China Economy 2008

Economy - overview:
China's economy during the last quarter century 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. China has generally implemented reforms in a gradualist or piecemeal fashion, including the sale of minority shares in four of China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in 2005. 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. 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, China in 2007 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. Despite an increased backlash against foreign mergers and acquisitions, annual inflows of foreign direct investment in 2006 rose to $63 billion. By the end of 2006, more than 5,000 domestic Chinese enterprises had established direct investments in 172 countries and regions around the world. The Chinese government faces several economic development challenges: (a) to sustain adequate job growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; (b) to reduce corruption and other economic crimes; and (c) to contain 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 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 as its double-digit economic growth increases demand. Chinese energy officials in 2007 agreed to purchase five third generation nuclear reactors from Western companies. More power generating capacity came on line in 2006 as large scale investments - including the Three Gorges Dam across the Yangtze River - were completed.

GDP (purchasing power parity):
$7.043 trillion (2007 est.)

GDP (official exchange rate):
$2.879 trillion (2007 est.)

GDP - real growth rate:
11.4% (official data) (2007 est.)

GDP - per capita (PPP):
$5,300 (2007 est.)

GDP - composition by sector:
agriculture: 11%
industry: 49.5%
services: 39.5%
note: industry includes construction (2007 est.)

Labor force:
803.3 million (2007 est.)

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

Unemployment rate:
6.1% unemployment in urban areas; substantial unemployment and underemployment in rural areas (2006 est.)

Population below poverty line:
10% (2004 est.)

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

Distribution of family income - Gini index:
46.9 (2004)

Inflation rate (consumer prices):
4.7% (2007 est.)

Investment (gross fixed):
42.2% of GDP (2007 est.)

Budget:
revenues: $640.6 billion
expenditures: $634.6 billion (2007 est.)

Public debt:
18.9% of GDP (2007 est.)

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

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:
12.9% (2007 est.)

Electricity - production:
2.866 trillion kWh (2006)

Electricity - consumption:
2.859 trillion kWh (2006)

Electricity - exports:
11.27 billion kWh (2006)

Electricity - imports:
5.39 billion kWh (2006)

Oil - production:
3.71 million bbl/day (2006)

Oil - consumption:
7 million bbl/day (2006)

Oil - exports:
375,800 bbl/day (2006)

Oil - imports:
3.646 million bbl/day (2006)

Oil - proved reserves:
16.3 billion bbl (1 January 2006 est.)

natural gas - production:
58.6 billion cu m (2006 est.)

natural gas - consumption:
55.6 billion cu m (2006 est.)

natural gas - exports:
2.874 billion cu m (2006)

natural gas - imports:
976 million cu m (2006)

natural gas - proved reserves:
2.45 trillion cu m (2006 est.)

Current account balance:
$363.3 billion (2007 est.)

Exports:
$1.221 trillion f.o.b. (2007 est.)

Exports - commodities:
machinery and equipment, apparel, optical and medical equipment, iron and steel

Exports - partners:
US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2% (2006)

Imports:
$917.4 billion f.o.b. (2007 est.)

Imports - partners:
Japan 14.6%, South Korea 11.3%, Taiwan 10.9%, US 7.5%, Germany 4.8% (2006)

Economic aid - recipient:
$1.757 billion (2005)

Reserves of foreign exchange and gold:
$1.493 trillion (31 December 2007 est.)

Debt - external:
$363 billion (31 December 2007 est.)

Stock of direct foreign investment - at home:
$699.5 billion (2006 est.)

Stock of direct foreign investment - abroad:
$75 billion (2006 est.)

Market value of publicly traded shares:
$2.426 trillion (2006)

Currency (code):
Renminbi (RMB); note - also referred to by the unit yuan (CNY)

Exchange rates:
yuan per US dollar - 7.61 (2007), 7.97 (2006), 8.1943 (2005), 8.2768 (2004), 8.277 (2003)