-hand perspective. Their works, translated into English for a Western audience, are published only through an independent Hong Kong publishing house, www.enrichprofessional.com/home and can be found at academic libraries throughout the world.
The World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
's chief economist Justin Lin in 2011 stated that China, which become the world's second largest economy in 2010, may become the world's largest economy in 2030, overtaking the United States, if current trends continue. Challenges include income inequality and pollution. The Standard Chartered Bank
Standard Chartered Bank
Standard Chartered PLC is a multinational financial services company headquartered in London, United Kingdom with operations in more than seventy countries...
in a 2011 report suggested that China may become the world's largest economy in 2020. A 2007 OECD rapport by Angus Maddison estimated that if using purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
conversions, then China will overtake the United States in 2015. James Wolfensohn, former World Bank president, estimated in 2010 that by 2030 two-thirds of the world's middle class
Middle class
The middle class is any class of people in the middle of a societal hierarchy. In Weberian socio-economic terms, the middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class....
will live in China.
In 2011, the IMF warned that government controlled banks could be building up imbalances that could hamper growth and leave the system "severely impacted".
Government role
Since 1949 the government, under socialist political and economic system, has been responsible for planning and managing the national economy. In the early 1950s, the foreign trade system was monopolizedMonopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
by the state. Nearly all the domestic enterprises were state-owned and the government had set the prices for key commodities, controlled the level and general distribution of investment funds, determined output targets for major enterprises and branches, allocated energy resources, set wage levels and employment targets, operated the wholesale and retail networks, and steered the financial policy and banking system. In the countryside from the mid-1950s, the government established cropping patterns, set the level of prices, and fixed output targets for all major crops.
Since 1978 when economic reforms were instituted, the government's role in the economy has lessened by a great degree. Industrial output by state enterprises slowly declined, although a few strategic industries, such as the aerospace industry have today remained predominantly state-owned. While the role of the government in managing the economy has been reduced and the role of both private enterprise and market forces increased, the government maintains a major role in the urban economy. With its policies on such issues as agricultural procurement the government also retains a major influence on rural sector performance. The State Constitution of 1982
Constitution of the People's Republic of China
The Constitution of the People's Republic of China is the highest law within the People's Republic of China. The current version was adopted by the 5th National People's Congress on December 4, 1982 with further revisions in 1988, 1993, 1999, and 2004. Three previous state constitutions—those of...
specified that the state is to guide the country's economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
by making broad decisions on economic priorities and policies, and that the State Council
State Council of the People's Republic of China
The State Council of the People's Republic of China , which is largely synonymous with the Central People's Government after 1954, is the chief administrative authority of the People's Republic of China. It is chaired by the Premier and includes the heads of each governmental department and agency...
, which exercises executive control, was to direct its subordinate bodies in preparing and implementing the national economic plan
Economic planning
Economic planning refers to any directing or planning of economic activity outside the mechanisisms of the market, in an attempt to achieve specific economic or social outcomes. Planning is an economic mechanism for resource allocation and decision-making in contrast with the market mechanism...
and the state budget. A major portion of the government system (bureaucracy) is devoted to managing the economy in a top-down chain of command
Chain of Command
Chain of Command may refer to:* Chain of command, in a military context, the line of authority and responsibility along which orders are passed* "Chain of Command" , the fifth episode of the first season of Beast Wars...
with all but a few of the more than 100 ministries, commissions, administrations, bureaus, academies, and corporations under the State Council being concerned with economic matters.
Each significant economic sector is supervised by one or more of these organizations, which includes the People's Bank of China
People's Bank of China
The People's Bank of China is the central bank of the People's Republic of China with the power to control monetary policy and regulate financial institutions in mainland China...
, National Development and Reform Commission
National Development and Reform Commission
The National Development and Reform Commission , formerly State Planning Commission and State Development Planning Commission, is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy...
, Ministry of Finance
Ministry of Finance of the People's Republic of China
The Ministry of Finance of the People's Republic of China is the national executive agency of the Central People's Government which administers macroeconomic policies and the national annual budget. It also handles fiscal policy, economic regulations and government expenditure for the state.The...
, and the ministries of agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
; coal industry; commerce
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
; communications
Telecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
; education
Education
Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...
; light industry
Light industry
Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...
; metallurgical industry; petroleum industry
Petroleum industry
The petroleum industry includes the global processes of exploration, extraction, refining, transporting , and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline...
; railways; textile industry
Textile industry
The textile industry is primarily concerned with the production of yarn, and cloth and the subsequent design or manufacture of clothing and their distribution. The raw material may be natural, or synthetic using products of the chemical industry....
; and water resources
Water resources
Water resources are sources of water that are useful or potentially useful. Uses of water include agricultural, industrial, household, recreational and environmental activities. Virtually all of these human uses require fresh water....
and electric power
Electric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
. Several aspects of the economy are administered by specialized departments under the State Council, including the National Bureau of Statistics
National Bureau of Statistics of China
The National Bureau of Statistics is an agency within the State Council of the People's Republic of China charged with the collection and publication of statistics related to the economy, population and society of the People's Republic of China at national and local levels.-List of Directors:*Xue...
, Civil Aviation Administration of China
Civil Aviation Administration of China
The Civil Aviation Administration of China , formerly the General Administration of Civil Aviation of China , is the aviation authority under the Ministry of Transport of the People's Republic of China. It oversees civil aviation and investigates aviation accidents and incidents...
, and the tourism bureau. Each of the economic organizations under the State Council directs the units under its jurisdiction through subordinate offices at the provincial and local levels.
The whole policy-making process involves extensive consultation and negotiation. Economic policies and decisions adopted by the National People's Congress
National People's Congress
The National People's Congress , abbreviated NPC , is the highest state body and the only legislative house in the People's Republic of China. The National People's Congress is held in the Great Hall of the People, Beijing, capital of the People's Republic of China; with 2,987 members, it is the...
and the State Council are to be passed on to the economic organizations under the State Council, which incorporates them into the plans for the various sectors of the economy. Economic plans and policies are implemented by a variety of direct and indirect control mechanisms. Direct control is exercised by designating specific physical output quotas and supply allocations for some goods and services. Indirect instruments—also called "economic levers"—operate by affecting market incentives. These included levying taxes, setting prices for products and supplies, allocating investment funds, monitoring and controlling financial transactions by the banking system, and controlling the allocation of key resources, such as skilled labor, electric power, transportation, steel, and chemicals (including fertilizers). The main advantage of including a project in an annual plan is that the raw materials, labor, financial resources, and markets are guaranteed by directives that have the weight of the law behind them. In reality, however, a great deal of economic activity goes on outside the scope of the detailed plan, and the tendency has been for the plan to become narrower rather than broader in scope. A major objective of the reform program was to reduce the use of direct controls and to increase the role of indirect economic levers. Major state-owned enterprises still receive detailed plans specifying physical quantities of key inputs and products from their ministries. These corporations, however, have been increasingly affected by prices and allocations that were determined through market interaction and only indirectly influenced by the central plan.
Total economic enterprise in China is apportioned along lines of directive planning (mandatory), indicative planning
Indicative planning
Indicative planning is a form of central economic planning implemented by a state in an effort to solve the problem of imperfect information in economies and thus increase economic performance...
(indirect implementation of central directives), and those left to market forces. In the early 1980s during the initial reforms enterprises began to have increasing discretion over the quantities of inputs purchased, the sources of inputs, the variety of products manufactured, and the production process. Operational supervision over economic projects has devolved primarily to provincial
Province (China)
A province, in the context of Chinese government, is a translation of sheng formally provincial level divisions, which is an administrative division. Provinces, municipalities, autonomous regions, and the special administrative regions, make up the four types of province of administrative division...
, municipal
Direct-controlled municipality
A direct-controlled municipality is the highest level classification for cities used by unitary state, with status equal to that of the provinces in the respective countries...
, and county governments. The majority of state-owned industrial enterprises, which were managed at the provincial level or below, were partially regulated by a combination of specific allocations and indirect controls, but they also produced goods outside the plan for sale in the market. Important, scarce resources—for example, engineers or finished steel—may have been assigned to this kind of unit in exact numbers. Less critical assignments of personnel and materials would have been authorized in a general way by the plan, but with procurement
Procurement
Procurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
arrangements left up to the enterprise management.
In addition, enterprises themselves are gaining increased independence in a range of activity. While strategically important industry and services and most of large-scale construction have remained under directive planning, the market economy
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
has gained rapidly in scale every year as it subsumes more and more sectors. Overall, the Chinese industrial system contains a complex mixture of relationships. The State Council generally administers relatively strict control over resources deemed to be of vital concern for the performance and health of the entire economy. Less vital aspects of the economy have been transferred to lower levels for detailed decisions and management. Furthermore, the need to coordinate entities that are in different organizational hierarchies generally causes a great deal of informal bargaining and consensus building.
Consumer spending
Consumer spending
Consumer spending or consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level...
has been subject to a limited degree of direct government influence but is primarily determined by the basic market forces of income levels and commodity prices. Before the reform period, key goods were rationed when they were in short supply, but by the mid-1980s availability had increased to the point that rationing was discontinued for everything except grain, which could also be purchased in the free markets. Collectively owned units and the agricultural sector were regulated primarily by indirect instruments. Each collective unit was "responsible for its own profit and loss," and the prices of its inputs and products provided the major production incentives.
Vast changes were made in relaxing the state control of the agricultural sector from the late 1970s. The structural mechanisms for implementing state objectives—the people's communes and their subordinate teams and brigades
Production brigade
A production brigade was formerly the basic accounting and farm production unit in the people's commune system. Production teams were largely disbanded during the agricultural reforms of 1982-85. In the administrative hierarchy, the team was the lowest level, the next higher levels being the...
—have been either entirely eliminated or greatly diminished. Farm incentive
Incentive
In economics and sociology, an incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way...
s have been boosted both by price increases for state-purchased agricultural products, and it was permitted to sell excess production on a free market. There was more room in the choice of what crops to grow, and peasants are allowed to contract for land that they will work, rather than simply working most of the land collectively. The system of procurement quotas (fixed in the form of contracts) has been being phased out, although the state can still buy farm products and control surpluses in order to affect market conditions.
Foreign trade is supervised by the Ministry of Commerce
Ministry of Commerce of the People's Republic of China
The Ministry of Commerce of the People's Republic of China , formerly Ministry of Foreign Trade and Economic Co-operation is an executive agency of the State Council of China...
, customs
General Administration of Customs
The General Administration of Customs is an administrative agency within the government of the People's Republic of China...
, and the Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in China...
, the foreign exchange arm of the Chinese banking system
Chinese financial system
China's financial system is highly regulated and has recently begun to expand rapidly as monetary policy becomes integral to its overall economic policy...
, which controls access to the foreign currency required for imports. Ever since restrictions on foreign trade were reduced, there have been broad opportunities for individual enterprises to engage in exchanges with foreign firms without much intervention from official agencies.
Though private sector companies still dominate small and medium sized businesses, the government still plays a large part in the bigger industries. The fact that government accounts for a third of the GDP shows this. Foreign owned companies hold significant stakes. The public sector is mainly made up of State-Owned Enterprises (SOEs).
Purely on economic grounds, therefore, China has become a phenomenon. It is the second-largest economy in the world and has frequently been described as likely, within a decade, to surpass both the European Union and the United States in total GDP. Under the leadership of President Hu Jintao
Hu Jintao
Hu Jintao is the current Paramount Leader of the People's Republic of China. He has held the titles of General Secretary of the Communist Party of China since 2002, President of the People's Republic of China since 2003, and Chairman of the Central Military Commission since 2004, succeeding Jiang...
, the Chinese Communist Party has retained full control of the country's affairs and remained firmly committed to many of socialism
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...
's key tenets. All of the country's major banks, for example, remained tightly linked to the state, as do key sectors such as oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
, petrochemicals, and steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
. State agencies have provided most of the country's still-limited financial services, and state-owned enterprises produced more than one-third of total output. Indeed, the state-and the Party-were central players in nearly all aspects of China's economy, guiding a development trajectory often labeled as "socialism with Chinese characteristics".
Regional economies
Transportation in the People's Republic of China
Transport in the People's Republic of China has experienced major growth and expansion in recent years. Airports, roads, and railway construction will provide a massive employment boost in China over the next decade....
—combined with important differences in the availability of natural
Natural Resources
Natural Resources is a soul album released by Motown girl group Martha Reeves and the Vandellas in 1970 on the Gordy label. The album is significant for the Vietnam War ballad "I Should Be Proud" and the slow jam, "Love Guess Who"...
and human resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...
and in industrial
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
—has produced significant variations in the regional economies of China.
Economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
has generally been more rapid in coastal provinces than in the interior, and there are large disparities in per capita income
Per capita income
Per capita income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate and dividing it by the total population...
between regions. The three wealthiest regions are along the southeast coast, centred on the Pearl River Delta
Pearl River Delta
The Pearl River Delta , Zhujiang Delta or Zhusanjiao in Guangdong province, People's Republic of China is the low-lying area surrounding the Pearl River estuary where the Pearl River flows into the South China Sea...
; along the east coast, centred on the Lower Yangtze River
Yangtze River
The Yangtze, Yangzi or Cháng Jiāng is the longest river in Asia, and the third-longest in the world. It flows for from the glaciers on the Tibetan Plateau in Qinghai eastward across southwest, central and eastern China before emptying into the East China Sea at Shanghai. It is also one of the...
; and near the Bohai Gulf, in the Beijing
Beijing
Beijing , also known as Peking , is the capital of the People's Republic of China and one of the most populous cities in the world, with a population of 19,612,368 as of 2010. The city is the country's political, cultural, and educational center, and home to the headquarters for most of China's...
–Tianjin
Tianjin
' is a metropolis in northern China and one of the five national central cities of the People's Republic of China. It is governed as a direct-controlled municipality, one of four such designations, and is, thus, under direct administration of the central government...
–Liaoning
Liaoning
' is a province of the People's Republic of China, located in the northeast of the country. Its one-character abbreviation is "辽" , a name taken from the Liao River that flows through the province. "Níng" means "peace"...
region. It is the rapid development of these areas that is expected to have the most significant effect on the Asian regional economy as a whole, and Chinese government policy is designed to remove the obstacles to accelerated growth in these wealthier regions.
- See also: List of administrative regions by GDP, List of administrative regions by GDP per capita, and List of cities by GDP per capita.
Development
- See also: List of administrative divisions by Human Development Index (HDI).
China, economically frail before 1978, has again become one of the world's major economic powers with the greatest potential. In the 22 years following reform and opening-up in 1979 in particular, China's economy developed at an unprecedented rate, and that momentum has been held steady into the 21st century.
China adopts the "five-year-plan" strategy for economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
. The Twelfth Five-Year Plan (2011–2015) is currently being implemented.
It was not an obvious path to growth. But for nearly 30 years China had indeed been growing, thrusting its citizens into prosperity and its goods across the world. Between 1978 and 2005, China's per capita GDP had grown from $153 to $1284, while its current account surplus had increased over twelve-fold between 1982 and 2004, from $5.7 billion to $71 billion. During this time, China had also become an industrial powerhouse, moving beyond initial successes in low-wage sectors like clothing
Clothing
Clothing refers to any covering for the human body that is worn. The wearing of clothing is exclusively a human characteristic and is a feature of nearly all human societies...
and footwear
Footwear
Footwear consists of garments worn on the feet, for fashion, protection against the environment, and adornment. Being barefoot is commonly associated with poverty, but some cultures chose not to wear footwear at least in some situations....
to the increasingly sophisticated production of computers, pharmaceuticals, and automobiles.
Just how long the trajectory could continue, however, remained unclear. According to the 11th five-year plan
Five-year plan
Five-Year Plan may refer to:*Five-Year Plans for the National Economy of the Soviet Union*Five-Year Plans of Argentina*Five-Year Plans of Bhutan*Five-Year Plans of the People's Republic of China*Five-Year Plans of Cuba*Five-year plans of Ethiopia...
