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Economy

Economy – Overview:
China’s economy since the late 1970s has changed from a closed, centrally planned system to a more market-oriented one that plays a major role in the global economy – in 2010 China became the world’s largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China generally has implemented reforms in a gradualist fashion.

In recent years, China has renewed its support for 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, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation.

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 2010 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China’s agricultural and industrial output each exceeded those of the US, although China was second to the US in the value of services it produced. Still, per capita income is below the world average.

The Chinese government faces numerous economic development challenges, including:
(a) reducing its high domestic savings rate and correspondingly low domestic demand;
(b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force;
(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 progressed further 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.

The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years, but China rebounded quickly, outperforming all other major economies in 2010 with GDP growth around 10%.

The economy appears set to remain on a strong growth trajectory in 2011, lending credibility to the stimulus policies the regime rolled out during the global financial crisis. The government vows to continue reforming the economy and emphasizes the need to increase domestic consumption in order to make the economy less dependent on exports for GDP growth in the future, but China likely will make only marginal progress toward these rebalancing goals in 2011. Two economic problems China currently faces are inflation – which, late in 2010, surpassed the government’s target of 3% – and local government debt, which swelled as a result of stimulus policies, and is largely off-the-books and potentially low-quality.

GDP (purchasing power parity):
$9.872 trillion (2010 est.)
country comparison to the world: 3
$8.95 trillion (2009 est.)
$8.204 trillion (2008 est.)
note: data are in 2010 US dollars

GDP (official exchange rate):
$5.745 trillion

GDP – Real Growth Rate:
10.3% (2010 est.)
country comparison to the world: 6
9.1% (2009 est.)
9% (2008 est.)

GDP – Per Capita (PPP):
$7,400 (2010 est.)
country comparison to the world: 127
$6,800 (2009 est.)
$6,200 (2008 est.)
note: data are in 2010 US dollars

GDP – Composition by Sector:
agriculture: 9.6%
industry: 46.8%
services: 43.6% (2010 est.)

Labor force:
819.5 million (2010 est.)
country comparison to the world: 1

Labor Force – by Occupation:
agriculture: 39.5%
industry: 27.2%
services: 33.2% (2008 est.)

Unemployment Rate:
4.3% (September 2009 est.)
country comparison to the world: 40
4.2% (December 2008 est.)

Population Below Poverty Line:
2.8%
21.5 million rural population live below the official “absolute poverty” line (approximately $90 per year); an additional
35.5 million rural population live above that level but below the official “low income” line (approximately $125 per year) (2007)

Household Income or Consumption by Percentage Share:
lowest 10%: 3.5%
highest 10%: 15%
data are for urban households only (2008)

Distribution of Family Income – Gini index:
41.5 (2007)
country comparison to the world: 53
40 (2001)

Investment (gross fixed):
47.8% of GDP (2010 est.)
country comparison to the world: 1

Budget:
revenues: $1.149 trillion
expenditures: $1.27 trillion (2010 est.)

Public Debt:
17.5% of GDP (2010 est.)
country comparison to the world: 112
16.9% of GDP (2009 est.)

Inflation Rate (Consumer Prices):
5% (2010 est.)
country comparison to the world: 144
-0.7% (2009 est.)

Central Bank Discount Rate:
2.79% (31 December 2009)
country comparison to the world: 126
2.79% (31 December 2008)

Commercial Bank Prime Lending Rate:
5.81% (31 December 2010 est.)
country comparison to the world: 144
5.31% (31 December 2009 est.)

Stock of Narrow Money:
$3.838 trillion (31 December 2010 est)
country comparison to the world: 4
$3.242 trillion (31 December 2009 est)
Stock of Broad Money:
$10.08 trillion (31 December 2010 est.)
country comparison to the world: 5
$8.933 trillion (31 December 2009 est.)
Stock of Domestic Credit:
$8.156 trillion (31 December 2010 est.)
country comparison to the world: 4
$7.24 trillion (31 December 2009 est.)

Market Value of Publicly Traded Shares:
$5.008 trillion (31 December 2009 est.)
country comparison to the world: 4
$2.794 trillion (31 December 2008)
$6.226 trillion (31 December 2007 est.)

Agriculture – Products:
world leader in gross value of agricultural output; rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish

Industries:
world leader in gross value of industrial output; 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:
11% (2010 est.)
country comparison to the world: 16

Electricity – Production:
3.451 trillion kWh (2008 est.)
country comparison to the world: 2
Electricity – Consumption:
3.438 trillion kWh (2008 est.)
country comparison to the world: 2
Electricity – Exports:
16.64 billion kWh (2008)
Electricity – Imports:
3.842 billion kWh (2008)

Oil – Production:
3.991 million bbl/day (2009 est.)
country comparison to the world: 5
Oil – Consumption:
8.2 million bbl/day (2009 est.)
country comparison to the world: 3
Oil – Exports:
388,000 bbl/day (2008 est.)
country comparison to the world: 32
Oil – Imports:
4.393 million bbl/day (2008)
country comparison to the world: 4
Oil – Proved Reserves:
20.35 billion bbl (1 January 2010 est.)
country comparison to the world: 13

Natural Gas – Production:
82.94 billion cu m (2009)
country comparison to the world: 9
Natural Gas – Consumption:
87.08 billion cu m (2009)
country comparison to the world: 9
Natural gas – Exports:
3.32 billion cu m (2009)
country comparison to the world: 31
Natural Gas – Imports:
7.462 billion cu m (2009)
country comparison to the world: 27
Natural Gas – Proved Reserves:
3.03 trillion cu m (1 January 2010 est.)
country comparison to the world: 13

Current Account Balance:
$272.5 billion (2010 est.)
country comparison to the world: 1
$297.1 billion (2009 est.)

Exports:
$1.506 trillion (2010 est.)
country comparison to the world: 2
$1.204 trillion (2009 est.)
Exports – Commodities:
electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment
Exports – Partners:
US 20.03%, Hong Kong 12.03%, Japan 8.32%, South Korea 4.55%, Germany 4.27% (2009)

Imports:
$1.307 trillion (2010 est.)
country comparison to the world: 3
$954.3 billion (2009 est.)
Imports – Commodities:
electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals
Imports – Partners:
Japan 12.27%, Hong Kong 10.06%, South Korea 9.04%, US 7.66%, Taiwan 6.84%, Germany 5.54% (2009)

Reserves of Foreign Exchange and Gold:
$2.622 trillion (31 December 2010 est.)
country comparison to the world: 1
$2.426 trillion (31 December 2009 est.)

Debt – External:
$406.6 billion (31 December 2010 est.)
country comparison to the world: 22
$349.3 billion (31 December 2009 est.)

Stock of Direct Foreign Investment – at Home:
$574.3 billion (31 December 2010 est.)
country comparison to the world: 9
$473.1 billion (31 December 2009 est.)

Stock of Direct Foreign Investment – Abroad:
$278.9 billion (31 December 2010 est.)
country comparison to the world: 15
$229.6 billion (31 December 2009 est.)

Exchange Rates:
Renminbi yuan (RMB) per US dollar – 6.7852 (2010), 6.8314 (2009), 6.9385 (2008), 7.61 (2007), 7.97 (2006)

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