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The Economy of China

Chinese Economy

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Economy - overview: China's economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. Annual inflows of foreign direct investment rose to nearly $84 billion in 2007. China has generally implemented reforms in a gradualist or piecemeal fashion. In recent years, China has re-invigorated its support for leading state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg was more than 20% by late 2008, but the exchange rate has changed little since the onset of the global financial crisis. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2008 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. The Chinese government faces numerous economic development challenges, including: (a) strengthening its social safety net, including pension and health system reform, to counteract a high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants, new entrants to the work force, and workers laid off from state-owned enterprises deemed not worth saving; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work. One demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the north - is another long-term problem. China continues to lose arable land because of erosion and economic development. In 2007 China intensified government efforts to improve environmental conditions, tying the evaluation of local officials to environmental targets, publishing a national climate change policy, and establishing a high level leading group on climate change, headed by Premier WEN Jiabao. The Chinese government seeks to add energy production capacity from sources other than coal and oil. In late 2008, as China commemorated the 30th anniversary of its historic economic reforms, the global economic downturn began to slow foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.

GDP:

GDP - real growth rate: 9.8% (2008 est.) 13% (2007 est.) 11.6% (2006 est.)

GDP - per capita:

GDP - composition by sector: agriculture: 10.6% industry: 49.2% services: 40.2% (2008 est.)

Population below poverty line:

Household income or consumption by percentage share: lowest 10%: 1.6% highest 10%: 34.9% (2004)

Distribution of family income - Gini index: 47 (2007)

Inflation rate (consumer prices):

Labor force: 807.7 million (2008 est.)

Labor force - by occupation: agriculture: 43% industry: 25% services: 32% (2006 est.)

Unemployment rate: 4% officially in urban areas, but including migrants may be as high as 9%; substantial unemployment and underemployment in rural areas (2008 est.)

Budget: revenues: $868.6 billion expenditures: $850.5 billion (2008 est.)

Industries: mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites

Industrial production growth rate: 10.7% (2008 est.)

Electricity - production: 3.256 trillion kWh (2007)

Electricity - production by source:

Electricity - consumption: 3.271 trillion kWh (2007)

Electricity - exports: 14.56 billion kWh (2007 est.)

Electricity - imports: 4.251 billion kWh (2007 est.)

Oil - production: 3.725 million bbl/day (2008 est.)

Oil - consumption: 7.88 million bbl/day (2007 est.)

Oil - exports: 399,000 bbl/day (2007)

Oil - imports: 4.21 million bbl/day (2007)

Oil - proved reserves: 16 billion bbl (1 January 2008 est.)

Natural gas - production: 69.27 billion cu m (2007 est.)

Natural gas - consumption: 70.51 billion cu m (2007 est.)

Natural gas - exports: 5.36 billion cu m (2007 est.)

Natural gas - imports: 3.871 billion cu m (2007 est.)

Natural gas - proved reserves: 2.265 trillion cu m (1 January 2008 est.)

Agriculture - products: rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish

Exports: $1.465 trillion f.o.b. (2008 est.)

Exports - commodities: electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment

Exports - partners: US 19.1%, Hong Kong 15.1%, Japan 8.4%, South Korea 4.6%, Germany 4% (2007)

Imports: $1.156 trillion f.o.b. (2008 est.)

Imports - commodities: electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals

Imports - partners: Japan 14%, South Korea 10.9%, Taiwan 10.5%, US 7.3%, Germany 4.7% (2007)

Debt - external: $420.8 billion (31 December 2008 est.)

Economic aid - recipient:

Currency:

Currency code:

Exchange rates: Renminbi yuan (RMB) per US dollar - 6.9385 (2008 est.), 7.61 (2007), 7.97 (2006), 8.1943 (2005), 8.2768 (2004)

Fiscal year: