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Afghanistan vs. China

Economy

AfghanistanChina
Economy - overview

Prior to 2001, Afghanistan was an extremely poor, landlocked, and foreign aid-dependent country. Increased domestic economic activity occurred following the US-led invasion, as well as significant international economic development assistance. This increased activity expanded access to water, electricity, sanitation, education, and health services, and fostered consistent growth in government revenues since 2014. While international security forces have been drawing down since 2012, with much higher U.S. forces’ drawdowns occurring since 2017, economic progress continues, albeit uneven across sectors and key economic indicators. After recovering from the 2018 drought and growing 3.9% in 2019, political instability, expiring international financial commitments, and the COVID-19 pandemic have wrought significant adversity on the Afghan economy, with a projected 5% contraction.

Current political parties’ power-sharing agreement following the September 2019 presidential elections as well as ongoing Taliban attacks and peace talks have led to Afghan economic instability. This instability, coupled with expiring international grant and assistance, endangers recent fiscal gains and has led to more internally displaced persons. In November 2020, Afghanistan secured $12 billion in additional international aid for 2021-2025, much of which is conditional upon Taliban peace progress. Additionally, Afghanistan continues to experience influxes of repatriating Afghanis, mostly from Iran, significantly straining economic and security institutions.

Afghanistan’s trade deficit remains at approximately 31% of GDP and is highly dependent on financing through grants and aid. While Afghan agricultural growth remains consistent, recent industrial and services growth have been enormously impacted by COVID-19 lockdowns and trade cessations. While trade with the People’s Republic of China has rapidly expanded in recent years, Afghanistan still relies heavily upon India and Pakistan as export partners but is more diverse in its import partners. Furthermore, Afghanistan still struggles to effectively enforce business contracts, facilitate easy tax collection, and enable greater international trade for domestic enterprises.

Current Afghan priorities focus on the following goals:

  • Securing international economic agreements, many of which are contingent on Taliban peace progress;
  • Increasing exports to $2 billion USD by 2023;
  • Continuing to expand government revenue collection;
  • Countering corruption and navigating challenges from the power-sharing agreement; and
  • Developing a strong private sector that can empower the economy.

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)$78.557 billion (2019 est.)

$75.6 billion (2018 est.)

$74.711 billion (2017 est.)

note: data are in 2017 dollars
$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 rate2.7% (2017 est.)

2.2% (2016 est.)

1% (2015 est.)
6.14% (2019 est.)

6.75% (2018 est.)

6.92% (2017 est.)
GDP - per capita (PPP)$2,065 (2019 est.)

$2,034 (2018 est.)

$2,058 (2017 est.)

note: data are in 2017 dollars
$16,117 (2019 est.)

$15,243 (2018 est.)

$14,344 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 23% (2016 est.)

industry: 21.1% (2016 est.)

services: 55.9% (2016 est.)

note: data exclude opium production
agriculture: 7.9% (2017 est.)

industry: 40.5% (2017 est.)

services: 51.6% (2017 est.)
Population below poverty line54.5% (2016 est.)0.6% (2019 est.)
Household income or consumption by percentage sharelowest 10%: 3.8%

highest 10%: 24% (2008)
lowest 10%: 2.1%

highest 10%: 31.4% (2012)

note: data are for urban households only
Inflation rate (consumer prices)5% (2017 est.)

4.4% (2016 est.)
2.8% (2019 est.)

2% (2018 est.)

1.5% (2017 est.)
Labor force8.478 million (2017 est.)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: 44.3%

industry: 18.1%

services: 37.6% (2017 est.)
agriculture: 27.7%

industry: 28.8%

services: 43.5% (2016 est.)
Unemployment rate23.9% (2017 est.)

22.6% (2016 est.)
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 index29.4 (2008)38.5 (2016 est.)

46.2 (2015 est.)
Budgetrevenues: 2.276 billion (2017 est.)

expenditures: 5.328 billion (2017 est.)
revenues: 2.553 trillion (2017 est.)

expenditures: 3.008 trillion (2017 est.)
Industriessmall-scale production of bricks, textiles, soap, furniture, shoes, fertilizer, apparel, food products, non-alcoholic beverages, mineral water, cement; handwoven carpets; natural gas, coal, copperworld 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 rate-1.9% (2016 est.)6.1% (2017 est.)
Agriculture - productswheat, milk, grapes, vegetables, potatoes, watermelons, melons, rice, onions, applesmaize, rice, vegetables, wheat, sugar cane, potatoes, cucumbers, tomatoes, watermelons, sweet potatoes
Exports$784 million (2017 est.)

$614.2 million (2016 est.)

note: not including illicit exports or reexports
$2.49 trillion (2018)

$2.216 trillion (2017 est.)

$1.99 trillion (2016 est.)
Exports - commoditiesgold, grapes, opium, fruits and nuts, insect resins, cotton, handwoven carpets, soapstone, scrap metal (2019)broadcasting equipment, computers, integrated circuits, office machinery and parts, telephones (2019)
Exports - partnersUnited Arab Emirates 45%, Pakistan 24%, India 22%, China 1% (2019)United States 17%, Hong Kong 10%, Japan 6% (2019)
Imports$7.616 billion (2017 est.)

$6.16 billion (2016 est.)
$2.14 trillion (2018)

$1.74 trillion (2017 est.)

$1.501 trillion (2016 est.)
Imports - commoditieswheat flours, broadcasting equipment, refined petroleum, rolled tobacco, aircraft parts, synthetic fabrics (2019)crude petroleum, integrated circuits, iron, natural gas, cars, gold (2019)
Imports - partnersUnited Arab Emirates 23%, Pakistan 17%, India 13%, China 9%, United States 9%, Uzbekistan 7%, Kazakhstan 6% (2019)South Korea 9%, Japan 8%, Australia 7%, Germany 7%, US 7%, Taiwan 6% (2019)
Debt - external$284 million (FY10/11)$2,027,950,000,000 (2019 est.)

$1,935,206,000,000 (2018 est.)
Exchange ratesafghanis (AFA) per US dollar -

7.87 (2017 est.)

68.03 (2016 est.)

67.87 (2015)

61.14 (2014 est.)

57.25 (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 year21 December - 20 Decembercalendar year
Public debt7% of GDP (2017 est.)

7.8% 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$7.187 billion (31 December 2017 est.)

$6.901 billion (31 December 2015 est.)
$3.236 trillion (31 December 2017 est.)

$3.098 trillion (31 December 2016 est.)
Current Account Balance$1.014 billion (2017 est.)

$1.409 billion (2016 est.)
$141.335 billion (2019 est.)

$25.499 billion (2018 est.)
GDP (official exchange rate)$20.24 billion (2017 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
Taxes and other revenues11.2% (of GDP) (2017 est.)21.3% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-15.1% (of GDP) (2017 est.)-3.8% (of GDP) (2017 est.)
GDP - composition, by end usehousehold consumption: 81.6% (2016 est.)

government consumption: 12% (2016 est.)

investment in fixed capital: 17.2% (2016 est.)

investment in inventories: 30% (2016 est.)

exports of goods and services: 6.7% (2016 est.)

imports of goods and services: -47.6% (2016 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 saving22.7% of GDP (2017 est.)

25.8% of GDP (2016 est.)

21.4% of GDP (2015 est.)
44.2% of GDP (2019 est.)

44.4% of GDP (2018 est.)

45% of GDP (2017 est.)

Source: CIA Factbook