Economy in China

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Economy—overview: Beginning in late 1978 the Chinese leadership has been trying to move 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 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. 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 1992-97 annual growth of GDP accelerated particularly in the coastal areas—averaging about 10% annually according to official figures. 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 1995-97 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 have been losing the ability to pay full wages and pensions. From 60 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; furthermore the regime gives insufficient priority to agricultural research. The next few years may witness increasing tensions between a highly centralized political system and an increasingly decentralized economic system. Rapid economic growth likely will continue but at a declining rate. Hong Kong's reversion on 1 July 1997 to Chinese administration will strengthen the already close ties between the two economies.

GDP: purchasing power parity—$4.25 trillion (1997 estimate as extrapolated from World Bank estimate for 1995 with use of official Chinese growth figures for 1996-97; the result may overstate China's GDP by as much as 25%)

GDP—real growth rate: 8.8% (1997 est.)

GDP—per capita: purchasing power parity—$3 460 (1997 est.)

GDP—composition by sector:

agriculture: 20%

industry: 49%

services: 31% (1996 est.)

Inflation rate—consumer price index: 2.8% (1997 est.)

Labor force:

total: 623.9 million (1995)

by occupation: agriculture and forestry 53% industry and commerce 26% construction and mining 7% social services 4% other 10% (1995)

Unemployment rate: officially 4% in urban areas; probably 8%-10%; substantial unemployment and underemployment in rural areas (1997 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 autos consumer electronics telecommunications

Industrial production growth rate: 13% (1996 est.)

Electricity—capacity: 250 million kW (1997 est.)

Electricity—production: 1.135 trillion kWh (1997 est.)

Electricity—consumption per capita: 1 100 kWh (1997 est.)

Agriculture—products: rice wheat potatoes sorghum peanuts tea millet barley cotton other fibers oilseed; pork and other livestock products; fish

Exports:

total value: $182.7 billion (f.o.b. 1997)

commodities: electrical machinery clothing footwear toys mineral fuels leather plastics fabrics (1997)

partners: Hong Kong US Japan South Korea Germany Netherlands (1997)

Imports:

total value: $142.4 billion (c.i.f. 1997)

commodities: mechanical appliances electrical machinery mineral fuels plastics iron and steel fabrics cotton and yarn (1997)

partners: Japan Taiwan US South Korea Hong Kong Germany Singapore (1997)

Debt—external: $131 billion (1997 est.)

Economic aid:

recipient: ODA $1.977 billion (1993)

Currency: 1 yuan (¥) = 10 jiao

Exchange rates: yuan (¥) per US$1—8.2796 (December 1997) 8.2898 (1997) 8.3142 (1996) 8.3514 (1995) 8.6187 (1994) 5.7620 (1993)

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


Great daily source for news on the Chinese economy: China Economic Scan ( http://www.chinaeconomicscan.com )

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