, China needed to sustain an annual growth rates of 8% for the foreseeable future. Only with such levels of growth, the leadership argued, could China continue to develop its industrial prowess, raise its citizen's standard of living, and redress the inequalities that were cropping up across the country. Yet no country had ever before maintained the kind of growth that China was predicting. Moreover, China had to some extent already undergone the easier parts of development. In the 1980s, it had transformed its vast and inefficient agricultural sector, freeing its peasants from the confines of central planning and winning them to the cause of reform. In the 1990s, it had likewise started to restructure its stagnant industrial sector, wooing foreign investors for the first time. These policies had catalysed the country's phenomenal growth. Instead, China had to take what many regarded as the final step toward the market, liberalizing the banking sector and launching the beginnings of a real capital market
Capital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...
.
This step, however, would not be easy. As of 2004, China's state-owned enterprises were still only partially reorganized, and its banks were dealing with the burden of over $205 billion (1.7 trillion RMB) in non-performing loan
Non-performing loan
A Non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms....
s, monies that had little chance of ever being repaid. The country had a floating exchange rate
Floating exchange rate
A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency....
, and strict controls on both the current and capital accounts.
Regional development
These strategies are aimed at the relatively poorer regions in China in an attempt to prevent widening inequalities:- China Western DevelopmentChina Western DevelopmentChina Western Development , also China's Western Development, Western China Development, Great Western Development Strategy, or the Open Up the West Program is a policy adopted by the People's Republic of China to boost its less developed western regions.The policy covers 6 provinces , 5 autonomous...
, designed to increase the economic situation of the western provinces through capital investment and development of natural resources. - Revitalize Northeast ChinaRevitalize Northeast ChinaRevitalize The Old Northeast Industrial Bases , also Revitalize Northeast China or Northeast China Revitalization, is a policy adopted by the People's Republic of China in 2003 to rejuvenate industrial bases in Northeast China...
, to rejuvenate the industrial bases in Northeast ChinaNortheast ChinaNortheast China, historically known in English as Manchuria, is a geographical region of China, consisting of the three provinces of Liaoning, Jilin and Heilongjiang. The region is sometimes called the Three Northeast Provinces...
. It covers the three provinces of HeilongjiangHeilongjiangFor the river known in Mandarin as Heilong Jiang, see Amur River' is a province of the People's Republic of China located in the northeastern part of the country. "Heilongjiang" literally means Black Dragon River, which is the Chinese name for the Amur. The one-character abbreviation is 黑...
, JilinJilinJilin , is a province of the People's Republic of China located in the northeastern part of the country. Jilin borders North Korea and Russia to the east, Heilongjiang to the north, Liaoning to the south, and Inner Mongolia to the west...
, and LiaoningLiaoning' is a province of the People's Republic of China, located in the northeast of the country. Its one-character abbreviation is "辽" , a name taken from the Liao River that flows through the province. "Níng" means "peace"...
, as well as the five eastern prefecturesPrefecture (China)The term Prefectures, or the more formal prefectural level divisions, in the context of China, is used to refer to several unrelated political divisions in both ancient and modern China. Other than provincial level divisions, prefectural level divisions are not mentioned in the Chinese constitution...
of Inner MongoliaInner MongoliaInner Mongolia is an autonomous region of the People's Republic of China, located in the northern region of the country. Inner Mongolia shares an international border with the countries of Mongolia and the Russian Federation...
. - Rise of Central China Plan, to accelerate the development of its central regions. It covers six provinces: ShanxiShanxi' is a province in Northern China. Its one-character abbreviation is "晋" , after the state of Jin that existed here during the Spring and Autumn Period....
, HenanHenanHenan , is a province of the People's Republic of China, located in the central part of the country. Its one-character abbreviation is "豫" , named after Yuzhou , a Han Dynasty state that included parts of Henan...
, AnhuiAnhuiAnhui is a province in the People's Republic of China. Located in eastern China across the basins of the Yangtze River and the Huai River, it borders Jiangsu to the east, Zhejiang to the southeast, Jiangxi to the south, Hubei to the southwest, Henan to the northwest, and Shandong for a tiny...
, HubeiHubei' Hupeh) is a province in Central China. The name of the province means "north of the lake", referring to its position north of Lake Dongting...
, HunanHunan' is a province of South-Central China, located to the south of the middle reaches of the Yangtze River and south of Lake Dongting...
, and JiangxiJiangxi' is a southern province in the People's Republic of China. Spanning from the banks of the Yangtze River in the north into hillier areas in the south, it shares a border with Anhui to the north, Zhejiang to the northeast, Fujian to the east, Guangdong to the south, Hunan to the west, and Hubei to...
. - Third FrontThird Front (China)The Third Front is a massive Chinese development of industry in its south-western interior, where it would be strategically secure in the event of a war.-Origins:...
, focused on the southwestern provinces.
Foreign investment abroad:
- Go Global, to encourage its enterprises to invest overseas.
Key national projects
The "West-to-East Electricity Transmission," the "West-to-East Gas Transmission," and the "South–North Water Transfer Project" are the government's three key strategic projects, aimed at realigning overall economic development and achieving rational distribution of national resources across China. The "West-to-East Electricity Transmission" project is in full swing, involving hydropower and coal resources in western China and the construction of new power transmission channels to deliver electricity to the east. The southern power grid line, transmitting three million kW from GuizhouGuizhou
' is a province of the People's Republic of China located in the southwestern part of the country. Its provincial capital city is Guiyang.- History :...
to Guangdong
Guangdong
Guangdong is a province on the South China Sea coast of the People's Republic of China. The province was previously often written with the alternative English name Kwangtung Province...
, was completed in September 2004. The "West-to-East Gas Transmission" project includes a 4,000 km trunk pipeline running through 10 provinces, autonomous regions or municipalities, conveying natural gas to cities in northern and eastern China. This was finished in October 2004 and has a design capacity 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.
Hong Kong and Macau
In accordance with the One Country, Two SystemsOne country, two systems
"One country, two systems" is an idea originally proposed by Deng Xiaoping, then Paramount Leader of the People's Republic of China , for the reunification of China during the early 1980s...
policy, the economies of the former European colonies, Hong Kong and Macao, are separate from the rest of the PRC, and each other. Both Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and Macau
Macau
Macau , also spelled Macao , is, along with Hong Kong, one of the two special administrative regions of the People's Republic of China...
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
World Customs Organization
The World Customs Organization is an intergovernmental organization headquartered in Brussels, Belgium. With its worldwide membership, the WCO is recognized as the voice of the global customs community...
, the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
and the Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region...
forum, often under the names "Hong Kong, China" and "Macao, China".
- See also: Closer Economic Partnership ArrangementCloser Economic Partnership ArrangementCloser Economic Partnership Arrangement are economic and trade agreement between the separate customs territories within the People's Republic of China....
with Hong KongMainland and Hong Kong Closer Economic Partnership ArrangementThe Mainland and Hong Kong Closer Economic Partnership Arrangement, or Closer Economic Partnership Arrangement for short, is an economic agreement between the Government of the Hong Kong Special Administrative Region and the Central People's Government of the People's Republic of China, signed on...
and Macau.
Macroeconomic trends
In January 1985, the State Council of China approved to establish a SNA (System of National Accounting), use the gross domestic productGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP) to measure the national economy. China started the study of theoretical foundation, guiding, and accounting model etc., for establishing a new system of national economic accounting. In 1986, as the first citizen of the People's Republic of China to receive a Ph.D. in economics from an overseas country, Dr. Fengbo Zhang headed Chinese Macroeconomic Research
Analysis of Chinese Macroeconomy
Analysis of Chinese Macroeconomy is a book written by , a Chinese economist.-Reception:The first edition was published in Chinese by People's Press. the first place winner of the annual Chinese National Book Award in 1987...
- the key research project of the seventh Five-Year Plan of China, as well as completing and publishing the China GDP data by China's own research. The summary of the above has been included in the book Chinese Macroeconomic Structure and Policy (1988) Editor: Fengbo Zhang, collectively authored by the Research Center of the State Council of China. This is the first GDP data which was published by China. The State Council of China issued “The notice regarding implementation of System of National Accounting
United Nations System of National Accounts
The United Nations System of National Accounts is an international standard system of national accounts, the first international standard being published in 1953...
” in August 1992, the SNA
United Nations System of National Accounts
The United Nations System of National Accounts is an international standard system of national accounts, the first international standard being published in 1953...
system officially is introduced to China, replaced Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
's MPS
Material Product System
Material Product System refers to the system of national accounts used in the former Soviet Union and the Eastern Bloc countries, as well as in China until 1993 introduced the Western SNA system and GDP to China,...
system, Western economic indicator GDP became China’s most important economic indicator (WikiChina: China GDP, The First China GDP).
The table below shows the trend of the GDP of China at market prices estimated by the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) with figures in millions (Chinese yuan
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
). See also. For purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
comparisons, the US dollar is exchanged at 2.05 CNY only.
| Year | Gross domestic product | US dollar exchange | Inflation index (2000=100) |
Nominal Per Capita GDP (as % of USA) |
PPP Per Capita GDP (as % of USA) |
|---|---|---|---|---|---|
| 1955 | 91,000 | 2.46 | 19.2 | 2.43 | |
| 1960 | 145,700 | 2.46 | 20.0 | 3.04 | |
| 1965 | 171,600 | 2.46 | 21.6 | 2.63 | |
| 1970 | 225,300 | 2.46 | 21.3 | 2.20 | |
| 1975 | 299,700 | 1.86 | 22.4 | 2.32 | |
| 1980 | 460,906 | 1.49 | 25.0 | 2.52 | 2.04 |
| 1985 | 896,440 | 2.93 | 30.0 | 1.65 | 2.84 |
| 1990 | 1,854,790 | 4.78 | 49.0 | 1.48 | 3.43 |
| 1995 | 6,079,400 | 8.35 | 91.0 | 2.17 | 5.44 |
| 2000 | 9,921,500 | 8.27 | 100.0 | 2.69 | 6.75 |
| 2005 | 18,308,500 | 8.19 | 106.0 | 4.05 | 9.61 |
| 2010 | 25,506,956 | 6.97 | 112.0 | 6.23 | 15.90 |
Systemic problems
The government has in recent years struggled to contain the social strife and environmental damage related to the economy's rapid transformation; collect public receipts due from provinces, businesses, and individuals; reduce corruptionPolitical corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...
and other economic crimes; sustain adequate job growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; and keep afloat the large state-owned enterprises, most of which had not participated in the vigorous expansion of the economy and many of which had been losing the ability to pay full wages and pensions. From 50 to surplus rural workers were adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program
One-child policy
The one-child policy refers to the one-child limitation applying to a minority of families in the population control policy of the People's Republic of China . The Chinese government refers to it under the official translation of family planning policy...
. Another long-term threat to continued rapid economic growth has been the deterioration in the environment, notably air
Air pollution
Air pollution is the introduction of chemicals, particulate matter, or biological materials that cause harm or discomfort to humans or other living organisms, or cause damage to the natural environment or built environment, into the atmosphere....
and water pollution
Water pollution
Water pollution is the contamination of water bodies . Water pollution occurs when pollutants are discharged directly or indirectly into water bodies without adequate treatment to remove harmful compounds....
, soil erosion, growing desertification
Desertification
Desertification is the degradation of land in drylands. Caused by a variety of factors, such as climate change and human activities, desertification is one of the most significant global environmental problems.-Definitions:...
and the steady fall of the water table
Water table
The water table is the level at which the submarine pressure is far from atmospheric pressure. It may be conveniently visualized as the 'surface' of the subsurface materials that are saturated with groundwater in a given vicinity. However, saturated conditions may extend above the water table as...
especially in the north. China also has continued to lose arable land
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
because of erosion and infrastructure development.
Other major problems concern the labor force
Labor force
In economics, a labor force or labour force is a region's combined civilian workforce, including both the employed and unemployed.Normally, the labor force of a country consists of everyone of working age In economics, a labor force or labour force is a region's combined civilian workforce,...
and the pricing system. There is large-scale underemployment
Underemployment
Underemployment refers to an employment situation that is insufficient in some important way for the worker, relative to a standard. Examples include holding a part-time job despite desiring full-time work, and overqualification, where the employee has education, experience, or skills beyond the...
in both urban and rural areas, and the fear of the disruptive effects of major, explicit unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
is strong. The prices of certain key commodities, especially of industrial raw material
Raw material
A raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...
s and major industrial products, are determined by the state. In most cases, basic price ratios were set in the 1950s and are often irrational in terms of current production capabilities and demands. Over the years, large subsidies were built into the price structure, and these subsidies grew substantially in the late 1970s and 1980s. By the early 1990s these subsidies began to be eliminated, in large part due to China's admission into the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO) in 2001, which carried with it requirements for further economic liberalization and deregulation.
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
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
in order to control global warming
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
. There were diligent efforts to increase energy efficiency
Efficient energy use
Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...
and increase use of renewable sources
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
; over 1,000 inefficient power plants had been closed, but projections continued to show a dramatic rise in carbon emissions from burning fossil fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
s.
Regulatory environment
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 marginProfit margin
Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.Net profit Margin = x100...
s, often at the expense of consumer safety. This issue became more prominent in 2007, with a number of restrictions being placed on problematic Chinese exports by the United States.
Inflation
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.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
Price controls are governmental impositions on the prices charged for goods and services in a market, usually intended to maintain the affordability of staple foods and goods, and to prevent price gouging during shortages, or, alternatively, to insure an income for providers of certain goods...
were in effect on numerous basic products and services, but were ineffective with food, prices of which were rising at an annual rate of 18.2% in November 2007. The problem of inflation has caused concern at the highest levels of the Chinese government. On January 9, 2008, the government of China 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 a fifth of a pound 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
BBC News is the department of the British Broadcasting Corporation responsible for the gathering and broadcasting of news and current affairs. The department is the world's largest broadcast news organisation and generates about 120 hours of radio and television output each day, as well as online...
described as the highest inflation rate since 1997, due to the winter storms that month
2008 Chinese winter storms
The 2008 Chinese winter storms（2008年中国雪灾、2008年中国南方雪灾）are a series of winter storm events that affected large portions of southern and central China starting on 25 January 2008 until 6 February 2008. The systems affected most of the area with heavy snows, ice and cold temperatures causing extensive...
. 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 March 11, 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 a 11.7% increase in food prices 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 up.
Labor shortages and rising export costs
- See also: Labor section below.
By 2005, there were signs of stronger demand for workers being able to choose employment that offered higher wages and better working conditions, enabling some to move away from the restrictive dormitory life and boring marige work that have characterized export industries in provinces such as Guangdong
Guangdong
Guangdong is a province on the South China Sea coast of the People's Republic of China. The province was previously often written with the alternative English name Kwangtung Province...
and Fujian
Fujian
' , formerly romanised as Fukien or Huguing or Foukien, is a province on the southeast coast of mainland China. Fujian is bordered by Zhejiang to the north, Jiangxi to the west, and Guangdong to the south. Taiwan lies to the east, across the Taiwan Strait...
. Minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
s began rising toward the equivalent of 100 U.S. dollars a month as companies scrambled for employees, with some paying as much as $150 a month on average. The labor shortage was partially driven by the demographic trends, as the proportion of people of working age fell as the result of strict family planning
Family planning
Family planning is the planning of when to have children, and the use of birth control and other techniques to implement such plans. Other techniques commonly used include sexuality education, prevention and management of sexually transmitted infections, pre-conception counseling and...
.
