Economy of the People's Republic of China PDF Print E-mail
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Wednesday, 15 June 2011 09:59
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Economy of the People's Republic of China
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ChinaChina's economy is mainly characterised as a market economy based on private property ownership and is one of the leading examples of state capitalism. A wide variety of small-scale enterprises were encouraged while the government relaxed price controls and promoted foreign investment. Foreign trade was focused upon as a major vehicle of growth, which led to the creation of Special Economic Zones (SEZs) first in Shenzhen (near Hong Kong) and then in other Chinese cities.

Inefficient state-owned enterprises (SOEs) were restructured by introducing western-style management system and the unprofitable ones were closed, resulting in massive job losses. By the latter part of 2010, China was reversing some of its economic liberalization initiative whereby state-owned companies were buying up independent businesses in the steel, auto and energy industries.

Since economic liberalization began in 1978, the PRC's investment- and export-led economy has grown 90 times bigger and is the fastest growing major economy in the world. According to IMF that PRC's annual average GDP growth for the period of 2001–2010 was 10.5 percent and predicted to grow with 9.5 percent for the period of 2011–2015. As Global Growth Generators countries announced by Citigroup at February 2011, China has high 3G Index. It now has the world's second largest nominal GDP at 39.8 trillion yuan (US$6.05 trillion), although its per capita income of US$4,300 is still low and puts the PRC behind roughly a hundred countries. The primary, secondary, and tertiary industries contributed 10.6%, 46.8%, and 42.6% respectively to the total economy in 2009. If PPP is taken into account, the PRC's economy is second only to the US at $10.085 trillion corresponding to $7,518 per capita.

The inaugural Global Wealth Report by Credit Suisse Research Institute collects data across more than 200 countries in mid-2010 stated China is expected to overtake Japan as the second wealthiest country in the world by 2015 ($35 trillion) on the back of rapid economic growth and strong domestic consumption. Ten years ago, China was the seventh largest country in global wealth and China currently holds $16.5 trillion, 35 percent ahead of the wealthiest European country, France.

In November 2010 Japan's government said, output in China, the largest maker of mobile phones, computers and vehicles, surpassed Japan for the second straight quarter in the three months through September 2010. The Chinese economy overtook the UK as the fourth largest in 2005 and tipped Germany from third place in 2007.

The PRC is the fourth most visited country in the world with 50.9 million inbound international visitors in 2009. It is a member of the WTO and is the world's second largest trading power behind the US with a total international trade of US$2.21 trillion – US$1.20 trillion in exports (#1) and US$1.01 trillion in imports (#2). Its foreign exchange reserves have reached US$2.85 trillion at end of 2010 and it means increased by 18.7 percent from last year, making it by far the world's largest for the last few years. The PRC owns an estimated $1.6 trillion of US securities. The PRC, holding US$1.16 trillion in Treasury bonds, is the largest foreign holder of US public debt. It is the world's third largest recipient of inward FDI by attracting US$92.4 billion in 2008 alone, while the country itself increasingly invests abroad with a total outward FDI of US$52.2 billion in 2008 alone becoming the world's sixth largest outward investor. FDI inward in 2010 was $106 billion rose 16 percent from 2009.

Last Updated on Wednesday, 15 June 2011 16:13