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China vs. Nepal

Economy

ChinaNepal
Economy - overview

Since the late 1970s, China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role. China has implemented reforms in a gradualist fashion, resulting in efficiency gains that have contributed to a more than tenfold increase in GDP since 1978. Reforms began with the phaseout of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment. China continues to pursue an industrial policy, state support of key sectors, and a restrictive investment regime. From 2013 to 2017, China had one of the fastest growing economies in the world, averaging slightly more than 7% real growth per year. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2017 stood as the largest economy in the world, surpassing the US in 2014 for the first time in modern history. China became the world's largest exporter in 2010, and the largest trading nation in 2013. Still, China's per capita income is below the world average.

In July 2005 moved to an exchange rate system that references a basket of currencies. From mid-2005 to late 2008, the renminbi (RMB) appreciated more than 20% against the US dollar, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing announced it would resume a gradual appreciation. From 2013 until early 2015, the renminbi held steady against the dollar, but it depreciated 13% from mid-2015 until end-2016 amid strong capital outflows; in 2017 the RMB resumed appreciating against the dollar - roughly 7% from end-of-2016 to end-of-2017. In 2015, the People's Bank of China announced it would continue to carefully push for full convertibility of the renminbi, after the currency was accepted as part of the IMF's special drawing rights basket. However, since late 2015 the Chinese Government has strengthened capital controls and oversight of overseas investments to better manage the exchange rate and maintain financial stability.

The Chinese Government faces numerous economic challenges including: (a) reducing its high domestic savings rate and correspondingly low domestic household consumption; (b) managing its high corporate debt burden to maintain financial stability; (c) controlling off-balance sheet local government debt used to finance infrastructure stimulus; (d) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and college graduates, while maintaining competitiveness; (e) dampening speculative investment in the real estate sector without sharply slowing the economy; (f) reducing industrial overcapacity; and (g) raising productivity growth rates through the more efficient allocation of capital and state-support for innovation. Economic development has progressed further in coastal provinces than in the interior, and by 2016 more than 169.3 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of China's population control policy known as the "one-child policy" - which was relaxed in 2016 to permit all families to have two children - 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 urbanization. The Chinese Government is seeking to add energy production capacity from sources other than coal and oil, focusing on natural gas, nuclear, and clean energy development. In 2016, China ratified the Paris Agreement, a multilateral agreement to combat climate change, and committed to peak its carbon dioxide emissions between 2025 and 2030.

The government's 13th Five-Year Plan, unveiled in March 2016, emphasizes the need to increase innovation and boost domestic consumption to make the economy less dependent on government investment, exports, and heavy industry. However, China has made more progress on subsidizing innovation than rebalancing the economy. Beijing has committed to giving the market a more decisive role in allocating resources, but the Chinese Government's policies continue to favor state-owned enterprises and emphasize stability. Chinese leaders in 2010 pledged to double China's GDP by 2020, and the 13th Five Year Plan includes annual economic growth targets of at least 6.5% through 2020 to achieve that goal. In recent years, China has renewed its support for state-owned enterprises in sectors considered important to "economic security," explicitly looking to foster globally competitive industries. Chinese leaders also have undermined some market-oriented reforms by reaffirming the "dominant" role of the state in the economy, a stance that threatens to discourage private initiative and make the economy less efficient over time. The slight acceleration in economic growth in 2017-the first such uptick since 2010-gives Beijing more latitude to pursue its economic reforms, focusing on financial sector deleveraging and its Supply-Side Structural Reform agenda, first announced in late 2015.

Nepal is among the least developed countries in the world, with about one-quarter of its population living below the poverty line. Nepal is heavily dependent on remittances, which amount to as much as 30% of GDP. Agriculture is the mainstay of the economy, providing a livelihood for almost two-thirds of the population but accounting for less than a third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain.

Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of commercially feasible capacity. Nepal has signed trade and investment agreements with India, China, and other countries, but political uncertainty and a difficult business climate have hampered foreign investment. The United States and Nepal signed a $500 million Millennium Challenge Corporation Compact in September 2017 which will expand Nepal's electricity infrastructure and help maintain transportation infrastructure.