It was reported in The New York Times in April 2006 that labor costs continued to increase and a shortage of unskilled labor had developed with a million or more employees being sought. Operations that relied on cheap labor were contemplating relocations to cities in the interior or to other low-cost countries such as Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
or Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
. Many young people were attending college rather than opting for minimum-wage factory work. The demographic shift
Population ageing
Population ageing or population aging occurs when the median age of a country or region rises. This happens because of rising life expectancy or declining birth rates. Excepting 18 countries termed 'demographic outliers' by the UN) this process is taking place in every country and region across...
resulting from the one-child policy
One-child policy
The one-child policy refers to the one-child limitation applying to a minority of families in the population control policy of the People's Republic of China . The Chinese government refers to it under the official translation of family planning policy...
continued to reduce the supply of young entry-level workers. Also, government efforts to advance economic development in the interior of the country were beginning to be effective at creating better opportunities there. A follow-up article in The New York Times in late August 2007 reported acceleration of this trend. The minimum wage a young unskilled factory worker could be hired at had increased to $200 with experienced workers commanding more. There was strong demand for young workers willing to work long hours and live in dormitory conditions, while older workers, over forty, were considered unsuitable.
Rising wages were being, to a certain extent, offset by increases in productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
, but in 2007, a slight rise in the cost of imports from China was recorded by the United States government: "After falling since its inception in December 2003, the price index for imports from China rose 0.4 percent in July 2007, the largest monthly increase since the index was first published in December 2003. The July increase was the third consecutive monthly advance. Over the past year, import prices from China increased 0.9 percent." By February 2008, concerns were being raised that rising wages and inflation in China were beginning to create inflationary pressure in the United States and Europe, which had depended on cheap prices for consumer goods from China exerting downward pressure on prices.
On January 1, 2008, China introduced a new Labor Law, increasing the rights of the workforce, this caused many foreign and private companies, whose operations in China were based on low wages, to move to countries with lower labor costs, like Thailand, Vietnam or Bangladesh. In the summer of 2008 the growth in export orders began to fall sharply as the sub-prime crisis in export markets reduced demand in Guangdong province, particularly in toy and textile manufacture. According to Chinese Government sources jobs in 67,000 factories were reported to have been lost. The government initially was happy to see factories close down in labour intensive low wage factories, and the Labor law was seen as a means of helping to eradicate them, but the global financial crisis led to a far more rapid process of private sector collapse in Guangdong than was expected, raising fears of a contagious spread of social unrest.
In early 2010 a labor shortage developed in coastal areas with many migrant workers not returning after the new year holiday. Wages rose rapidly with temp agencies charging over $1.00 US per hour for factory workers in Guangzhou. Following the strikes in 2010 at Japanese auto plants, the shortage continued with many factories unable to fully staff their factories.
According to Fan Gang
Fan Gang
Fan Gang is one of China's most prominent economists and one China's most active reform advocates. He is currently based in Beijing, serving as a professor at the Graduate School of Chinese Academy of Social Sciences as well as the director of China's National Economic Research Institute . He is...
, professor of economics at Beijing University and director of China’s National Economic Research Institute, due to the large volume of workers engaged in relatively unremunerative agricultural work there is considerable room for increased nominal wages in China without changing the competitive position of the Chinese export industry for the next few decades. Lower wages in other countries may not represent productivity comparable to the increasing productivity of Chinese workers.
Financial and banking system
Most of China's financial institutions are state owned and governed and 98% of banking assets are state owned. The chief instruments of financial
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
and fiscal
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....
control are the People's Bank of China
People's Bank of China
The People's Bank of China is the central bank of the People's Republic of China with the power to control monetary policy and regulate financial institutions in mainland China...
(PBC) and the Ministry of Finance
Ministry of Finance of the People's Republic of China
The Ministry of Finance of the People's Republic of China is the national executive agency of the Central People's Government which administers macroeconomic policies and the national annual budget. It also handles fiscal policy, economic regulations and government expenditure for the state.The...
, both under the authority of the State Council
State Council of the People's Republic of China
The State Council of the People's Republic of China , which is largely synonymous with the Central People's Government after 1954, is the chief administrative authority of the People's Republic of China. It is chaired by the Premier and includes the heads of each governmental department and agency...
. The People's Bank of China replaced the Central Bank of China
Central Bank of China
The Central Bank of the Republic of China , known in English from 1924 to 2007 as the Central Bank of China, is the central bank of the Republic of China . Its legal and common name in Chinese is literally translated as the "Central Bank"...
in 1950 and gradually took over private bank
Private bank
Private banks are banks that are not incorporated. A private bank is owned by either an individual or a general partner with limited partner...
s. It fulfills many of the functions of other central
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
and commercial bank
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
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 to the government's economic plans. The PBC is also responsible for international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
and other overseas transactions
Financial transaction
A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
. Remittances by overseas Chinese
Overseas Chinese
Overseas Chinese are people of Chinese birth or descent who live outside the Greater China Area . People of partial Chinese ancestry living outside the Greater China Area may also consider themselves Overseas Chinese....
are managed by the Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in China...
(BOC), which has a number of branch offices in several countries.
Other financial institutions that are crucial, include the China Development Bank
China Development Bank
The China Development Bank is a financial institution in the People's Republic of China under the direct jurisdiction of the State Council. It is the only bank in China whose governor is a full minister...
(CDB), which funds economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
and directs foreign investment; the Agricultural Bank of China
Agricultural Bank of China
Agricultural Bank of China Limited , also known as AgBank, is one of the "Big Four" banks in the People's Republic of China. It was founded in 1951, and has its headquarters in Beijing...
(ABC), which provides for the agricultural sector; the China Construction Bank
China Construction Bank
China Construction Bank is one of the 'big four' banks in the People's Republic of China. To date, it is ranked as the nation's second largest and the second largest bank in the world by market capitalization and 12th largest company in the world. The bank has approximately 13,629 domestic branches...
(CCB), which is responsible for capitalizing a portion of overall investment and for providing capital funds for certain industrial and construction enterprises; and the Industrial and Commercial Bank of China
Industrial and Commercial Bank of China
Industrial and Commercial Bank of China Ltd. is the largest bank in the world by profit and market capitalization. It is one China's 'Big Four' state-owned commercial banks .It was founded as a limited company on January 1, 1984...
(ICBC), which conducts ordinary commercial transactions and acts as a savings bank
Savings bank
A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to...
for the public.
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
was previously provided on a grant
Grant (money)
Grants are funds disbursed by one party , often a Government Department, Corporation, Foundation or Trust, to a recipient, often a nonprofit entity, educational institution, business or an individual. In order to receive a grant, some form of "Grant Writing" often referred to as either a proposal...
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 renminbi in loans were 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
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and several United Nations
China and the United Nations
China's seat in the United Nations and membership of the United Nations Security Council was originally occupied by the Republic of China since October 24, 1945. During the Chinese Civil War, the Communist Party of China repelled the government of the ROC from Mainland China to the island of...
programs, as well as from countries (particularly Japan
Sino-Japanese relations
China and Japan are geographically separated only by a relatively narrow stretch of ocean. China has strongly influenced Japan with its writing system, architecture, culture, religion, philosophy, and law...
) and, to a lesser extent, commercial banks. Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
has been a major conduit of this investment, as well as a source itself.
With two stock exchanges (Shanghai Stock Exchange
Shanghai Stock Exchange
The Shanghai Stock Exchange , abbreviated as 上证所/上證所 or 上交所, is a stock exchange that is based in the city of Shanghai, China. It is one of the two stock exchanges operating independently in the People's Republic of China, the other is the Shenzhen Stock Exchange...
and Shenzhen Stock Exchange
Shenzhen Stock Exchange
The Shenzhen Stock Exchange is one of the People's Republic of China's two stock exchanges, alongside the Shanghai Stock Exchange. It is based in Shenzhen, China...
), mainland China's stock market had a market value of by January 2007, which became the third largest stock market in Asia, after Japan and Hong Kong. It is estimated to be the world's third largest by 2016.
Currency system
The renminbiRenminbi
The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC...
("people's currency") is the currency of China, denominated as the yuan
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
, subdivided into 10 jiao
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
or 100 fen
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
. The renminbi is issued by the People's Bank of China
People's Bank of China
The People's Bank of China is the central bank of the People's Republic of China with the power to control monetary policy and regulate financial institutions in mainland China...
, the monetary authority of the PRC. The ISO 4217
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
abbreviation is CNY, although also commonly abbreviated as "RMB". The Latinised symbol is ¥. The yuan is generally considered by outside observers to be undervalued by about 30-40%.
The renminbi is held in a floating exchange-rate system managed primarily against the US dollar. On July 21, 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 (Chinese yuan per US$1) on July 31, 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
Balance of trade
The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports...
, inflation, measured by the consumer price index
Consumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...
and the value of its currency. Despite allowing the value of the yuan to "float", China's central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
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. 222
Tax system
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 capitalization
Capitalization
Capitalization is writing a word with its first letter as a majuscule and the remaining letters in minuscules . This of course only applies to those writing systems which have a case distinction...
and pricing situations of various firms, but more-uniform tax schedules were introduced in the early 1990s. In addition, personal income
Personal Income
In economics, personal income refers to an individual's total earnings from wages, investment enterprises, and other ventures....
and value-added taxes were implemented at that time.
Agriculture
Farm
A farm is an area of land, or, for aquaculture, lake, river or sea, including various structures, devoted primarily to the practice of producing and managing food , fibres and, increasingly, fuel. It is the basic production facility in food production. Farms may be owned and operated by a single...
workers are in the industry, mostly laboring on pieces of land about the size of U.S farms. Virtually all arable land
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
is used for food crop
Crop
Crop may refer to:* Crop, a plant grown and harvested for agricultural use* Crop , part of the alimentary tract of some animals* Crop , a modified whip used in horseback riding or disciplining humans...
s. China is the world's largest producer of rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
and is among the principal sources of wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, corn (maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
), tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, soybeans, potato
Potato
The potato is a starchy, tuberous crop from the perennial Solanum tuberosum of the Solanaceae family . The word potato may refer to the plant itself as well as the edible tuber. In the region of the Andes, there are some other closely related cultivated potato species...
es, sorghum
Sorghum
Sorghum is a genus of numerous species of grasses, one of which is raised for grain and many of which are used as fodder plants either cultivated or as part of pasture. The plants are cultivated in warmer climates worldwide. Species are native to tropical and subtropical regions of all continents...
, peanut
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
s, tea
Tea
Tea is an aromatic beverage prepared by adding cured leaves of the Camellia sinensis plant to hot water. The term also refers to the plant itself. After water, tea is the most widely consumed beverage in the world...
, millet
Millet
The millets are a group of small-seeded species of cereal crops or grains, widely grown around the world for food and fodder. They do not form a taxonomic group, but rather a functional or agronomic one. Their essential similarities are that they are small-seeded grasses grown in difficult...
, barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
, oilseed, pork
Pork
Pork is the culinary name for meat from the domestic pig , which is eaten in many countries. It is one of the most commonly consumed meats worldwide, with evidence of pig husbandry dating back to 5000 BC....
, and fish
Fish
Fish are a paraphyletic group of organisms that consist of all gill-bearing aquatic vertebrate 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...
. Major non-food crops, including cotton, other fibers, and oilseeds, 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
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
. 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
Fertilizer
Fertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...
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.
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
. China ranks first worldwide in farm output, and, as a result of topographic
Topography
Topography is the study of Earth's surface shape and features or those ofplanets, moons, and asteroids...
and climatic
Climate
Climate encompasses the statistics of temperature, humidity, atmospheric pressure, wind, rainfall, atmospheric particle count and other meteorological elemental measurements in a given region over long periods...
factors, only about 10–15 percent of the total land area is suitable for cultivation
Tillage
Tillage is the agricultural preparation of the soil by mechanical agitation of various types, such as digging, stirring, and overturning. Examples of human-powered tilling methods using hand tools include shovelling, picking, mattock work, hoeing, and raking...
. Of this, slightly more than half is unirrigated, and the remainder is divided roughly equally between paddy field
Paddy field
A paddy field is a flooded parcel of arable land used for growing rice and other semiaquatic crops. Paddy fields are a typical feature of rice farming in east, south and southeast Asia. Paddies can be built into steep hillsides as terraces and adjacent to depressed or steeply sloped features such...
s and irrigated 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, 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
Animal husbandry is the agricultural practice of breeding and raising livestock.- History :Animal husbandry has been practiced for thousands of years, since the first domestication of animals....
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
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
output. China has a long tradition of ocean and freshwater fishing and of aquaculture
Aquaculture
Aquaculture, also known as aquafarming, is the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants. Aquaculture involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the...
. Pond raising has always been important and has been increasingly emphasized to supplement coastal and inland fisheries threatened by overfishing
Overfishing
Overfishing occurs when fishing activities reduce fish stocks below an acceptable level. This can occur in any body of water from a pond to the oceans....
and to provide such valuable export commodities as prawn
Prawn
Prawns are decapod crustaceans of the sub-order Dendrobranchiata. There are 540 extant species, in seven families, and a fossil record extending back to the Devonian...
s.
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
Reforestation is the natural or intentional restocking of existing forests and woodlands that have been depleted, usually through deforestation....
program that proved inadequate, and forest resources are still fairly meagre. The principal forests are found in the Qin Mountains and the central mountains and on the Sichuan–Yunnan plateau. Because they are inaccessible, the Qinling forests are not worked extensively, and much of the country's timber
Timber
Timber may refer to:* Timber, a term common in the United Kingdom and Australia for wood materials * Timber, Oregon, an unincorporated community in the U.S...
comes from Heilongjiang
Heilongjiang
For the river known in Mandarin as Heilong Jiang, see Amur River' is a province of the People's Republic of China located in the northeastern part of the country. "Heilongjiang" literally means Black Dragon River, which is the Chinese name for the Amur. The one-character abbreviation is 黑...
, Jilin
Jilin
Jilin , is a province of the People's Republic of China located in the northeastern part of the country. Jilin borders North Korea and Russia to the east, Heilongjiang to the north, Liaoning to the south, and Inner Mongolia to the west...
, Sichuan
Sichuan
' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...
, and Yunnan
Yunnan
Yunnan is a province of the People's Republic of China, located in the far southwest of the country spanning approximately and with a population of 45.7 million . The capital of the province is Kunming. The province borders Burma, Laos, and Vietnam.Yunnan is situated in a mountainous area, with...
.
Western China
Western China
Western China , refers to the western part of China. In the definition of the Chinese government, Western China covers six provinces: Gansu, Guizhou, Qinghai, Shaanxi, Sichuan, and Yunnan; one municipality: Chongqing; and three autonomous regions: Ningxia, Tibet, and Xinjiang.-Administrative...
, comprising Tibet
Tibet
Tibet is a plateau region in Asia, north-east of the Himalayas. It is the traditional homeland of the Tibetan people as well as some other ethnic groups such as Monpas, Qiang, and Lhobas, and is now also inhabited by considerable numbers of Han and Hui people...
, Xinjiang
Xinjiang
Xinjiang is an autonomous region of the People's Republic of China. It is the largest Chinese administrative division and spans over 1.6 million km2...
, and Qinghai
Qinghai
Qinghai ; Oirat Mongolian: ; ; Salar:) is a province of the People's Republic of China, named after Qinghai Lake...
, has little agricultural significance except for areas of floriculture
Floriculture
Floriculture, or flower farming, is a discipline of horticulture concerned with the cultivation of flowering and ornamental plants for gardens and for floristry, comprising the floral industry...
and cattle raising. Rice, China's most important crop, is dominant in the southern provinces and many of the farms here yield two harvests a year. In the north, wheat is of the greatest importance, while in central China wheat and rice vie with each other for the top place. Millet
Millet
The millets are a group of small-seeded species of cereal crops or grains, widely grown around the world for food and fodder. They do not form a taxonomic group, but rather a functional or agronomic one. Their essential similarities are that they are small-seeded grasses grown in difficult...
and kaoliang
Kaoliang
Kaoliang jiu is a strong distilled liquor, made from fermented sorghum . It is made and sold in both mainland China and Taiwan, and also popular in Korea, where it is called goryangju...
