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Pakistan vs. China

Economy

PakistanChina
Economy - overview

Decades of internal political disputes and low levels of foreign investment have led to underdevelopment in Pakistan. Pakistan has a large English-speaking population, with English-language skills less prevalent outside urban centers. Despite some progress in recent years in both security and energy, a challenging security environment, electricity shortages, and a burdensome investment climate have traditionally deterred investors. Agriculture accounts for one-fifth of output and two-fifths of employment. Textiles and apparel account for more than half of Pakistan's export earnings; Pakistan's failure to diversify its exports has left the country vulnerable to shifts in world demand. Pakistan's GDP growth has gradually increased since 2012, and was 5.3% in 2017. Official unemployment was 6% in 2017, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Human development continues to lag behind most of the region.

In 2013, Pakistan embarked on a $6.3 billion IMF Extended Fund Facility, which focused on reducing energy shortages, stabilizing public finances, increasing revenue collection, and improving its balance of payments position. The program concluded in September 2016. Although Pakistan missed several structural reform criteria, it restored macroeconomic stability, improved its credit rating, and boosted growth. The Pakistani rupee has remained relatively stable against the US dollar since 2015, though it declined about 10% between November 2017 and March 2018. Balance of payments concerns have reemerged, however, as a result of a significant increase in imports and weak export and remittance growth.

Pakistan must continue to address several longstanding issues, including expanding investment in education, healthcare, and sanitation; adapting to the effects of climate change and natural disasters; improving the country's business environment; and widening the country's tax base. Given demographic challenges, Pakistan's leadership will be pressed to implement economic reforms, promote further development of the energy sector, and attract foreign investment to support sufficient economic growth necessary to employ its growing and rapidly urbanizing population, much of which is under the age of 25.

In an effort to boost development, Pakistan and China are implementing the "China-Pakistan Economic Corridor" (CPEC) with $60 billion in investments targeted towards energy and other infrastructure projects. Pakistan believes CPEC investments will enable growth rates of over 6% of GDP by laying the groundwork for increased exports. CPEC-related obligations, however, have raised IMF concern about Pakistan's capital outflows and external financing needs over the medium term.

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.

GDP (purchasing power parity)$1,015,796,000,000 (2019 est.)

$1,005,850,000,000 (2018 est.)

$950.381 billion (2017 est.)

note: data are in 2017 dollars
data are for fiscal years
$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
GDP - real growth rate5.4% (2017 est.)

4.6% (2016 est.)

4.1% (2015 est.)

note: data are for fiscal years
6.14% (2019 est.)

6.75% (2018 est.)

6.92% (2017 est.)
GDP - per capita (PPP)$4,690 (2019 est.)

$4,740 (2018 est.)

$4,571 (2017 est.)

note: data are in 2010 dollars
$16,117 (2019 est.)

$15,243 (2018 est.)

$14,344 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 24.4% (2016 est.)

industry: 19.1% (2016 est.)

services: 56.5% (2017 est.)
agriculture: 7.9% (2017 est.)

industry: 40.5% (2017 est.)

services: 51.6% (2017 est.)
Population below poverty line24.3% (2015 est.)0.6% (2019 est.)
Household income or consumption by percentage sharelowest 10%: 4%

highest 10%: 26.1% (FY2013)
lowest 10%: 2.1%

highest 10%: 31.4% (2012)

note: data are for urban households only
Inflation rate (consumer prices)9.3% (2019 est.)

5.2% (2018 est.)

4.2% (2017 est.)
2.8% (2019 est.)

2% (2018 est.)

1.5% (2017 est.)
Labor force61.71 million (2017 est.)

note: extensive export of labor, mostly to the Middle East, and use of child labor
774.71 million (2019 est.)

note: by the end of 2012, China's working age population (15-64 years) was 1.004 billion
Labor force - by occupationagriculture: 42.3%

industry: 22.6%

services: 35.1% (FY2015 est.)
agriculture: 27.7%

industry: 28.8%

services: 43.5% (2016 est.)
Unemployment rate6% (2017 est.)

6% (2016 est.)

note: Pakistan has substantial underemployment
3.64% (2019 est.)

3.84% (2018 est.)

note: data are for registered urban unemployment, which excludes private enterprises and migrants
Distribution of family income - Gini index33.5 (2015 est.)

30.9 (FY2011)
38.5 (2016 est.)

