Economical overview
China's economic development since 1978 has been
faster than any other country. Since 2010, China is the
world's second largest economy after the US - measured
in gross domestic product (GDP) - and within a few
years, the Chinese economy is expected to have outgrown
the US. But the growth rate has gradually slowed down in
the 2010s and a shift is underway to a more
consumption-driven, technologically advanced and
environmentally sustainable economy.
Measured in purchasing power (PPP), China's economy
was larger than the US already in 2014, according to
statistics from the International Monetary Fund. But in
terms of GDP per capita, China is still far ahead of
Western European countries and the United States, even
though poverty in the country has fallen sharply. It is
a priority goal of China's leadership for the country to
achieve high income status, today China according to the
World Bank is regarded as an upper middle income
country.
-
Countryaah.com:
Major imports by China, covering a full list of top products imported by the country and trade value for each product category.
The official line is that China should be a
"socialist market economy". But the state still has a
strong role in the economy and controls several areas
that are deemed to be important for the country,
including the banking sector, energy and
telecommunications. At the same time, the private sector
of the economy has grown in recent years and today
private companies contribute almost two-thirds of GDP
and four-fifths of employment. Foreign companies have
also been increasingly introduced into the Chinese
market.
-
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including CHN which represents the country of China.
Financial crisis
A growing export industry, supported by foreign
investment, has been the main driver of China's economic
expansion. The development has been particularly intense
in China's coastal provinces and in the southern
provinces of Guangdong, Fujian and Hainan. This has led
to large differences in wage workers' incomes between
different countries and to tensions between coastal
regions and provinces inland and in the west. The
government has prioritized attempts to open the Western
provinces to private investment to get growth there.
In 2008, the rapid growth rate slowed down due to the
global financial crisis. Chinese export companies noted
a sharp decline in demand. From autumn 2008, China's
management implemented a comprehensive stimulus package
to stop the slowdown in the economy. For example, nearly
$ 600 billion over a two-year period would be used for
new railways and other infrastructure. Through the
measures, China was able to avert more serious
consequences of the crisis.
But the years of focus on rapid economic growth with
strong investments, extensive lending and export
targeting have created structural weaknesses in the
economy such as increased indebtedness, overcapacity and
inefficiency, while the country's environment has had to
pay a high price (see also Industry and Natural
Resources and Energy).
New reforms
Although the state-controlled companies have become
smaller and the profitability of some of them increased
through privatizations and mergers, many continue to be
a burden to the Chinese economy. Favorable loans from
the state banks have kept inefficient state giants,
while private small companies have often been forced to
seek loans from loan sharks and from so-called shadow
banks. The banking sector has at times had problems with
"bad" loans that the state companies were unable to pay
interest on or repay. On several occasions, the
government has been able to prevent capital to prevent
banks from imposing capital on the banks, while at the
same time tightening lending rules. During the 2010s,
many local governments in the country had incurred high
debts that they found difficult to finance.
From the second half of the 2010s, reforms were
initiated that the economy would be largely driven by
domestic consumption and become less export-oriented,
while market forces were also given more leeway.
However, stimulating increasing consumption has not
proved to be so easy, as lack of trust in the welfare
system means that the Chinese often spend money for
future use. The government has contrasted with measures
to increase employment and give residents more money in
the wallet through increased wages, lower taxes and
investments in social insurance.
Growth is falling
China's management also does not want growth to be
emphasized in the same way as before. It is considered
more important that growth is sustainable, that it is in
harmony with the environment and that it does not
consume as much energy and is therefore less expensive.
At the same time, economic growth must not be too low,
as it can hit the financial sector and lead to social
unrest. In 2019, GDP grew by just over 6 percent, which
was significantly lower than the figures of over 10
percent reported in the first decade of the 2000s. But
growth remained within the targets agreed by the
decision makers and the fact is that many other
countries would feel more than satisfied if their
economies grew at the same rate.
But China's economic challenges remain great. The
Chinese workforce has reached its highest number and
those of working age will gradually decrease as the
population ages and there will be more to support. In
addition, wage levels have risen during the second half
of the 2010, which has led some foreign companies to
move to new low-wage countries. Continued challenges in
the real estate sector also exist, despite the
government putting great effort into controlling housing
costs and property speculation.
At the turn of the decade, the government also had to
take steps to deal with the consequences of the outbreak
of a new coronavirus in the country. The new corona
virus, which first spread in the city of Wuhan in Hubei
Province and then across other parts of China in late
2019 and early 2020, had major repercussions on the
economy. The closure of factories and companies when
quarantine rules began to apply to limit the spread of
infection affected both the service sector and the
manufacturing industry. Exports fell by just over 17
percent during the first two months of 2020 and retail
sales fell by 20 percent. From March, the situation had
improved somewhat as companies reopened and people could
return to their jobs. The central bank promised that
affected companies would have access to cheaper loans.
FACTS - FINANCE
GDP per person
US $ 9,771 (2018)
Total GDP
US $ 13,608,152 million (2018)
GDP growth
6.6 percent (2018)
Agriculture's share of GDP
7.2 percent (2018)
Manufacturing industry's share of GDP
29.4 percent (2018)
The service sector's share of GDP
52.2 percent (2018)
Inflation
2.3 percent (2019)
Government debt's share of GDP
50.6 percent (2018)
External debt
US $ 1 710 240 million (2017)
Currency
yuan
Assistance per person
- US $ 1 (2017)
|