(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
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
. Most of the soybean
Soybean
The soybean or soya bean is a species of legume native to East Asia, widely grown for its edible bean which has numerous uses...
crop is derived from the north and the northeast; corn (maize) is grown in the center and the north, while tea
Tea
Tea is an aromatic beverage prepared by adding cured leaves of the Camellia sinensis plant to hot water. The term also refers to the plant itself. After water, tea is the most widely consumed beverage in the world...
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
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
comes from the center and parts of the south. Other important crops are potatoes, sugar beet
Sugar beet
Sugar beet, a cultivated plant of Beta vulgaris, is a plant whose tuber contains a high concentration of sucrose. It is grown commercially for sugar production. Sugar beets and other B...
s, and oilseeds.
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
Collective farming
Collective farming and communal farming are types of agricultural production in which the holdings of several farmers are run as a joint enterprise...
. Later this expanded to include a gradual liberalization of price controls; fiscal
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....
decentralization
Decentralization
__FORCETOC__Decentralization or decentralisation is the process of dispersing decision-making governance closer to the people and/or citizens. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy,...
; massive privatization of state enterprises, thereby allowing a wide variety of private enterprises in the services and light manufacturing; the foundation of a diversified banking system (but with large amounts of state control); the development of a stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
; and the opening of the economy to increased foreign trade and foreign investment.
Energy and mineral resources
Electricity:- production: 2.8344 trillion kWh (2006)
- consumption: 2.8248 trillion kWh (2006)
- exports: 11.19 billion kWh (2005)
- imports: 5.011 billion kWh (2005)
Electricity – production by source:
- thermal: 77.8% (68.7% from coal) (2006)
- hydro: 20.7% (2006)
- other: 0.4% (2006)
- nuclear: 1.1% (2006)
Oil:
- production: 3631000 oilbbl/d (2005)
- consumption: 6534000 oilbbl/d (2005) and expected 9300000 oilbbl/d in 2030
- exports: 443300 oilbbl/d (2005)
- imports: 3181000 oilbbl/d (2005)
- net imports: 2740000 oilbbl/d (2005)
- proved reserves: 16.3 Goilbbl (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: 1,448k m3 (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 generated from fossil fuel at thermal plants, with about 17 percent at hydroelectric installations; only about two percent is from nuclear energy
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...
, mainly from plants located in Guangdong
Guangdong
Guangdong is a province on the South China Sea coast of the People's Republic of China. The province was previously often written with the alternative English name Kwangtung Province...
and Zhejiang
Zhejiang
Zhejiang is an eastern coastal province of the People's Republic of China. The word Zhejiang was the old name of the Qiantang River, which passes through Hangzhou, the provincial capital...
. 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
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
and oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
, the central part of north China has abundant coal, and the southwest has immense hydroelectric potential. But the industrialized regions around Guangzhou
Guangzhou
Guangzhou , known historically as Canton or Kwangchow, is the capital and largest city of the Guangdong province in the People's Republic of China. Located in southern China on the Pearl River, about north-northwest of Hong Kong, Guangzhou is a key national transportation hub and trading port...
and the Lower Yangtze
Yangtze River
The Yangtze, Yangzi or Cháng Jiāng is the longest river in Asia, and the third-longest in the world. It flows for from the glaciers on the Tibetan Plateau in Qinghai eastward across southwest, central and eastern China before emptying into the East China Sea at Shanghai. It is also one of the...
region around Shanghai have too little energy, while there is relatively little heavy industry
Heavy industry
Heavy industry does not have a single fixed meaning as compared to light industry. It can mean production of products which are either heavy in weight or in the processes leading to their production. In general, it is a popular term used within the name of many Japanese and Korean firms, meaning...
located near major energy resource areas other than in the southern part of the northeast.
Although electric-generating capacity has grown rapidly, it has continued to fall considerably short of demand. This has been partly because energy prices were long fixed so low that industries had few incentives to conserve
Energy conservation
Energy conservation refers to efforts made to reduce energy consumption. Energy conservation can be achieved through increased efficient energy use, in conjunction with decreased energy consumption and/or reduced consumption from conventional energy sources...
. In addition, it has often been necessary to transport fuel
Fuel
Fuel is any material that stores energy that can later be extracted to perform mechanical work in a controlled manner. Most fuels used by humans undergo combustion, a redox reaction in which a combustible substance releases energy after it ignites and reacts with the oxygen in the air...
s (notably coal) great distances from points of production to consumption. Coal provides about 70–75 percent of China's energy consumption, although its proportion has been gradually declining. Petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
production, which grew rapidly from an extremely low base in the early 1960s, has increased much more gradually from 1980. Natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
production still constitutes only a small (though increasing) fraction of overall energy production, but gas is supplanting coal as a domestic fuel in the major cities.
In the 1990s, energy demand rocketed in response to the rapid expansion of the economy but energy production was constrained by limited capital. As in other sectors of the state-owned economy, the energy sector suffered from low utilization and inefficiencies
Efficient energy use
Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...
in production, transport, conversion, consumption, and conservation
Energy conservation
Energy conservation refers to efforts made to reduce energy consumption. Energy conservation can be achieved through increased efficient energy use, in conjunction with decreased energy consumption and/or reduced consumption from conventional energy sources...
. Other problems included declining real prices, rising taxes and production costs, spiraling losses, high debt burden, insufficient investment, low productivity, poor management structure, environmental pollution, and inadequate technological development. To keep pace with demand, China sought to increase electric generating capacity to a target level of 290 gigawatts by 2000.
According to Chinese statistics, China managed to keep its energy growth rate at just half the rate of GDP growth throughout the 1990s. Though these numbers are not reliable, there has been agreement that China had improved its energy efficiency significantly over this period. In the late 1990s, an estimated 10,000 megawatts of generating capacity was added each year, at an annual cost of about . China imported new power plants from the West to increase its generation capacity, and these units then accounted for approximately 20% of total generating capacity. More power generating capacity came on line in the mid-2000s as large scale investments were completed. In 2001, China's total energy consumption was projected to double by 2020. Energy consumption grew at nearly 10 percent per year between 2000 and 2005, more than twice the yearly rate of the previous two decades.
In 2003, China surpassed Japan to become the second-largest consumer of primary energy
Primary energy
Primary energy is an energy form found in nature that has not been subjected to any conversion or transformation process. It is energy contained in raw fuels, and other forms of energy received as input to a system...
, after the United States. China is the world's second-largest consumer of oil, after the United States, and for 2006, China's increase in oil demand represented 38% of the world total increase in oil demand. China is also the third-largest energy producer in the world, after the United States and Russia. China's electricity consumption is expected to grow by over 4% a year through 2030, which will require more than in electricity infrastructure investment to meet the demand. China expects to add approximately 15,000 megawatts of generating capacity a year, with 20% of that coming from foreign suppliers.
China, due in large part to environmental concerns, has wanted to shift China's current energy mix from a heavy reliance on coal, which accounts for 70–75% of China's energy, toward greater reliance on oil, natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
, renewable energy
Renewable energy in China
Renewable energy is helping the People's Republic of China complete its economic transformation and achieve "energy security". China rapidly has moved along the path of renewable energy development. About 17 percent of China's electricity came from renewable sources in 2007, led by the world's...
, and nuclear power
Nuclear power in China
, the People's Republic of China has 14 nuclear power reactors spread out over 4 separate sites and 27 under construction. China's National Development and Reform Commission has indicated the intention to raise the percentage of China's electricity produced by nuclear power from the current 1% to...
. China has closed thousands of coal mines over the past five to ten years to cut overproduction. According to Chinese statistics, this has reduced coal production by over 25%.
Only one-fifth of the new coal power plant capacity installed from 1995 to 2000 included desulfurization equipment. Interest in renewable sources of energy is growing, but except for hydropower
Hydropower
Hydropower, hydraulic power, hydrokinetic power or water power is power that is derived from the force or energy of falling water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as...
, their contribution to the overall energy mix is unlikely to rise above 1–2% in the near future. China's energy sector continues to be hampered by difficulties in obtaining funding, including long-term financing, and by market balkanization
Balkanization
Balkanization, or Balkanisation, is a geopolitical term, originally used to describe the process of fragmentation or division of a region or state into smaller regions or states that are often hostile or non-cooperative with each other, and it is considered pejorative.The term refers to the...
due to local protectionism
Protectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
that prevents more efficient large plants from achieving economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
.
Since 1993, China has been a net importer of oil, a large portion of which comes from the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
. Imported oil accounts for 20% of the processed crude in China. Net imports are expected to rise to barrels
Barrel (unit)
A barrel is one of several units of volume, with dry barrels, fluid barrels , oil barrel, etc...
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
Central Asia is a core region of the Asian continent from the Caspian Sea in the west, China in the east, Afghanistan in the south, and Russia in the north...
and has invested in Kazakhstan
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
i oil field
Oil field
An oil field is a region with an abundance of oil wells extracting petroleum from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area...
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
Clean coal technology
Clean coal technology is a collection of technologies being developed to reduce the environmental impact of coal energy generation. When coal is used as a fuel source, the gaseous emmissions generated by the thermal decomposition of the coal, include sulphur dioxide, nitrogen dioxide, carbon...
. 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.
In May 2004, then-Secretary of Energy in the United States Spencer Abraham
Spencer Abraham
Edmund Spencer Abraham is a former United States Senator from Michigan. He served as the tenth United States Secretary of Energy, serving under President George W. Bush. Abraham is one of the founders of the Federalist Society....
signed a Memorandum of Understanding
Memorandum of understanding
A memorandum of understanding is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in...
(MOU) with China's National Development and Reform Commission
National Development and Reform Commission
The National Development and Reform Commission , formerly State Planning Commission and State Development Planning Commission, is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy...
(NDRC) that launched the U.S.–China Energy Policy Dialogue. The Dialogue strengthened energy-related interactions between China and the United States, the world's two largest energy consumers. The U.S.–China Energy Policy Dialogue has built upon the two countries' existing cooperative ventures in high energy nuclear physics, fossil energy, energy efficiency and renewable energy and energy information exchanges. The NDRC and the Department of Energy also exchange views and expertise on Peaceful Uses of Nuclear Technologies, and convenes an annual Oil and Gas Industry Forum with China.
Mining
Outdated miningMining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
and ore-processing technologies are being replaced with modern techniques, but China's rapid industrialization requires imports of minerals from abroad. In particular, iron ore imports from Australia and the United States have soared in the early 2000s as steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
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
Democratic Republic of the Congo
The Democratic Republic of the Congo is a state located in Central Africa. It is the second largest country in Africa by area and the eleventh largest in the world...
and Gabon
Gabon
Gabon , officially the Gabonese Republic is a state in west central Africa sharing borders with Equatorial Guinea to the northwest, Cameroon to the north, and with the Republic of the Congo curving around the east and south. The Gulf of Guinea, an arm of the Atlantic Ocean is to the west...
.
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
(nearly 2 billion tons), iron ore (310 million tons), crude petroleum ( tons), natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
( cubic meters), antimony
Antimony
Antimony is a toxic chemical element with the symbol Sb and an atomic number of 51. A lustrous grey metalloid, it is found in nature mainly as the sulfide mineral stibnite...
ore (110,000 tons), tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
concentrates (110,000 tons), nickel
Nickel
Nickel is a chemical element with the chemical symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel belongs to the transition metals and is hard and ductile...
ore (64,000 tons), tungsten
Tungsten
Tungsten , also known as wolfram , is a chemical element with the chemical symbol W and atomic number 74.A hard, rare metal under standard conditions when uncombined, tungsten is found naturally on Earth only in chemical compounds. It was identified as a new element in 1781, and first isolated as...
concentrates (67,000 tons), unrefined salt
Salt
In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...
( tons), vanadium
Vanadium
Vanadium is a chemical element with the symbol V and atomic number 23. It is a hard, silvery gray, ductile and malleable transition metal. The formation of an oxide layer stabilizes the metal against oxidation. The element is found only in chemically combined form in nature...
(40,000 tons), and molybdenum
Molybdenum
Molybdenum , is a Group 6 chemical element with the symbol Mo and atomic number 42. The name is from Neo-Latin Molybdaenum, from Ancient Greek , meaning lead, itself proposed as a loanword from Anatolian Luvian and Lydian languages, since its ores were confused with lead ores...
ore (29,000 tons). In order of magnitude, produced minerals were bauxite
Bauxite
Bauxite is an aluminium ore and is the main source of aluminium. This form of rock consists mostly of the minerals gibbsite Al3, boehmite γ-AlO, and diaspore α-AlO, in a mixture with the two iron oxides goethite and hematite, the clay mineral kaolinite, and small amounts of anatase TiO2...
, gypsum
Gypsum
Gypsum is a very soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4·2H2O. It is found in alabaster, a decorative stone used in Ancient Egypt. It is the second softest mineral on the Mohs Hardness Scale...
, barite
Barite
Baryte, or barite, is a mineral consisting of barium sulfate. The baryte group consists of baryte, celestine, anglesite and anhydrite. Baryte itself is generally white or colorless, and is the main source of barium...
, magnesite
Magnesite
Magnesite is magnesium carbonate, MgCO3. Iron substitutes for magnesium with a complete solution series with siderite, FeCO3. Calcium, manganese, cobalt, and nickel may also occur in small amounts...
, talc
Talc
Talc is a mineral composed of hydrated magnesium silicate with the chemical formula H2Mg34 or Mg3Si4O102. In loose form, it is the widely-used substance known as talcum powder. It occurs as foliated to fibrous masses, its crystals being so rare as to be almost unknown...
and related minerals, manganese
Manganese
Manganese is a chemical element, designated by the symbol Mn. It has the atomic number 25. It is found as a free element in nature , and in many minerals...
ore, fluorspar, and zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...
. In addition, China produced 2,450 tons of silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
and 215 tons of gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
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.
Hydroelectric resources
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 of the countrySouthwest China
Southwest China is a region of the People's Republic of China defined by governmental bureaus that includes the municipality of Chongqing, the provinces of Sichuan, Yunnan and Guizhou, and the Tibet Autonomous Region.-Provinces:-Municipalities:...
, where coal supplies are poor but demand for energy is rising swiftly. The potential in the northeast is fairly small, but it was there that the first hydroelectric stations were built—by the Japanese during its occupation of Manchuria
Manchuria
Manchuria is a historical name given to a large geographic region in northeast Asia. Depending on the definition of its extent, Manchuria usually falls entirely within the People's Republic of China, or is sometimes divided between China and Russia. The region is commonly referred to as Northeast...
. Due to considerable seasonal fluctuations in rainfall, the flow of rivers tends to drop during the winter, forcing many power station
Power station
A power station is an industrial facility for the generation of electric energy....
s to operate at less than normal capacity, while in the summer, on the other hand, floods often interfere with generation
Electricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
.
Thirteen years in construction at a cost of , the immense Three Gorges Dam
Three Gorges Dam
The Three Gorges Dam is a hydroelectric dam that spans the Yangtze River by the town of Sandouping, located in the Yiling District of Yichang, in Hubei province, China...
across the Yangtze River
Yangtze River
The Yangtze, Yangzi or Cháng Jiāng is the longest river in Asia, and the third-longest in the world. It flows for from the glaciers on the Tibetan Plateau in Qinghai eastward across southwest, central and eastern China before emptying into the East China Sea at Shanghai. It is also one of the...
was essentially completed in 2006 and will revolutionize electrification
Electrification
Electrification originally referred to the build out of the electrical generating and distribution systems which occurred in the United States, England and other countries from the mid 1880's until around 1940 and is in progress in developing countries. This also included the change over from line...
and flood control
Flood control
In communications, flood control is a feature of many communication protocols designed to prevent overwhelming of a destination receiver. Such controls can be implemented either in software or in hardware, and will often request that the message be resent after the receiver has finished...
in the area.
Coal
China is well endowed with mineral resources, the most important of which is coalCoal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
. China's mineral resources include large reserves of coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
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
' is a province in Northern China. Its one-character abbreviation is "晋" , after the state of Jin that existed here during the Spring and Autumn Period....
