Economy of China

Economy - overview:
Beginning in late 1978 the Chinese leadership has been moving the economy from a sluggish Soviet-style centrally planned economy to a more market-oriented economy but still within a rigid political framework of Communist Party control. To this end the authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. In 1999, with its 1.25 billion people but a GDP of just $3,800 per capita, China became the second largest economy in the world after the US. Agricultural output doubled in the 1980s, and industry also posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment helped spur output of both domestic and export goods. On the darker side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy, lassitude, corruption) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, retightening central controls at intervals. In late 1993 China's leadership approved additional long-term reforms aimed at giving still more play to market-oriented institutions and at strengthening the center's control over the financial system; state enterprises would continue to dominate many key industries in what was now termed "a socialist market economy". In 1995-99 inflation dropped sharply, reflecting tighter monetary policies and stronger measures to control food prices. At the same time, the government struggled to (a) collect revenues due from provinces, businesses, and individuals; (b) reduce corruption and other economic crimes; and (c) 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 100 million surplus rural workers are 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, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development. The next few years will witness increasing tensions between a highly centralized political system and an increasingly decentralized economic system.
GDP:
purchasing power parity - $4.8 trillion (1999 est.)
GDP - real growth rate:
7% (1999 est.)
GDP - per capita:
purchasing power parity - $3,800 (1999 est.)
GDP - composition by sector:
agriculture:
15%
industry:
35%
services:
50% (1999 est.)
Population below poverty line:
10% (1999 est.)
Household income or consumption by percentage share:
lowest 10%:
2.2%
highest 10%:
30.9% (1995)
Inflation rate (consumer prices):
-1.3% (1999 est.)
Labor force:
700 million (1998 est.)
Labor force - by occupation:
agriculture 50%, industry 24%, services 26% (1998)
Unemployment rate:
urban unemployment roughly 10%; substantial unemployment and underemployment in rural areas (1999 est.)
Budget:
revenues:
$NA
expenditures:
$NA, including capital expenditures of $NA
Industries:
iron and steel, coal, machine building, armaments, textiles and apparel, petroleum, cement, chemical fertilizers, footwear, toys, food processing, automobiles, consumer electronics, telecommunications
Industrial production growth rate:
8.8% (1999 est.)
Electricity - production:
1.16 trillion kWh (1998)
Electricity - production by source:
fossil fuel:
80.31%
hydro:
18.46%
nuclear:
1.23%
other:
0% (1998)
Electricity - consumption:
1.014 trillion kWh (1998)
Electricity - exports:
7.935 billion kWh (1998)
Electricity - imports:
89 million kWh (1998)
Agriculture - products:
rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed; pork; fish
Exports:
$194.9 billion (f.o.b., 1999)
Exports - commodities:
machinery and equipment; textiles and clothing, footwear, toys and sporting goods; mineral fuels, chemicals
Exports - partners:
US 22%, Hong Kong 19%, Japan 17%, Germany, South Korea, Netherlands, UK, Singapore, Taiwan (1999)
Imports:
$165.8 billion (c.i.f., 1999)
Imports - commodities:
machinery and equipment, plastics, chemicals, iron and steel, mineral fuels
Imports - partners:
Japan 20%, US 12%, Taiwan 12%, South Korea 10%, Germany, Hong Kong, Russia, Singapore (1999)
Debt - external:
$159 billion (1998 est.)
Economic aid - recipient:
$NA
Currency:
1 yuan = 10 jiao
Exchange rates:
yuan per US$1 - 8.2793 (January 2000), 8.2783 (1999), 8.2790 (1998), 8.2898 (1997), 8.3142 (1996), 8.3514 (1995)
note:
beginning 1 January 1994, the People's Bank of China quotes the midpoint rate against the US dollar based on the previous day's prevailing rate in the interbank foreign exchange market
Fiscal year:
calendar year