Massive earthquakes struck Nepal in early 2015, which damaged or destroyed infrastructure and homes and set back economic development. Although political gridlock and lack of capacity have hindered post-earthquake recovery, government-led reconstruction efforts have progressively picked up speed, although many hard hit areas still have seen little assistance. Additional challenges to Nepal's growth include its landlocked geographic location, inconsistent electricity supply, and underdeveloped transportation infrastructure.

GDP (purchasing power parity)$22,526,502,000,000 (2019 est.)

$21,229,363,000,000 (2018 est.)

$19,887,033,000,000 (2017 est.)

note: data are in 2010 dollars
$97.749 billion (2019 est.)

$91.362 billion (2018 est.)

$85.624 billion (2017 est.)

note: data are in 2017 dollars
GDP - real growth rate6.14% (2019 est.)

6.75% (2018 est.)

6.92% (2017 est.)
7.9% (2017 est.)

0.6% (2016 est.)

3.3% (2015 est.)
GDP - per capita (PPP)$16,117 (2019 est.)

$15,243 (2018 est.)

$14,344 (2017 est.)

note: data are in 2010 dollars
$3,417 (2019 est.)

$3,253 (2018 est.)

$3,099 (2017 est.)

note: data are in 2017 dollars
GDP - composition by sectoragriculture: 7.9% (2017 est.)

industry: 40.5% (2017 est.)

services: 51.6% (2017 est.)
agriculture: 27% (2017 est.)

industry: 13.5% (2017 est.)

services: 59.5% (2017 est.)
Population below poverty line0.6% (2019 est.)25.2% (2011 est.)
Household income or consumption by percentage sharelowest 10%: 2.1%

highest 10%: 31.4% (2012)

note: data are for urban households only
lowest 10%: 3.2%

highest 10%: 29.5% (2011)
Inflation rate (consumer prices)2.8% (2019 est.)

2% (2018 est.)

1.5% (2017 est.)
4.5% (2017 est.)

9.9% (2016 est.)
Labor force774.71 million (2019 est.)

note: by the end of 2012, China's working age population (15-64 years) was 1.004 billion
16.81 million (2017 est.)

note: severe lack of skilled labor
Labor force - by occupationagriculture: 27.7%

industry: 28.8%

services: 43.5% (2016 est.)
agriculture: 69%

industry: 12%

services: 19% (2015 est.)
Unemployment rate3.64% (2019 est.)

3.84% (2018 est.)

note: data are for registered urban unemployment, which excludes private enterprises and migrants
3% (2017 est.)

3.2% (2016 est.)
Distribution of family income - Gini index38.5 (2016 est.)

46.2 (2015 est.)
32.8 (2010 est.)

47.2 (2008 est.)
Budgetrevenues: 2.553 trillion (2017 est.)

expenditures: 3.008 trillion (2017 est.)
revenues: 5.925 billion (2017 est.)

expenditures: 5.945 billion (2017 est.)
Industriesworld 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; fertilizer; consumer products (including footwear, toys, and electronics); food processing; transportation equipment, including automobiles, railcars and locomotives, ships, aircraft; telecommunications equipment, commercial space launch vehicles, satellitestourism, carpets, textiles; small rice, jute, sugar, and oilseed mills; cigarettes, cement and brick production
Industrial production growth rate6.1% (2017 est.)12.4% (2017 est.)
Agriculture - productsmaize, rice, vegetables, wheat, sugar cane, potatoes, cucumbers, tomatoes, watermelons, sweet potatoesrice, vegetables, sugar cane, potatoes, maize, wheat, buffalo milk, milk, fruit, mangoes/guavas
Exports$2.49 trillion (2018)

$2.216 trillion (2017 est.)

$1.99 trillion (2016 est.)
$818.7 million (2017 est.)