, in fact, is thought to contain about half of the total; other important coal-bearing provinces include Heilongjiang
Heilongjiang
For the river known in Mandarin as Heilong Jiang, see Amur River' is a province of the People's Republic of China located in the northeastern part of the country. "Heilongjiang" literally means Black Dragon River, which is the Chinese name for the Amur. The one-character abbreviation is 黑...
, Liaoning
Liaoning
' is a province of the People's Republic of China, located in the northeast of the country. Its one-character abbreviation is "辽" , a name taken from the Liao River that flows through the province. "Níng" means "peace"...
, Jilin
Jilin
Jilin , is a province of the People's Republic of China located in the northeastern part of the country. Jilin borders North Korea and Russia to the east, Heilongjiang to the north, Liaoning to the south, and Inner Mongolia to the west...
, Hebei
Hebei
' is a province of the People's Republic of China in the North China region. Its one-character abbreviation is "" , named after Ji Province, a Han Dynasty province that included what is now southern Hebei...
, and Shandong
Shandong
' is a Province located on the eastern coast of the People's Republic of China. Shandong has played a major role in Chinese history from the beginning of Chinese civilization along the lower reaches of the Yellow River and served as a pivotal cultural and religious site for Taoism, Chinese...
. Apart from these northern provinces, significant quantities of coal are present in Sichuan
Sichuan
' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...
, and there are some deposits of importance in Guangdong
Guangdong
Guangdong is a province on the South China Sea coast of the People's Republic of China. The province was previously often written with the alternative English name Kwangtung Province...
, Guangxi
Guangxi
Guangxi, formerly romanized Kwangsi, is a province of southern China along its border with Vietnam. In 1958, it became the Guangxi Zhuang Autonomous Region of the People's Republic of China, a region with special privileges created specifically for the Zhuang people.Guangxi's location, in...
, Yunnan
Yunnan
Yunnan is a province of the People's Republic of China, located in the far southwest of the country spanning approximately and with a population of 45.7 million . The capital of the province is Kunming. The province borders Burma, Laos, and Vietnam.Yunnan is situated in a mountainous area, with...
, and Guizhou
Guizhou
' is a province of the People's Republic of China located in the southwestern part of the country. Its provincial capital city is Guiyang.- History :...
. A large part of the country's reserves consists of good bituminous coal
Bituminous coal
Bituminous coal or black coal is a relatively soft coal containing a tarlike substance called bitumen. It is of higher quality than lignite coal but of poorer quality than Anthracite...
, but there are also large deposits of lignite
Lignite
Lignite, often referred to as brown coal, or Rosebud coal by Northern Pacific Railroad,is a soft brown fuel with characteristics that put it somewhere between coal and peat...
. Anthracite is present in several places (especially Liaoning
Liaoning
' is a province of the People's Republic of China, located in the northeast of the country. Its one-character abbreviation is "辽" , a name taken from the Liao River that flows through the province. "Níng" means "peace"...
, Guizhou
Guizhou
' is a province of the People's Republic of China located in the southwestern part of the country. Its provincial capital city is Guiyang.- History :...
, and Henan
Henan
Henan , is a province of the People's Republic of China, located in the central part of the country. Its one-character abbreviation is "豫" , named after Yuzhou , a Han Dynasty state that included parts of Henan...
), 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 mines
Coal mining
The goal of coal mining is to obtain 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 iron ore and for cement production. In the United States,...
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
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
makes up the bulk of China's energy consumption (70% in 2005), 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
Acid rain
Acid rain is a rain or any other form of precipitation that is unusually acidic, meaning that it possesses elevated levels of hydrogen ions . It can have harmful effects on plants, aquatic animals, and infrastructure. Acid rain is caused by emissions of carbon dioxide, sulfur dioxide and nitrogen...
-causing sulfur dioxide
Sulfur dioxide
Sulfur dioxide is the chemical compound with the formula . It is released by volcanoes and in various industrial processes. Since coal and petroleum often contain sulfur compounds, their combustion generates sulfur dioxide unless the sulfur compounds are removed before burning the fuel...
and greenhouse gas
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
es, including carbon dioxide
Carbon dioxide
Carbon dioxide is a naturally occurring chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom...
.
Oil and natural gas
China's onshore oilOil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
resources are mostly located in the Northeast
Northeast China
Northeast China, historically known in English as Manchuria, is a geographical region of China, consisting of the three provinces of Liaoning, Jilin and Heilongjiang. The region is sometimes called the Three Northeast Provinces...
and in Xinjiang
Xinjiang
Xinjiang is an autonomous region of the People's Republic of China. It is the largest Chinese administrative division and spans over 1.6 million km2...
, Gansu
Gansu
' is a province located in the northwest of the People's Republic of China.It lies between the Tibetan and Huangtu plateaus, and borders Mongolia, Inner Mongolia, and Ningxia to the north, Xinjiang and Qinghai to the west, Sichuan to the south, and Shaanxi to the east...
, Qinghai
Qinghai
Qinghai ; Oirat Mongolian: ; ; Salar:) is a province of the People's Republic of China, named after Qinghai Lake...
, Sichuan
Sichuan
' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...
, Shandong
Shandong
' is a Province located on the eastern coast of the People's Republic of China. Shandong has played a major role in Chinese history from the beginning of Chinese civilization along the lower reaches of the Yellow River and served as a pivotal cultural and religious site for Taoism, Chinese...
, and Henan
Henan
Henan , is a province of the People's Republic of China, located in the central part of the country. Its one-character abbreviation is "豫" , named after Yuzhou , a Han Dynasty state that included parts of Henan...
provinces. Oil shale
Oil shale
Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen from which liquid hydrocarbons called shale oil can be produced...
is found in a number of places, especially at Fushun
Fushun
Fushun is a city in Liaoning, China, about 45 km east from Shenyang, with a population about 2,138 090 inhabitants at the 2010 census and an area of 11,271 km2, including 713 km2 of the city proper. Fushun is situated on the Hun He . It was formerly called Fouchouen in French...
in Liaoning, where the deposits overlie the coal reserves, as well as in Guangdong. Light oil
Light crude oil
Light crude oil is liquid petroleum that has a low density and flows freely at room temperature. It has a low viscosity, low specific gravity and high API gravity due to the presence of a high proportion of light hydrocarbon fractions. It generally has a low wax content...
of high quality has been found in the Pearl River
Pearl River (China)
The Pearl River or less commonly, the "Guangdong River" or "Canton River" etc., , is an extensive river system in southern China. The name Pearl River is usually used as a catchment term to refer to the watersheds of the Xi Jiang , the Bei Jiang , and the Dong Jiang...
estuary of the South China Sea
South China Sea
The South China Sea is a marginal sea that is part of the Pacific Ocean, encompassing an area from the Singapore and Malacca Straits to the Strait of Taiwan of around...
, the Qaidam
Qaidam
Qaidam Basin, also spelled Tsaidam is an hyperarid basin that occupies a large part of the Haixi Mongol and Tibetan Autonomous Prefecture in Qinghai Province, western China...
Basin in Qinghai, and the Tarim Basin
Tarim Basin
The Tarim Basin is a large endorheic basin occupying an area of about . It is located in the Xinjiang Uyghur Autonomous Region in China's far west. Its northern boundary is the Tian Shan mountain range and its southern is the Kunlun Mountains on the northern edge of the Tibetan Plateau. The...
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 and East China Seas, the Yellow Sea
Yellow Sea
The Yellow Sea is the name given to the northern part of the East China Sea, which is a marginal sea of the Pacific Ocean. It is located between mainland China and the Korean Peninsula. Its name comes from the sand particles from Gobi Desert sand storms that turn the surface of the water golden...
, the Gulf of Tonkin
Gulf of Tonkin
The Gulf of Tonkin is an arm of the South China Sea, lying off the coast of northeastern Vietnam.-Etymology:The name Tonkin, written "東京" in Hán tự and Đông Kinh in romanised Vietnamese, means "Eastern Capital", and is the former toponym for Hanoi, the capital of Vietnam...
, and the Bohai Sea
Bohai Sea
Bohai Sea , also known as Bohai Gulf, Bohai, or Bo Hai, is the innermost gulf of the Yellow Sea on the coast of Northeastern and North China. It is approximately 78,000 km2 Bohai Sea , also known as Bohai Gulf, Bohai, or Bo Hai, is the innermost gulf of the Yellow Sea on the coast of...
.
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
Qaidam
Qaidam Basin, also spelled Tsaidam is an hyperarid basin that occupies a large part of the Haixi Mongol and Tibetan Autonomous Prefecture in Qinghai Province, western China...
Basin, Hebei
Hebei
' is a province of the People's Republic of China in the North China region. Its one-character abbreviation is "" , named after Ji Province, a Han Dynasty province that included what is now southern Hebei...
, Jiangsu
Jiangsu
' is a province of the People's Republic of China, located along the east coast of the country. The name comes from jiang, short for the city of Jiangning , and su, for the city of Suzhou. The abbreviation for this province is "苏" , the second character of its name...
, Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
, and Zhejiang
Zhejiang
Zhejiang is an eastern coastal province of the People's Republic of China. The word Zhejiang was the old name of the Qiantang River, which passes through Hangzhou, the provincial capital...
, and offshore to the southwest of Hainan Island.
Metals and nonmetals
Iron ore reserves are found in most provinces, including HainanHainan
Hainan is the smallest province of the People's Republic of China . Although the province comprises some two hundred islands scattered among three archipelagos off the southern coast, of its land mass is Hainan Island , from which the province takes its name...
. Gansu, Guizhou, southern Sichuan, and Guangdong provinces have rich deposits. The largest mined reserves are located north of the Yangtze River
Yangtze River
The Yangtze, Yangzi or Cháng Jiāng is the longest river in Asia, and the third-longest in the world. It flows for from the glaciers on the Tibetan Plateau in Qinghai eastward across southwest, central and eastern China before emptying into the East China Sea at Shanghai. It is also one of the...
and supply neighboring iron and steel enterprises. With the exception of nickel
Nickel
Nickel is a chemical element with the chemical symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel belongs to the transition metals and is hard and ductile...
, chromium
Chromium
Chromium is a chemical element which has the symbol Cr and atomic number 24. It is the first element in Group 6. It is a steely-gray, lustrous, hard metal that takes a high polish and has a high melting point. It is also odorless, tasteless, and malleable...
, and cobalt
Cobalt
Cobalt is a chemical element with symbol Co and atomic number 27. It is found naturally only in chemically combined form. The free element, produced by reductive smelting, is a hard, lustrous, silver-gray metal....
, China is well supplied with ferroalloy
Ferroalloy
Ferroalloy refers to various alloys of iron with a high proportion of one or more other element, manganese or silicon for example. It is used in the production of steels and alloys as a raw material.The main ferroalloys are:*FeAl – ferroaluminum...
s and manganese
Manganese
Manganese is a chemical element, designated by the symbol Mn. It has the atomic number 25. It is found as a free element in nature , and in many minerals...
. Reserves of tungsten
Tungsten
Tungsten , also known as wolfram , is a chemical element with the chemical symbol W and atomic number 74.A hard, rare metal under standard conditions when uncombined, tungsten is found naturally on Earth only in chemical compounds. It was identified as a new element in 1781, and first isolated as...
are also known to be fairly large. Copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
resources are moderate, and high-quality ore is present only in a few deposits. Discoveries have been reported from Ningxia
Ningxia
Ningxia, formerly transliterated as Ningsia, is an autonomous region of the People's Republic of China. Located in Northwest China, on the Loess Plateau, the Yellow River flows through this vast area of land. The Great Wall of China runs along its northeastern boundary...
. Lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
and zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...
are available, and bauxite
Bauxite
Bauxite is an aluminium ore and is the main source of aluminium. This form of rock consists mostly of the minerals gibbsite Al3, boehmite γ-AlO, and diaspore α-AlO, in a mixture with the two iron oxides goethite and hematite, the clay mineral kaolinite, and small amounts of anatase TiO2...
resources are thought to be plentiful. China's antimony
Antimony
Antimony is a toxic chemical element with the symbol Sb and an atomic number of 51. A lustrous grey metalloid, it is found in nature mainly as the sulfide mineral stibnite...
reserves are the largest in the world. Tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
resources are plentiful, and there are fairly rich deposits of gold. China is the world's fifth largest producer of gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and in the early 21st century became an important producer and exporter of rare metals needed in high-technology industries. The rare earth
Rare earth element
As defined by IUPAC, rare earth elements or rare earth metals are a set of seventeen chemical elements in the periodic table, specifically the fifteen lanthanides plus scandium and yttrium...
reserves at the Bayan Obi mine in Inner Mongolia
Inner Mongolia
Inner Mongolia is an autonomous region of the People's Republic of China, located in the northern region of the country. Inner Mongolia shares an international border with the countries of Mongolia and the Russian Federation...
are thought to be the largest in any single location in the world.
China also produces a fairly wide range of nonmetal
Nonmetal
Nonmetal, or non-metal, is a term used in chemistry when classifying the chemical elements. On the basis of their general physical and chemical properties, every element in the periodic table can be termed either a metal or a nonmetal...
lic minerals. One of the most important of these is salt
Salt
In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...
, which is derived from coastal evaporation
Evaporation
Evaporation is a type of vaporization of a liquid that occurs only on the surface of a liquid. The other type of vaporization is boiling, which, instead, occurs on the entire mass of the liquid....
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. Pyrite
Pyrite
The mineral pyrite, or iron pyrite, is an iron sulfide with the formula FeS2. This mineral's metallic luster and pale-to-normal, brass-yellow hue have earned it the nickname fool's gold because of its resemblance to gold...
s occur in several places; Liaoning, Hebei, Shandong, and Shanxi have the most important deposits. China also has large resources of fluorite
Fluorite
Fluorite is a halide mineral composed of calcium fluoride, CaF2. It is an isometric mineral with a cubic habit, though octahedral and more complex isometric forms are not uncommon...
(fluorspar), gypsum
Gypsum
Gypsum is a very soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4·2H2O. It is found in alabaster, a decorative stone used in Ancient Egypt. It is the second softest mineral on the Mohs Hardness Scale...
, asbestos
Asbestos
Asbestos is a set of six naturally occurring silicate minerals used commercially for their desirable physical properties. They all have in common their eponymous, asbestiform habit: long, thin fibrous crystals...
, and cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
.
Industry and manufacturing
Industry and construction account for 46.8% of China's GDP. In 2009 around 8% of the total manufacturing output in the world came from China itself and China ranked third worldwide in industrial output that year (first was EU and second US). 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.Major industries include mining and ore processing; iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
and steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
; aluminium
Aluminium
Aluminium or aluminum is a silvery white member of the boron group of chemical elements. It has the symbol Al, and its atomic number is 13. It is not soluble in water under normal circumstances....
; coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
; machinery; armaments; textiles and apparel; petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
; cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
; chemical; fertilizers; food processing
Food processing
Food processing is the set of methods and techniques used to transform raw ingredients into food or to transform food into other forms for consumption by humans or animals either in the home or by the food processing industry...
; automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
s and other transportation equipment including rail cars and locomotives, ships, and aircraft; consumer products including footwear
Footwear
Footwear consists of garments worn on the feet, for fashion, protection against the environment, and adornment. Being barefoot is commonly associated with poverty, but some cultures chose not to wear footwear at least in some situations....
, toy
Toy
A toy is any object that can be used for play. Toys are associated commonly with children and pets. Playing with toys is often thought to be an enjoyable means of training the young for life in human society. Different materials are used to make toys enjoyable and cuddly to both young and old...
s, and electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
; telecommunications and information technology
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
. 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. The state-owned sector still accounts for about 30% of GDP. In recent years, authorities have been giving greater attention to the management of state assets—both in the financial market as well as among state-owned-enterprises—and progress has been noteworthy.
Since the founding of the People's Republic, industrial development has been given considerable attention. Among the various industrial branches the machine
Machine
A machine manages power to accomplish a task, examples include, a mechanical system, a computing system, an electronic system, and a molecular machine. In common usage, the meaning is that of a device having parts that perform or assist in performing any type of work...