46.2 (2015 est.)
Budgetrevenues: 46.81 billion (2017 est.)

expenditures: 64.49 billion (2017 est.)

note: data are for fiscal years
revenues: 2.553 trillion (2017 est.)

expenditures: 3.008 trillion (2017 est.)
Industriestextiles and apparel, food processing, pharmaceuticals, surgical instruments, construction materials, paper products, fertilizer, shrimpworld 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, satellites
Industrial production growth rate5.4% (2017 est.)6.1% (2017 est.)
Agriculture - productssugar cane, buffalo milk, wheat, milk, rice, maize, potatoes, cotton, fruit, mangoes/guavasmaize, rice, vegetables, wheat, sugar cane, potatoes, cucumbers, tomatoes, watermelons, sweet potatoes
Exports$31.517 billion (2019 est.)

$27.604 billion (2018 est.)

$25.613 billion (2017 est.)
$2.49 trillion (2018)

$2.216 trillion (2017 est.)

$1.99 trillion (2016 est.)
Exports - commoditiestextiles, clothing and apparel, rice, leather goods, surgical instruments (2019)broadcasting equipment, computers, integrated circuits, office machinery and parts, telephones (2019)
Exports - partnersUnited States 14%, China 8%, Germany 7%, United Kingdom 6% (2019)United States 17%, Hong Kong 10%, Japan 6% (2019)
Imports$42.27 billion (2019 est.)

$51.602 billion (2018 est.)

$47.165 billion (2017 est.)
$2.14 trillion (2018)

$1.74 trillion (2017 est.)

$1.501 trillion (2016 est.)
Imports - commoditiesrefined petroleum, crude petroleum, natural gas, palm oil, scrap iron (2019)crude petroleum, integrated circuits, iron, natural gas, cars, gold (2019)
Imports - partnersChina 28%, United Arab Emirates 11%, United States 5% (2019)South Korea 9%, Japan 8%, Australia 7%, Germany 7%, US 7%, Taiwan 6% (2019)
Debt - external$107.527 billion (2019 est.)

$95.671 billion (2018 est.)
$2,027,950,000,000 (2019 est.)

$1,935,206,000,000 (2018 est.)
Exchange ratesPakistani rupees (PKR) per US dollar -

160.425 (2020 est.)

155.04 (2019 est.)

138.8 (2018 est.)

102.769 (2014 est.)

101.1 (2013 est.)
Renminbi 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.)
Fiscal year1 July - 30 Junecalendar year
Public debt67% of GDP (2017 est.)

67.6% of GDP (2016 est.)
47% 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
Reserves of foreign exchange and gold$18.46 billion (31 December 2017 est.)

$22.05 billion (31 December 2016 est.)
$3.236 trillion (31 December 2017 est.)

$3.098 trillion (31 December 2016 est.)
Current Account Balance-$7.143 billion (2019 est.)

-$19.482 billion (2018 est.)
$141.335 billion (2019 est.)

$25.499 billion (2018 est.)
GDP (official exchange rate)$253.183 billion (2019 est.)$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
Credit ratingsFitch rating: B- (2018)

Moody's rating: B3 (2015)

Standard & Poors rating: B- (2019)
Fitch rating: A+ (2007)

Moody's rating: A1 (2017)

Standard & Poors rating: A+ (2017)
Ease of Doing Business Index scoresOverall score: 61 (2020)

Starting a Business score: 89.3 (2020)

Trading score: 68.8 (2020)

Enforcement score: 43.5 (2020)
Overall score: 77.9 (2020)

Starting a Business score: 94.1 (2020)

Trading score: 86.5 (2020)

Enforcement score: 80.9 (2020)
Taxes and other revenues15.4% (of GDP) (2017 est.)21.3% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-5.8% (of GDP) (2017 est.)-3.8% (of GDP) (2017 est.)
GDP - composition, by end usehousehold consumption: 82% (2017 est.)

government consumption: 11.3% (2017 est.)

investment in fixed capital: 14.5% (2017 est.)

investment in inventories: 1.6% (2017 est.)

exports of goods and services: 8.2% (2017 est.)

imports of goods and services: -17.6% (2017 est.)
household 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.)
Gross national saving12.3% of GDP (2019 est.)

12.2% of GDP (2018 est.)

13% of GDP (2017 est.)

note: data are for fiscal years
44.2% of GDP (2019 est.)

44.4% of GDP (2018 est.)

45% of GDP (2017 est.)

Source: CIA Factbook