$761.6 million (2016 est.)
Exports - commoditiesbroadcasting equipment, computers, integrated circuits, office machinery and parts, telephones (2019)palm oil, clothing and apparel, carpets, soybean oil, flavored water (2019)
Exports - partnersUnited States 17%, Hong Kong 10%, Japan 6% (2019)India 68%, United States 10% (2019)
Imports$2.14 trillion (2018)

$1.74 trillion (2017 est.)

$1.501 trillion (2016 est.)
$10 billion (2017 est.)

$8.764 billion (2016 est.)
Imports - commoditiescrude petroleum, integrated circuits, iron, natural gas, cars, gold (2019)refined petroleum, iron, broadcasting equipment, natural gas, rice (2019)
Imports - partnersSouth Korea 9%, Japan 8%, Australia 7%, Germany 7%, US 7%, Taiwan 6% (2019)India 70%, China 15% (2019)
Debt - external$2,027,950,000,000 (2019 est.)

$1,935,206,000,000 (2018 est.)
$5.849 billion (31 December 2017 est.)

$4.321 billion (31 December 2016 est.)
Exchange ratesRenminbi yuan (RMB) per US dollar -

6.5374 (2020 est.)

7.0403 (2019 est.)

6.8798 (2018 est.)

6.1434 (2014 est.)

6.1958 (2013 est.)
Nepalese rupees (NPR) per US dollar -

104 (2017 est.)

107.38 (2016 est.)

107.38 (2015 est.)

102.41 (2014 est.)

99.53 (2013 est.)
Fiscal yearcalendar year16 July - 15 July
Public debt47% of GDP (2017 est.)

44.2% of GDP (2016 est.)

note: official data; data cover both central and local government debt, including debt officially recognized by China's National Audit Office report in 2011; data exclude policy bank bonds, Ministry of Railway debt, and China Asset Management Company debt
26.4% of GDP (2017 est.)

27.9% of GDP (2016 est.)
Reserves of foreign exchange and gold$3.236 trillion (31 December 2017 est.)

$3.098 trillion (31 December 2016 est.)
$9.091 billion (31 December 2017 est.)

$8.506 billion (31 December 2016 est.)
Current Account Balance$141.335 billion (2019 est.)

$25.499 billion (2018 est.)
-$93 million (2017 est.)

$1.339 billion (2016 est.)
GDP (official exchange rate)$14,327,359,000,000 (2019 est.)

note: because China's exchange rate is determined by fiat rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China's output; GDP at the official exchange rate substantially understates the actual level of China's output vis-a-vis the rest of the world; in China's situation, GDP at purchasing power parity provides the best measure for comparing output across countries
$24.88 billion (2017 est.)
Ease of Doing Business Index scoresOverall score: 77.9 (2020)

Starting a Business score: 94.1 (2020)

Trading score: 86.5 (2020)

Enforcement score: 80.9 (2020)
Overall score: 63.2 (2020)

Starting a Business score: 81.7 (2020)

Trading score: 85.1 (2020)

Enforcement score: 46 (2020)
Taxes and other revenues21.3% (of GDP) (2017 est.)23.8% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-3.8% (of GDP) (2017 est.)-0.1% (of GDP) (2017 est.)
GDP - composition, by end usehousehold consumption: 39.1% (2017 est.)

government consumption: 14.5% (2017 est.)

investment in fixed capital: 42.7% (2017 est.)

investment in inventories: 1.7% (2017 est.)

exports of goods and services: 20.4% (2017 est.)

imports of goods and services: -18.4% (2017 est.)
household consumption: 78% (2017 est.)

government consumption: 11.7% (2017 est.)

investment in fixed capital: 33.8% (2017 est.)

investment in inventories: 8.7% (2017 est.)

exports of goods and services: 9.8% (2017 est.)

imports of goods and services: -42% (2017 est.)
Gross national saving44.2% of GDP (2019 est.)

44.4% of GDP (2018 est.)

45% of GDP (2017 est.)
48.9% of GDP (2019 est.)

48.2% of GDP (2018 est.)

46.7% of GDP (2017 est.)

Source: CIA Factbook