-building and metallurgical
Metallurgy
Metallurgy is a domain of materials science that studies the physical and chemical behavior of metallic elements, their intermetallic compounds, and their mixtures, which are called alloys. It is also the technology of metals: the way in which science is applied to their practical use...
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
Innovation
Innovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...
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 10 percent per year, having surpassed all other sectors in economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
and degree of modernization
Modernization
In the social sciences, modernization or modernisation refers to a model of an evolutionary transition from a 'pre-modern' or 'traditional' to a 'modern' society. The teleology of modernization is described in social evolutionism theories, existing as a template that has been generally followed by...
. Some heavy industries and products deemed to be of national strategic importance remain state-owned, but an increasing proportion of lighter and consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
-oriented manufacturing firms are privately held or are private-state joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
s.
The predominant focus of development in the chemical industry
Chemical industry
The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials into more than 70,000 different products.-Products:...
is to expand the output of chemical fertilizer
Fertilizer
Fertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...
s, plastics, and synthetic fiber
Synthetic fiber
Synthetic fibers are the result of extensive research by scientists to improve on naturally occurring animal and plant fibers. In general, synthetic fibers are created by forcing, usually through extrusion, fiber forming materials through holes into the air, forming a thread...
s. 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
Clothing refers to any covering for the human body that is worn. The wearing of clothing is exclusively a human characteristic and is a feature of nearly all human societies...
, which also form an important part of China's exports. Textile manufacturing, a rapidly growing proportion of which consists of synthetics, account for about 10 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 centers, including Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
, Guangzhou
Guangzhou
Guangzhou , known historically as Canton or Kwangchow, is the capital and largest city of the Guangdong province in the People's Republic of China. Located in southern China on the Pearl River, about north-northwest of Hong Kong, Guangzhou is a key national transportation hub and trading port...
, and Harbin
Harbin
Harbin ; Manchu language: , Harbin; Russian: Харби́н Kharbin ), is the capital and largest city of Heilongjiang Province in Northeast China, lying on the southern bank of the Songhua River...
.
Major state industries are iron, steel, coal, machine building, light industrial products, armaments, and textiles. These industries completed a decade of reform (1979–1989) with little substantial management change. Prior to 1978, most output was produced by state-owned enterprises. As a result of the economic reforms that followed, there was a significant increase in production by enterprises sponsored by local government
Local government
Local government refers collectively to administrative authorities over areas that are smaller than a state.The term is used to contrast with offices at nation-state level, which are referred to as the central government, national government, or federal government...
s, especially townships and villages, and, increasingly, by private entrepreneurs and foreign investors. The 1996 industrial census revealed that there were 7,342,000 industrial enterprises at the end of 1995; total employment in industrial enterprises was approximately . The 1999 industrial census revealed that there were 7,930,000 industrial enterprises at the end of 1999 (including small-scale town and village enterprises
Town and village enterprises
Township and Village Enterprises are market-oriented public enterprises under the purview of local governments based in townships and villages in the People's Republic of China.-History:...
); total employment in state-owned industrial enterprises was about . The automobile industry has grown rapidly since 2000, as has the petrochemical industry. Machinery and electronic products became China's main exports. China is the world's leading manufacturer of chemical fertilizer
Fertilizer
Fertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...
s, cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
, and steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
. By 2002 the share in gross industrial output by state-owned and state-holding industries had decreased to 41%, and the state-owned companies themselves contributed only 16% of China's industrial output.
China's construction sector has grown substantially since the early 1980s. In the 21st century, investment in capital construction has experienced major annual increases. In 2001 investments increased 8.5% over the previous year. In 2002 there was a 16.4% increase, followed by a 30% increase in 2003. The manufacturing sector produced 44.1% of GDP in 2004 and accounted for 11.3% of total employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
in 2002. Industry and construction produced 53.1% of China's GDP in 2005. Industry (including mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
, manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
, construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
, and power
Electric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
) contributed 52.9% of GDP in 2004 and occupied 22.5% of the workforce
Workforce
The workforce is the labour pool in employment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic region like a city, country, state, etc. The term generally excludes the employers or management, and implies those involved in...
.
Energy production has increased rapidly, but it still falls considerably short of demand. This is partly due to artificial energy prices that have been held so low that industries have had few incentives to conserve. Coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
provides about 75–80 percent of China's energy consumption. Petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
production, which began growing rapidly from an extremely low base in the early 1960s, has basically remained at the same level since the late 1970s. There are large petroleum reserves in the inaccessible northwest and potentially significant offshore petroleum deposits, but about half of the country's oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
production still comes from the major Daqing oilfield in the northeast. China has much, and partially undeveloped, hydroelectric power potential and natural gas reserves. The government has made plans to develop nuclear power
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...
plants in the coastal and western regions (see Nuclear power in China).
Overall, the distribution of industry remains very uneven, despite serious efforts from the mid-1950s to the late 1970s to build up industry in the interior at the cost of the major cities on the east coast. While percentage growth of industry in the interior provinces generally greatly exceeded that of the coastal areas, the far larger initial industrial base of the latter has meant that a few coastal regions have continued to dominate China's industrial economy. The establishment of special economic zone
Special Economic Zone
A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...
s in coastal areas only heightened this disparity. Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
by itself accounts for about 8–10 percent of China's gross value of industrial output, and the east coast accounts for about 60 percent of the national industrial output. The rate of industrialization increased and diversified
Diversification (marketing strategy)
Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most...
after the early 1990s. Notable were the development of aerospace
Aerospace
Aerospace comprises the atmosphere of Earth and surrounding space. Typically the term is used to refer to the industry that researches, designs, manufactures, operates, and maintains vehicles moving through air and space...
, aircraft
Aircraft
An aircraft is a vehicle that is able to fly by gaining support from the air, or, in general, the atmosphere of a planet. An aircraft counters the force of gravity by using either static lift or by using the dynamic lift of an airfoil, or in a few cases the downward thrust from jet engines.Although...
, and automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
manufacturing. In addition, China expanded rapidly into the production of pharmaceuticals, software, semiconductors, electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
, and precision
Accuracy and precision
In the fields of science, engineering, industry and statistics, the accuracy of a measurement system is the degree of closeness of measurements of a quantity to that quantity's actual value. The precision of a measurement system, also called reproducibility or repeatability, is the degree to which...
equipment.
Steel industry
China is the largest producer of steel in the world and the steel industry has been rapidly increasing its steelSteel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
production. 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 tons in 2000, was increased to tons in 2006. 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 province of the People's Republic of China, located in the northeast of the country. Its one-character abbreviation is "辽" , a name taken from the Liao River that flows through the province. "Níng" means "peace"...
.
China is the top exporter of steel in the world. Export volumes in 2008 were tons, a 5.5% fall over the previous year. The decline ends China's decade-old steel export growth.
Automotive industry
By 2006 China had become the world's third largest automotive vehicle manufacturer (after US and Japan) and the second largest consumer (only after US). AutomobileAutomobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
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 in 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 automobiles were sold, including units of passenger cars and units of commercial vehicles.
As of 2010, China has become the world's largest automotive vehicle manufacturer as well as the largest consumer
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
Honda
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
factory in Guangzhou
Guangzhou
Guangzhou , known historically as Canton or Kwangchow, is the capital and largest city of the Guangdong province in the People's Republic of China. Located in southern China on the Pearl River, about north-northwest of Hong Kong, Guangzhou is a key national transportation hub and trading port...
was built in 2004 solely for the export market and was expected to ship 30,000 passenger vehicles to Europe in 2005. By 2004, 12 major foreign automotive manufacturers had joint-venture plants in China. They produced a wide range of automobiles, minivan
Minivan
Minivan is a type of van designed for personal use. Minivans are typically either two-box or one box designs for maximum interior volume – and are taller than a sedan, hatchback, or a station wagon....
s, sport utility vehicle
Sport utility vehicle
A sport utility vehicle is a generic marketing term for a vehicle similar to a station wagon, but built on a light-truck chassis. It is usually equipped with four-wheel drive for on- or off-road ability, and with some pretension or ability to be used as an off-road vehicle. Not all four-wheel...
s, bus
Bus
A bus is a road vehicle designed to carry passengers. Buses can have a capacity as high as 300 passengers. The most common type of bus is the single-decker bus, with larger loads carried by double-decker buses and articulated buses, and smaller loads carried by midibuses and minibuses; coaches are...
es, and truck
Truck
A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...
s. In 2003 China exported 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 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 and Chery are constantly evaluating new international locations, both in developing and developed countries.
Other industries
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 is the world's largest market for personal computers
Services
China's services output ranks fifth worldwide, and high power and telecom density has ensured that it has remained on a high-growth trajectory in the long-term. In 2005 the services sector produced 40.3% of China's annual GDP, second only to manufacturing. However, its proportion of GDP is still low compared with 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 shopsRetailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
, rationing
Rationing
Rationing is the controlled distribution of scarce resources, goods, or services. Rationing controls the size of the ration, one's allotted portion of the resources being distributed on a particular day or at a particular time.- In economics :...
, and regulated prices. With reform came private markets and individual entrepreneurs and a commercial sector. The wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
and retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
trade has expanded quickly, with urban areas now having many shopping mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s, retail shops, restaurant chains and hotels. Public administration
Public administration
Public Administration houses the implementation of government policy and an academic discipline that studies this implementation and that prepares civil servants for this work. As a "field of inquiry with a diverse scope" its "fundamental goal.....
has still remained a main component of the service sector, while tourism
Tourism in China
Tourism in China has greatly expanded over the last few decades since the beginning of reform and opening. The emergence of a newly rich middle class and an easing of restrictions on movement by the Chinese authorities are both fueling this travel boom. China has become one of the world's...
has become a significant factor in employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
and as a source of foreign exchange. The potential for growing services in China through franchising is huge.
Tourism
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. The total revenue of China's tourism industry reached USD in 2002, accounting for 5.44% of the GDP. It dropped, largely due to SARS, to USD in 2003. Nevertheless, for areas rich in tourism resources, tourism has become the main source of tax revenueTax revenue
Tax revenue is the income that is gained by governments through taxation.Just as there are different types of tax, the form in which tax revenue is collected also differs; furthermore, the agency that collects the tax may not be part of central government, but may be an alternative third-party...
and the key industry for economic development.
The total number of inbound tourists was in 2003, and that of tourists staying overnight was , about 10 times of the number in 1980. International tourism receipts were USD in 2003. China's ranking for both the overnight tourist arrivals and tourism receipts were among the world's top five in 2003. However, there is unlikely to be a big increase in the inbound tourism market.
China's 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 and tourism revenue was USD . The five-days-per-week and long vacation schemes have increased leisure time for the Chinese people and spurred market demand in domestic tourism and led to its prosperity.
A large middle class population with strong consumption power is emerging in China, especially in major cities. China's outbound tourists reached in 2003, overtaking Japan for the first time. Currently there are 65 countries/areas open to Chinese tour groups. Putting aside the threat of SARS and other unexpected events, based on the current economic growth situation and the social development of China, China's outbound tourism is poised to achieve a new growth peak.
Driven by the flourishing tourism industry, China's tourist hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
sector is expanding rapidly. At the end of 2003, China had a total of 10,093 tourist hotels and more than 820,000 rooms. 773 of these tourist hotels were foreign-funded. The number of foreign-funded (inclusive of Hong Kong, Macau and Taiwan investments) four- and five-star tourist hotels made up 26% and 30.02% of the national total, respectively.
In 2003, there were a total of 11,522 travel agencies in China, among which, 1,349 were international ones and 10,203 were domestic ones. While overall tourism market concentration rose, there was a drop in the market position of the traditional three key travel agencies. As competition heightened, China's tourism industry on the whole, had begun to start earning low profits, even while it was expanding its scale of operations.
Currently, there are approximately 15,000 natural, cultural and man-made places of attraction that are above county level. Presently, Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
investors are the main participants in the establishment of tourist attractions in China. In 2001, Sichuan
Sichuan
' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...
became the first province to propose renting
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
out the operation rights of 10 scenic areas to foreign investors.
According to the plan by China National Tourism Administration
China National Tourism Administration
The China National Tourism Administration is the Chinese government authority responsible for the development of tourism in the country. The CNTA is subordinate to the State Council. Its headquarters are in Beijing, with regional branches in various provinces...
, the number of inbound tourists, foreign exchange earnings from tourism and the domestic market size are targeted to have an annual growth of 4%, 8% and 8%, respectively, in the next five to ten years. It is also forecast by the WTO 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.
Labor and welfare
Iron rice bowl
"Iron rice bowl" is a Chinese term used to refer to an occupation with guaranteed job security, as well as steady income and benefits. The Chinese term can be compared to the similar English concept of a breadwinner with cradle to grave socialism...
.
In 1979–1980, the state reformed factories by giving wage increases to workers, which was immediately offset by sharply rising inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
rates of 6–7%. The reforms also dismantled the iron rice bowl
Iron rice bowl
"Iron rice bowl" is a Chinese term used to refer to an occupation with guaranteed job security, as well as steady income and benefits. The Chinese term can be compared to the similar English concept of a breadwinner with cradle to grave socialism...
, which meant it witnessed a rise in unemployment in the economy. In 1979 there were unemployed people. Official Chinese statistics reveal that 4.2% of the total urban workforce was unemployed in 2004, although other estimates have reached 10%. As part of its newly developing social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
legislation
Legislation
Legislation is law which has been promulgated by a legislature or other governing body, or the process of making it...
, China has an unemployment insurance system. At the end of 2003, more than people were participating in the plan, and laid-off employees had received benefits.
A 10-percent sample tabulation of census questionnaires from the 1982 census provided needed statistical data on China's working population and allowed the first reliable estimates of the labor force's size and characteristics. The estimated mid-1982 labor force was , or approximately 54 percent of the total population. Males accounted for slightly more than half of the estimated labor force, and the labor force participation rates for persons age fifteen years and older were among the highest in the world.
The 10-percent sample showed that approximately three-fourths of the labor force worked in the agricultural sector. According to the National Bureau of Statistics, in the mid-1980s more than people worked in the nonagricultural sector. The sample revealed that men occupied the great majority of leadership positions. The average worker was about thirty years old, and three out of every four workers were under forty-five years of age. The working population had a low education level. Less than 40 percent of the labor force had more than a primary school education, and 30 percent were illiterate or semiliterate.
In mid-1982 the overall unemployment rate was estimated to be about 5 percent. Of the approximately unemployed, were men and were women. The unemployment rate was highest in the northeast and lowest in the south. The unemployment rates were higher than those of East Asian, Southeast Asian, and Pacific island countries for which data were available but were lower than the rates found in North America and Europe. Virtually all of the unemployed persons in cities and towns were under twenty years of age.
By the 1990s and 2000s, agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
has remained the largest employer, though its proportion of the workforce has steadily declined; between 1991 and 2001 it dropped from about 60% to 40% of the total. The manufacturing labor force has also become smaller at a slower rate, partially because of reforms implemented at many of the state-run enterprises. Such reforms and other factors have increased unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
and underemployment
Underemployment
Underemployment refers to an employment situation that is insufficient in some important way for the worker, relative to a standard. Examples include holding a part-time job despite desiring full-time work, and overqualification, where the employee has education, experience, or skills beyond the...
in both urban and rural areas. Women have been a major labor presence in China since the People's Republic was established. Some 40–45 percent of all women over age 15 are employed.
China's estimated employed labor force in 2005 totaled persons, about 60% of the total population. During 2003, 49% of the labor force worked in agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
, forestry
Forestry
Forestry is the interdisciplinary profession embracing the science, art, and craft of creating, managing, using, and conserving forests and associated resources in a sustainable manner to meet desired goals, needs, and values for human benefit. Forestry is practiced in plantations and natural stands...
, and fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
; 22% in mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
, manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
, energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...
