China Economy Profile 2009

Economy - overview

China's economy during the past 30 years 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. Annual inflows of foreign direct investment rose to nearly $84 billion in 2007. China has generally implemented reforms in a gradualist or piecemeal fashion. In recent years, China has re-invigorated its support for leading 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, 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. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg was more than 20% by late 2008, but the exchange rate has changed little since the onset of the global financial crisis. 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 2008 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. The Chinese government faces numerous economic development challenges, including: (a) strengthening its social safety net, including pension and health system reform, to counteract a high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants, new entrants to the work force, and workers laid off from state-owned enterprises deemed not worth saving; (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 been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work - in recent years many have returned to their villages. 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. In late 2008, as China commemorated the 30th anniversary of its historic economic reforms, the global economic downturn began to slow foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.

GDP (purchasing power parity)

$7.973 trillion (2008 est.)
$7.315 trillion (2007 est.)
$6.473 trillion (2006 est.)
note: data are in 2008 US dollars

GDP (official exchange rate)

$4.402 trillion (2008 est.)

GDP - real growth rate

9% (2008 est.)
13% (2007 est.)
11.6% (2006 est.)

GDP - per capita (PPP)

$6,000 (2008 est.)
$5,500 (2007 est.)
$4,900 (2006 est.)
note: data are in 2008 US dollars

GDP - composition by sector

agriculture: 11.3%
industry: 48.6%
services: 40.1% (2008 est.)

Population below poverty line

8%
note: 21.5 million rural population live below the official "absolute poverty" line (approximately $90 per year); and an additional 35.5 million rural population above that but below the official "low income" line (approximately $125 per year) (2006 est.)

Labor force

807.3 million (2008 est.)

Labor force - by occupation

agriculture: 43%
industry: 25%
services: 32% (2006 est.)

Unemployment rate

4% (2008 est.)
4% (2007 est.)
note: official data for urban areas only; including migrants may boost total unemployment to 9%; substantial unemployment and underemployment in rural areas

Household income or consumption by percentage share

lowest 10%: 2.4%
highest 10%: 31.4% (2004)

Distribution of family income - Gini index

47 (2007)
40 (2001)

Investment (gross fixed)

40.5% of GDP (2008 est.)

Budget

revenues: $847.8 billion
expenditures: $861.6 billion (2008 est.)

Public debt

16.2% of GDP (2008 est.)
31.4% of GDP (2004 est.)

Inflation rate (consumer prices)

5.9% (2008 est.)
4.8% (2007 est.)

Central bank discount rate

2.79% (31 December 2008)
3.33% (31 December 2007)

Commercial bank prime lending rate

NA% (31 December 2008)
5.58% (17 December 2007)

Stock of money

$2.434 trillion (31 December 2008)
$2.09 trillion (31 December 2007)

Stock of quasi money

$4.523 trillion (31 December 2008)
$3.437 trillion (31 December 2007)

Stock of domestic credit

$5.555 trillion (31 December 2008)
$4.653 trillion (31 December 2007)

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

9.3% (2008 est.)

Electricity - production

3.256 trillion kWh (2007)

Electricity - production by source

fossil fuel: 80.2%
hydro: 18.5%
nuclear: 1.2%
other: 0.1% (2001)

Electricity - consumption

3.271 trillion kWh (2007)

Electricity - exports

14.56 billion kWh (2007 est.)

Electricity - imports

4.251 billion kWh (2007 est.)

Oil - production

3.725 million bbl/day (2008 est.)

Oil - consumption

7.88 million bbl/day (2007 est.)

Oil - imports

4.21 million bbl/day (2007)

Oil - exports

399,000 bbl/day (2007)

Oil - proved reserves

19.6 billion bbl (1 January 2008 est.)

Natural gas - production

69.27 billion cu m (2007 est.)

Natural gas - consumption

70.51 billion cu m (2007 est.)

Natural gas - exports

5.36 billion cu m (2007 est.)

Natural gas - imports

3.871 billion cu m (2007 est.)

Natural gas - proved reserves

2.265 trillion cu m (1 January 2008 est.)

Current Account Balance

$426.1 billion (2008 est.)
$371.8 billion (2007 est.)

Agriculture - products

rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish

Exports

$1.435 trillion (2008 est.)
$1.22 trillion (2007 est.)

Exports - commodities

electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment

Exports - partners

US 18.6%, Hong Kong 12.7%, Japan 8.2%, South Korea 5.1%, Germany 4.2% (2008)

Imports

$1.074 trillion (2008 est.)
$904.6 billion (2007 est.)

Imports - commodities

electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals

Imports - partners

Japan 12.2%, South Korea 10%, US 6.6%, Hong Kong 4.9%, Germany 4.5% (2008)

Reserves of foreign exchange and gold

$1.968 trillion (31 December 2008 est.)
$1.534 trillion (31 December 2007 est.)

Debt - external

$379.8 billion (31 December 2008 est.)
$363 billion (31 December 2007 est.)

Stock of direct foreign investment - at home

$758.9 billion (2007 est.)

Stock of direct foreign investment - abroad

$149.3 billion (31 December 2008 est.)
$95.8 billion (31 December 2007 est.)

Market value of publicly traded shares

$2.794 trillion (31 December 2008 est.)
$6.226 trillion (31 December 2007)
$2.426 trillion (31 December 2006)

Economic aid - recipient

$1.641 billion (FY07)

Currency (code)

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

Currency (code)

CNY

Exchange rates

Renminbi yuan (RMB) per US dollar - 6.9385 (2008 est.), 7.61 (2007), 7.97 (2006), 8.1943 (2005), 8.2768 (2004)

Fiscal year

calendar year