, and construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
industries; and 29% in the services sector and other categories. In 2004 some persons were employed by 743,000 private enterprises. 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.
The All-China Federation of Trade Unions
All-China Federation of Trade Unions
The All-China Federation of Trade Unions , is the sole national trade union federation of the People's Republic of China. It is the largest trade union in the world with 134 million members in 1,713,000 primary trade union organizations...
(ACFTU) was established in 1925 to represent the interests of national and local trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s and trade union councils. The ACFTU reported a membership of , out of an estimated urban workers, at the end of 2002. Chinese trade unions are organized on a broad industrial basis. Membership is open to those who rely on wage
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
s for the whole or a large part of their income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
, a qualification that excludes most agricultural workers. In theory, membership is not compulsory, but in view of the unions' role in the distribution of social benefits, the economic pressure to join is great. The lowest unit is the enterprise union committee. Individual trade unions also operate at the provincial level, and there are trade union councils that coordinate all union activities within a particular area and operate at county, municipal, and provincial levels. At the top of the movement is the ACFTU, which discharges its functions through a number of regional federations.
In theory the appropriate trade union organizations have been consulted on the level of wage
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
s as well as on wage differentials, but in practice their role in these and similar matters has been insignificant. They have not engaged in collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
, as their principal duties have included assisting the party and promoting production. In fulfilling these tasks, they have had a role in enforcing labor discipline. From the point of view of the membership, the most important activities have concerned the social and welfare services. Thus, the unions have looked after industrial safety, organized social and cultural activities, and, provided services such as clinics, rest and holiday homes, hostels, libraries, and clubs. They also administer old-age pensions, workers' insurance
Workers' compensation
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence...
, disability
Disability
A disability may be physical, cognitive, mental, sensory, emotional, developmental or some combination of these.Many people would rather be referred to as a person with a disability instead of handicapped...
benefits, and other welfare schemes. More recently, however, reforms of the social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
system have involved moving the responsibility for pension
Pension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
s and other welfare to the provinces.
Chinese labor laws, if fully enforced, would greatly alleviate common abuses such as not paying workers. In 2006 and thereafter there was an organizing campaign orchestrated by the central government to organize Chinese operations of foreign companies. It was reported in 2008 that problems with sweatshops persist.
In 2010, the issues of manufacturing wages caused a 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 the PRC 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.
External trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
makes up a sizeable portion of China's overall economy. The course of China's foreign trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
has experienced considerable transformations since the early 1950s. In 1950 more than 70 percent of the total trade was with non-Communist countries, but by 1954, a year after the end of the Korean War
Korean War
The Korean War was a conventional war between South Korea, supported by the United Nations, and North Korea, supported by the People's Republic of China , with military material aid from the Soviet Union...
, the situation was completely reversed, and trade with Communist countries stood at about 75 percent. During the next few years, trade with the Communist world lost some of its standing, but it was only after the Sino-Soviet split
Sino-Soviet split
In political science, the term Sino–Soviet split denotes the worsening of political and ideologic relations between the People's Republic of China and the Union of Soviet Socialist Republics during the Cold War...
of 1960, which resulted in the cancellation of Soviet credits
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
and the withdrawal of Soviet technicians, that the non-Communist world began to see a speedy recovery in its position. In 1965 China's trade with other socialist countries made up only about a third of the total.
Being a Second World
Second World
The term "Second World" is a phrase used to describe those countries which are allied with or are supported by the "First World" countries . These include countries supported by the United States, such as Colombia, Israel, etc., and those supported by the former Soviet Union, also known as the the...
country at the time, a meaningful segment of China's trade with the Third World
Third World
The term Third World arose during the Cold War to define countries that remained non-aligned with either capitalism and NATO , or communism and the Soviet Union...
was financed through grants, credits, and other forms of assistance. At first, from 1953 to 1955, aid went mainly to North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...
and North Vietnam
North Vietnam
The Democratic Republic of Vietnam , was a communist state that ruled the northern half of Vietnam from 1954 until 1976 following the Geneva Conference and laid claim to all of Vietnam from 1945 to 1954 during the First Indochina War, during which they controlled pockets of territory throughout...
and some other Communist states; but from the mid-1950s large amounts, mainly grants and long-term, interest-free loans, were promised to politically uncommitted developing countries. The principal efforts were made in Asia, especially to Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, Burma, Pakistan
Pakistan
Pakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...
, and Ceylon, but large loans were also granted in Africa (Ghana
Ghana
Ghana , officially the Republic of Ghana, is a country located in West Africa. It is bordered by Côte d'Ivoire to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south...
, Algeria
Algeria
Algeria , officially the People's Democratic Republic of Algeria , also formally referred to as the Democratic and Popular Republic of Algeria, is a country in the Maghreb region of Northwest Africa with Algiers as its capital.In terms of land area, it is the largest country in Africa and the Arab...
, Tanzania
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...
) and in the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
(Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
). However, after Mao Zedong
Mao Zedong
Mao Zedong, also transliterated as Mao Tse-tung , and commonly referred to as Chairman Mao , was a Chinese Communist revolutionary, guerrilla warfare strategist, Marxist political philosopher, and leader of the Chinese Revolution...
'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
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
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. On November 1991, China joined the Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region...
(APEC) group, which promotes free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
and cooperation the in 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.
China's global trade totaled $324 billion in 1997 and $151 billion in the first half of 1998; the trade surplus stood at . China's primary trading partners were Japan, Taiwan, the U.S., South Korea, Hong Kong, Germany, Singapore, Russia, and the Netherlands. China had a trade surplus with the U.S. of in 1997 and in 1998. Major imports were power generating equipment, aircraft and parts, computers and industrial machinery, raw materials, and chemical and agricultural products.
In 1998, China was in its 12th year of negotiations for accession to the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO)—formerly the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
(GATT), and had significantly reduced import tariffs. Previously in 1996, China had already introduced cuts to more than 4,000 tariff lines, reducing average tariffs from 35% to 23%; further tariff cuts that took effect October 1, 1997, decreased average tariffs to 17%. To gain WTO entry, all prospective WTO members were required to comply with certain fundamental trading disciplines and offer substantially expanded market access
Market access
Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to...
to other members of the organization. Many major trading entities—among them the United States, the European Union, and Japan—shared concerns with respect to China's accession. These concerns included obtaining satisfactory market access offers for both goods and services, full trading rights for all potential Chinese consumers and end-users, nondiscrimination between foreign and local commercial operations in China, the reduction of monopolistic state trading practices, and the elimination of arbitrary or non-scientific technical standards. China and other WTO members worked to achieve a commercially viable accession protocol.
In 1999, Premier Zhu Rongji
Zhu Rongji
Zhū Róngjī is a prominent Chinese politician who served as the Mayor and Party chief in Shanghai between 1987 and 1991, before serving as Vice-Premier and then the fifth Premier of the People's Republic of China from March 1998 to March 2003.A tough administrator, his time in office saw the...
signed a bilateral U.S.–China Agricultural Cooperation Agreement, which lifted longstanding Chinese prohibitions on imports of citrus
Citrus
Citrus is a common term and genus of flowering plants in the rue family, Rutaceae. Citrus is believed to have originated in the part of Southeast Asia bordered by Northeastern India, Myanmar and the Yunnan province of China...
, grain
GRAIN
GRAIN is a small international non-profit organisation that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems. Our support takes the form of independent research and analysis, networking at local, regional and...
, beef
Beef
Beef is the culinary name for meat from bovines, especially domestic cattle. Beef can be harvested from cows, bulls, heifers or steers. It is one of the principal meats used in the cuisine of the Middle East , Australia, Argentina, Brazil, Europe and the United States, and is also important in...
, and poultry
Poultry
Poultry are domesticated birds kept by humans for the purpose of producing eggs, meat, and/or feathers. These most typically are members of the superorder Galloanserae , especially the order Galliformes and the family Anatidae , commonly known as "waterfowl"...
. In November 1999, the United States and China reached a historic bilateral market-access agreement to pave the way for China's accession to the WTO. As part of the far-reaching trade liberalization agreement, China agreed to lower tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s and abolish market impediments after it joins the world trading body. Chinese and foreign businessmen, for example, would gain the right to import and export on their own – and to sell their products without going through a government middleman. 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 December 11, 2001, after 16 years of negotiations, the longest in the history of the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
.
| Period | Two-way trade | Exports | Imports |
|---|---|---|---|
| 1981–85 | |||
| 1986–90 | |||
| 1991–95 | |||
| 1996–2000 | |||
| 2000–05 | |||
| 2006 | |||
| 2007 |
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 one-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 port
Port
A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land....
s in the world, three are in China.
The U.S. is one of China's primary suppliers of semiconductors and electronic components, power-generating equipment, aircraft and parts, computers and industrial machinery, raw materials, waste and scrap, and chemical and agricultural products. However, U.S. exporters continue to have concerns about fair market access due to China's restrictive trade policies and U.S. export restrictions. Intellectual property theft makes many foreign companies wary of doing business in mainland China. According to U.S. statistics, China had a trade surplus with the U.S. of in 2004, more than doubling from 1999. Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
, the United States' largest retailer, is China's 7th largest export partner, just ahead of the United Kingdom.
Trade volume between China and Russia reached $29.1 billion in 2005, an increase of 37.1% compared with 2004. A spokesman for the Ministry of Commerce
Ministry of Commerce of the People's Republic of China
The Ministry of Commerce of the People's Republic of China , formerly Ministry of Foreign Trade and Economic Co-operation is an executive agency of the State Council of China...
, Van Jingsun, said that the volume of trade between China and Russia could exceed 40 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 11 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 in this time period border trade between the two countries reached , 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 . China's contracted investment in Russia totaled during January–September 2005, twice that in 2004.
Eastern Siberia-Pacific Ocean oil pipeline
The Eastern Siberia–Pacific Ocean oil pipeline is a pipeline system for exporting Russian crude oil to the Asia-Pacific markets . The pipeline is built and operated by Russian pipeline company Transneft.-History:...
with a branch to 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.
The China Council for the Promotion of International Trade
China Council for the Promotion of International Trade
The China Council for the Promotion of International Trade is a trade body of the Chinese government founded in 1952. It also goes by the name of the China Chamber of International Commerce ....
(CCPIT) promotes China's international economic and commercial interests. This is accomplished by developing business cooperation and exchanges with foreign countries. It also produces economic data, creates diplomatic ties and is active with trade arbitration issues. Hong Kong remains prominent in domestic trade, notably in its reliance on the mainland for agricultural products.
Trading partners
Foreign investment
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 CatalogueEncouraged Industry Catalogue
As one of the key tools used by the People's Republic of China government to direct foreign investment into mainland China, the Encouraged Industry Catalogue is significant in international trade with mainland China...
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
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
, allowed foreign partners to become chairs of joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
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 Enterprise
Wholly Foreign Owned Enterprise
The Wholly Foreign Owned Enterprise, abbreviated WFOE, is a common investment vehicle for mainland China-based business. The unique feature of a WFOE is that involvement of a mainland Chinese investor is not required, unlike most other investment vehicles. WFOEs are limited-liability corporations...
s 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
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
and allowed foreign investors to purchase special "B" shares of stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
in selected companies listed on the Shanghai
Shanghai Stock Exchange
The Shanghai Stock Exchange , abbreviated as 上证所/上證所 or 上交所, is a stock exchange that is based in the city of Shanghai, China. It is one of the two stock exchanges operating independently in the People's Republic of China, the other is the Shenzhen Stock Exchange...
and Shenzhen
Shenzhen Stock Exchange
The Shenzhen Stock Exchange is one of the People's Republic of China's two stock exchanges, alongside the Shanghai Stock Exchange. It is based in Shenzhen, China...
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 in foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
. 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.
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. In 1998, foreign-invested enterprises produced about 40% of China's exports, and foreign exchange reserves totalled about $145 billion. Foreign-invested enterprises today produce about half of China's exports (the majority of China's foreign investment come from Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, Macau
Macau
Macau , also spelled Macao , is, along with Hong Kong, one of the two special administrative regions of the People's Republic of China...
and Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
), 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 after the United States. China received $39 billion FDI in 1999 and FDI in 2000. China is now one of the leading FDI recipients in the world, receiving almost in 2005 according to World Bank statistics. In 2006, China received in foreign direct investment.
Foreign exchange reserves
Foreign exchange reserve of the People's Republic of China
The Foreign exchange reserves of the People's Republic of China are mainly composed of US dollar in the forms of US government bonds and institutional bonds, and excludes reserves held by Hong Kong and Macau...
totaled $155 billion in 1999 and $165 billion in 2000. Foreign exchange reserves
Foreign exchange reserves
Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
exceeded $800 billion in 2005, more than doubling from 2003. Foreign exchange reserves were $819 billion at the end of 2005, $1.066 trillion at the end of 2006, 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 , vs Japan . China has now surpassed those of Japan, making China's foreign exchange reserves the 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.
Chinese investment abroad
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.Demographics
Since the 1950s medical care, public hygiene and sanitation improved considerably, and epidemics were controlled. Consecutive generations continuously experienced better health. The population growthPopulation growth
Population growth is the change in a population over time, and can be quantified as the change in the number of individuals of any species in a population using "per unit time" for measurement....
rate surged as the mortality rate
Mortality rate
Mortality rate is a measure of the number of deaths in a population, scaled to the size of that population, per unit time...
dropped more rapidly than the birth rate
Birth rate
Crude birth rate is the nativity or childbirths per 1,000 people per year . Another word used interchangeably with "birth rate" is "natality". When the crude birth rate is subtracted from the crude death rate, it reveals the rate of natural increase...
. 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
Birth control
Birth control is an umbrella term for several techniques and methods used to prevent fertilization or to interrupt pregnancy at various stages. Birth control techniques and methods include contraception , contragestion and abortion...
program. The Great Leap Forward industrial plan in 1958–60 was partially responsible for a huge famine that caused the death rate to surpass the birth rate, and by 1960, the overall population was declining. A second population control
Population control
Human population control is the practice of artificially altering the rate of growth of a human population.Historically, human population control has been implemented by limiting the population's birth rate, usually by government mandate, and has been undertaken as a response to factors including...
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
Family planning
Family planning is the planning of when to have children, and the use of birth control and other techniques to implement such plans. Other techniques commonly used include sexuality education, prevention and management of sexually transmitted infections, pre-conception counseling and...
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 per family policy
One-child policy
The one-child policy refers to the one-child limitation applying to a minority of families in the population control policy of the People's Republic of China . The Chinese government refers to it under the official translation of family planning policy...
was implemented. By the early 1980s, China's population reached around and by the early 2000s, surpassed . 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
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
, 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 ageing
Population ageing
Population ageing or population aging occurs when the median age of a country or region rises. This happens because of rising life expectancy or declining birth rates. Excepting 18 countries termed 'demographic outliers' by the UN) this process is taking place in every country and region across...
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 the latest Forbes China Rich List (2007), China had 66 billionaire
Billionaire
A billionaire, in countries that use the short scale number naming system, is a person who has a net worth of at least one billion units of a given currency, usually the United States dollar, Euro, or Pound sterling. Forbes magazine updates a complete list of U.S. dollar billionaires around the...
s, the second largest number after the United States
Forbes 400
The Forbes 400 or 400 Richest Americans is a list published by Forbes Magazine magazine of the wealthiest 400 Americans, ranked by net worth. The list is published annually in September, and 2010 marks the 29th issue. The 400 was started by Malcom Forbes in 1982 and treats those in the list like...
, which had 415. In the 2006 Forbes Rich List it stated that there were 15 Chinese billionaires. In the latest 2007 Hurun Report, it lists 106 billionaires in China.
Transportation and Infrastructure
Development of the country's transportation infrastructure is given a high priority because it is so strategically tied to the national economy and national defenseDefense (military)
Defense has several uses in the sphere of military application.Personal defense implies measures taken by individual soldiers in protecting themselves whether by use of protective materials such as armor, or field construction of trenches or a bunker, or by using weapons that prevent the enemy...
. Regardless, the transportation infrastructure is still not fully developed in many aspects and areas, and it constitutes a major hindrance on economic growth and the efficient logistical
Logistics
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...
movement of goods and people. 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 logistics
Military logistics
Military logistics is the discipline of planning and carrying out the movement and maintenance of military forces. In its most comprehensive sense, it is those aspects or military operations that deal with:...
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 haulage
Haulage
Haulage may refer to:* The business of being a haulier or hauler , also called haulage contractor, common carrier, contract carrier, or private carrier, in other words of transporting goods by road or rail for other companies or one's own company.* The horizontal transport of ore, coal, supplies,...
is mainly provided by rail transport
Rail transport
Rail transport is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on...
. The rail sector is monopolized by China Railways
China Railways
China Railways is the national railway operator of the People's Republic of China, under the Chinese Ministry of Railways.China Railways operates rail commuter and freight transport via several smaller companies....
, which is controlled by the Ministry of Railways 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 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 (poor transportation networks, aging power grids, mediocre schools…).
Communications
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 by the end of 2006, an increase of 23.4% from a year before and by June 2007, making China the second largest Internet user after the United States, according to China's Ministry of Information Industry (MII). China's mobile phone penetration rate is 34% in 2007. In 2006, mobile phone users sent text messages, or on average 967 text messages per user. For 2006, the number of fixed-lines
Landline
A landline was originally an overland telegraph wire, as opposed to an undersea cable. Currently, landline refers to a telephone line which travels through a solid medium, either metal wire or optical fibre, as distinguished from a mobile cellular line, where transmission is via radio waves...
grew by 79%, mainly in the rural areas.
Science and technology
Science and technologyScience and technology
Science and technology is a term of art used to encompass the relationship between science and technology. It frequently appears within titles of academic disciplines and government offices.-See also:...
have always preoccupied China's leaders and indeed, China's political leadership comes almost exclusively from technical backgrounds and has a high regard for science
Science
Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe...
. Deng Xiaoping called it "the first productive force." In recent times, with Hu Jintao
Hu Jintao
Hu Jintao is the current Paramount Leader of the People's Republic of China. He has held the titles of General Secretary of the Communist Party of China since 2002, President of the People's Republic of China since 2003, and Chairman of the Central Military Commission since 2004, succeeding Jiang...
and Wen Jiabao
Wen Jiabao
Wen Jiabao is the sixth and current Premier and Party secretary of the State Council of the People's Republic of China, serving as China's head of government and leading its cabinet. In his capacity as Premier, Wen is regarded as the leading figure behind China's economic policy...
and their predecessors Jiang Zemin
Jiang Zemin
Jiang Zemin is a former Chinese politician, who served as General Secretary of the Communist Party of China from 1989 to 2002, as President of the People's Republic of China from 1993 to 2003, and as Chairman of the Central Military Commission from 1989 to 2005...
and Zhu Rongji
Zhu Rongji
Zhū Róngjī is a prominent Chinese politician who served as the Mayor and Party chief in Shanghai between 1987 and 1991, before serving as Vice-Premier and then the fifth Premier of the People's Republic of China from March 1998 to March 2003.A tough administrator, his time in office saw the...
all being trained engineers
Engineering
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...
, China's leaders have been described as technocrats.
Since the early 1980s scientific and technological modernization
Modernization
In the social sciences, modernization or modernisation refers to a model of an evolutionary transition from a 'pre-modern' or 'traditional' to a 'modern' society. The teleology of modernization is described in social evolutionism theories, existing as a template that has been generally followed by...
has been given an especially high priority. Plans were made to rebuild the educational structure, continue sending students abroad, negotiate technological purchases and transfer arrangements with the U.S. and others, and develop ways to disseminate scientific and technological information. Areas of most critical interest have included microelectronics, telecommunications, computers, automated manufacturing, and energy. China also has had a space program since the 1960s and, by the late 1990s, had successfully launched more than 25 satellites.
On the other hand, distortions in the economy and society created by party rule have severely hurt Chinese science, according to some Chinese science policy
Science policy
Science policy is an area of public policy concerned with the policies that affect the conduct of the science and research enterprise, including the funding of science, often in pursuance of other national policy goals such as technological innovation to promote commercial product development,...
experts. The Chinese Academy of Sciences
Chinese Academy of Sciences
The Chinese Academy of Sciences , formerly known as Academia Sinica, is the national academy for the natural sciences of the People's Republic of China. It is an institution of the State Council of China. It is headquartered in Beijing, with institutes all over the People's Republic of China...
, modeled on the Soviet system, puts much of China's greatest scientific talent in a large, under-funded apparatus that remains largely isolated from industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
, although the reforms of the past decade have begun to address this problem.
Chinese science strategists have seen China's greatest opportunities in newly emerging fields such as biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...
and computers where there is still a chance for China to become a significant player. A majority of Chinese students who went abroad have not returned, but they have built a dense network of global contacts that have greatly facilitated international scientific cooperation. The United States is often held up as the standard of scientific modernity in China. Indeed, photos of the Space Shuttle
Space Shuttle
The Space Shuttle was a manned orbital rocket and spacecraft system operated by NASA on 135 missions from 1981 to 2011. The system combined rocket launch, orbital spacecraft, and re-entry spaceplane with modular add-ons...
often appear in Chinese advertisements as a symbol of advanced technology. China's growing space program
Chinese space program
The space program of the People's Republic of China is directed by the China National Space Administration . Its technological roots can be traced back to the late 1950s, when the People's Republic began a rudimentary ballistic missile program in response to perceived American threats...
, which has put a man in space and successfully completed their second manned orbit in October 2005, is a focus of national pride.
At the end of 1996, China had 5,434 state-owned independent research and development institutions at and above the county level. There were another 3,400 research institutions affiliated with universities, 13,744 affiliated with medium and large industrial enterprises, and 726 affiliated with medium and large construction enterprises. A total of people were engaged in scientific and technological activities in these institutions.
The U.S.–China Science and Technology Agreement remains the framework for bilateral cooperation between the two countries in this field. It was originally signed in 1979. A five-year agreement to extend and amend the accord, including provisions for the protection of intellectual property rights, was signed in May 1991, and the Agreement was again extended for five years in April 1996. Five-year agreements to extend the accord were signed in April 2001 and April 2006. The Agreement is among the longest-standing U.S.–China accords, and includes over eleven U.S. Federal agencies and numerous branches that participate in cooperative exchanges under the S&T Agreement and its nearly 60 protocols, memoranda of understanding, agreements and annexes. The Agreement covers cooperation in areas such as marine conservation
Marine conservation
Marine conservation, also known as marine resources conservation, is the protection and preservation of ecosystems in oceans and seas. Marine conservation focuses on limiting human-caused damage to marine ecosystems, and on restoring damaged marine ecosystems...
, high-energy physics, renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
, and health
Health
Health is the level of functional or metabolic efficiency of a living being. In humans, it is the general condition of a person's mind, body and spirit, usually meaning to be free from illness, injury or pain...
. Biennial Joint Commission Meetings on Science and Technology bring together policymakers from both sides to coordinate joint science and technology cooperation. Executive Secretaries meetings are held biennially to implement specific cooperation programs.
Japan and the European Union also have high profile science and technology cooperative relationships with China.
Noopolitik and the Knowledge Economy
Unlike South KoreaSouth Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
the People's Republic does not have a full Ministry of Knowledge Economy as of 2011. Yet China has in ancient times maintained a premiership in world innovation, as evidenced by the manifold inventions it contributed throughout the world history. Notably taking note of the PRC's implementation of German Maglev train technology (transrapid) along with its clear interest in arcologies
Arcology
Arcology, a portmanteau of the words "architecture" and "ecology", is a set of architectural design principles aimed toward the design of enormous habitats of extremely high human population density. These largely hypothetical structures would contain a variety of residential, commercial, and...
and Solar powered planes while infrastructure, energy and transportation are known to have remained the PRC's main economic bottlenecks throughout the 2000s. China is rapidly implementing acquired technology for 600MW - 1000MW coal fired and 800MW - 1600MW nuclear fired power plant. Idriss Aberkane (2011) has argued "it may not be more than a decade before the Euro-Atlantic community manufactures and copies Chinese products, architecture, and systems". Until now, however, this postulate has to be seen as a very optimistic assumption as China is still more or less a "production site" for foreign enterprises and their technology (but also for illegal copies of those). Aberkane also underlined that while the PRC stood as the first nation in ability to provide popular material satisfaction, its doctrine of addressing all domestic issues through the lens of growth (which he calls a "growth panacea doctrine") was naturally continued by its interest in Noopolitik, a "knowledge panacea doctrine".
Furthermore, in an essay explicitly entitled "China's Innovation Wall" Adam Segal reported that the PRC's policy had clearly moved from "Made in China" to "Innovated in China". Zbigniew Brzezinski
Zbigniew Brzezinski
Zbigniew Kazimierz Brzezinski is a Polish American political scientist, geostrategist, and statesman who served as United States National Security Advisor to President Jimmy Carter from 1977 to 1981....
had himself taken note of the PRC's emulating the original American "Revolution in Military Affairs
Revolution in Military Affairs
The military concept of Revolution in Military Affairs is a theory about the future of warfare, often connected to technological and organizational recommendations for change in the United States military and others....
" along which the term "Noopolitik" appeared in the essay of John Arquilla
John Arquilla
John Arquilla received a PhD in International Relations from Stanford in 1991. He worked at RAND for several years, before joining the faculty of the US Naval Postgraduate School in 1993....
.
Luxury goods
A factor that often goes overlooked is the extent of luxury spending the Chinese citizenry are undertaking. There is no greater indication of the newfound wealth of the Chinese than the amount of money now spent on goods and services that were once inaccessible. Foremost among these is the shift towards bottled water. The Chinese bottled water manufacturing industry is forecast to more than double in size in 2008, becoming a $10.5 (US dollars) billion industry in the process. Meanwhile, as those who once had no recourse but poor-quality tap water take advantage of its availability in supermarkets, those who had little or no running water are now capitalising on its availability. The tap water production and supply industry is expected to grow by 29.3% in 2008, to . The country's motor vehicle production industry is expected to expand by 29.5% to nearly , as many Chinese eschew traditional modes of transport, such as bicycles, for the comforts of modern cars. Also, consumption of chocolate and other confectionery is set to increase by 24.3%, as the industry expands to , in order to keep up with China's collective sweet tooth. Couple with this is 20.8% growth in China's fast food industry, as major players such as McDonald'sMcDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald; in 1948...
enter the country with vigour. Also, the LVMH Group, who own major luxury brands including Louis Vuitton
Louis Vuitton
Louis Vuitton Malletier – commonly referred to as Louis Vuitton , or shortened to LV – is a French fashion house founded in 1854 by Louis Vuitton. The label is well known for its LV monogram, which is featured on most products, ranging from luxury trunks and leather goods to ready-to-wear, shoes,...
apparel, Moët & Chandon wines and champagne and Hennessy
Hennessy
Jas Hennessy & Co., or more simply Hennessy, is a world-leading cognac house with headquarters in Cognac, France. Today, the company of Jas Hennessy & Co...
cognacs, reported earnings growth of over 25% in 2007 in China, the region now accounting for around 16% of their global business.
Environment and public health
One of the serious negative consequences of China's rapid industrial development since the 1980s has been increased pollutionPollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...
and degradation
Environmental degradation
Environmental degradation is the deterioration of the environment through depletion of resources such as air, water and soil; the destruction of ecosystems and the extinction of wildlife...
of natural resources
Natural Resources
Natural Resources is a soul album released by Motown girl group Martha Reeves and the Vandellas in 1970 on the Gordy label. The album is significant for the Vietnam War ballad "I Should Be Proud" and the slow jam, "Love Guess Who"...
. Problems such as soil erosion, desertification
Desertification
Desertification is the degradation of land in drylands. Caused by a variety of factors, such as climate change and human activities, desertification is one of the most significant global environmental problems.-Definitions:...
and the steady fall of the water table
Water table
The water table is the level at which the submarine pressure is far from atmospheric pressure. It may be conveniently visualized as the 'surface' of the subsurface materials that are saturated with groundwater in a given vicinity. However, saturated conditions may extend above the water table as...
, especially in the north, have posed a threat to the sustainable development
Sustainable development
Sustainable development is a pattern of resource use, that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come...
of the country. China is an active participant in climate change
Climate change
Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average...
talks and other multilateral environmental negotiations in organization such as the UN Environment Program (UNEP).
Mergers and acquisitions
From 1993 to 2010, Chinese companies have been involved as either an acquiror or acquired company in 25,284 mergers and acquisitionsMergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
with a total known value of US$969 billion. 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$196 billion which is an increase of 25% compared to the year before.
See also
External links and further reading
- National Bureau of Statistics of China
- China's State Information Council (SIC)
- China Economic Information Network (CEInet) under the SIC
- China Monitor is the International presence of the SIC's CEInet
- Chinability News and statistics on China's economy and business climate.
- China on the World Stage from the Dean Peter Krogh Foreign Affairs Digital Archives
- Chinese Economy statistics NationMaster (All stats)
- Asian Development Bank, China
- World Bank, China
- IMF, China
- China Economy (China Economic Information Network). News stories and subscriber-only market analysis for various sectors of the country's economy.
- The State of the Chinese Economy USC U.S. China Institute 2011 conference on the structure, health, and future of China's economy. Twenty leading analysts examined the macroeconomic situation, worries about property bubbles and debt accumulation, labor and human capital trends, and the challenges posed by the health care and pension needs of an aging population. Video presentations are also available via YouTube.
- China's economy. Articles By Subject. Economist.com
- China Economic Net
- China Economic Review
- Far Eastern Economic Review Dow Jones' monthly magazine on Asia. For valuable insights on Asia's business and political development. With search and 58-year archive.
- Chinese Economy China Daily Special Coverage
- Financial Times, China
- The New York Times series "Choking on Growth"
- Asia Business Resources Library – Articles about doing business in China
- The China Perspective
- China Small and Medium Enterprises (SMEs) Information Network
- China Economic Scan
- Chinese Coming Back to Marx Amid Crisis by Bo Gu, NBC News, April 8, 2009
- China's Prospects In The Current Global Climate by Louis Kuijs, International Economics BulletinInternational Economics BulletinThe International economics Bulletin is a bi-monthly publication published by the Carnegie Endowment for International Peace. Edited by Uri Dadush, the publication draws on the expertise of Carnegie's global centers to provide a view of the economic crisis and its political implications.The...
, June 18, 2009. - Business China, up to date economic information and news
- Chinese Economic Development: Chris Bramall, Taylor & FrancisTaylor & FrancisTaylor & Francis Group is an international company originating in the United Kingdom which publishes books and academic journals. It is a division of Informa plc, a United Kingdom-based publisher and conference company.- Overview :...
, 2008. - Documents on the US-China economic relationship
- Documents on contemporary China, including economic policies
Journals
- China Economic Journal Taylor & Francis Journals: Welcome. Tandf.co.uk. Retrieved on 2010-08-06.
- China Economic Quarterly
- China & World Economy China & World Economy – Journal Information. Blackwellpublishing.com (2010-05-07). Retrieved on 2010-08-06.
- Journal of Chinese Economic and Business Studies (JCEBS) Taylor & Francis Journals: Welcome. Tandf.co.uk. Retrieved on 2010-08-06. is the official journal of the Chinese Economic Association (UK). CEA Publications – Journal of Chinese Economic and Business Studies. Ceauk.org.uk. Retrieved on 2010-08-06.
- Journal of Chinese Economic and Foreign Trade Studies Emerald, Journal of Chinese Economic and Foreign Trade Studies information. Emeraldinsight.com. Retrieved on 2010-08-06.
- The China Quarterly Journals.cambridge.org
- The Chinese Economy M.E. Sharpe, Inc. – Journal Information. Mesharpe.com. Retrieved on 2010-08-06.
- 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)