China has the third largest economy in the world after the United States and Japan with a nominal GDP of US$3.7 trillion (2008) when measured in exchange-rae terms. It has the world's second largest economy with a GDP of over $7.1 trillion (2007) when measured on a purchasing power parity (PPP) basis. China is the fastest growing major economy in the world contributing the most to global growth in 2007. Since free market reforms in 1978 China's GDP has grown an average 9.9 percent a year. China's per capita income has grown at an average annual rate of more than 8% over the last three decades, drastically reducing poverty, but this rapid growth has been accompanied by rising income inequalities. The country's per capita income is classified as in the lower middle category by world standards, at about $2,000 (nominal, 107th of 179 countries/economies), and $7,800 (PPP, 82nd of 179 countries/economies) in 2006, according to the International Monetary Fund.Since the late 1970s and early 1980s, the economic reforms initially began with the shift of farming work to a system of household responsibility to start the phase out of collectivized agriculture, and later expanded to include the gradual liberalization in of prices; fiscal decentralization; increased autonomy for state enterprises that increased the authority of local government officials and plant managers in industry thereby permitting a wide variety of private enterprie in services and light manufacturing; the foundation of a diversified banking system; the development of stock markets; the rapid growth of the non-state sector, and the opening of the economy to increased foreign trade and foreign investment. China has generally implemented reforms in a gradualist fashion, including the sale of equity in China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in mid-2000s. As its role in world trade has steadily grown, its importance to the international economy has also increased apace. China's foreign trade has grown faster than its GDP for the past 25 years.As of 2007, most of China's growth came from the private sector instead of exports. Particularly the smaller public sectr, which was dominated by about 200 large state enterprises concentrated mostly in utilities, heavy industries, and energy resources.
China has emphasized raising personal income and consumption and introducing new management systems to help increase productivity. The government has also focused on foreign trade as a major vehicle for economic growth. China's GDP has increased tenfold since 1978, largely due to economic reforms including liberalization of their economy. Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector and that the extent at which China is dependent on exports is exaggerated. Nevertheless, key bottlenecks continue to constrain growth. Available energy is insufficient to run at fully-installed industrial capacity, the transport system is inadequate to move sufficient quantities of such critical items as coal, and the communications system cannot yet fully meet the needs of an economy of China's size and complexity.
The two most important sectors of the economy have traditionally been agriculture and industry, which together employ more than 70 percent of the labor force and produce more than 60 percent of GDP. The two sectors have differed in many respects. Technology, labor productivity, and incomes have advanced much more rapidly in industry than in agriculture. Agricultural output has been vulnerable to the effects of weather, while industry has been more directly influenced by the government. The disparities between the two sectors have combined to form an economic-cultural-social gap between the rural and urban areas, which is a major division in Chinese society. China is the world's largest producer of rice and is among the principal sources of wheat, corn (maize), tobacco, soybeans, peanuts (groundnuts), and cotton. The country is one of the world's largest producers of a number of industrial and mineral products, including cotton cloth, tungsten, and antimony, and is an important producer of cotton yarn, coal, crude oil, and a number of other products. Its mineral resources are probably among the richest in the world but are only partially developed. China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites.
From the data give us China is very rich country but in my opinion China still very poor becasue as we know china have largest population,if we give the average for the China economic we can see China still poor still need to develop.
References
http://www.essortment.com/all/economicschina_rjns.htm
http://www.economywatch.com/world_economy/china/
http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China
13 comments:
From the article I read on 1st December 2008, today China also faced slow economic growth and it lead instability of political in China.
References:
http://www.usnews.com/blogs/capital-commerce/2008/12/01/bad-economy-could-cause-china-crackup.html
Despite breathless media reports about the World Bank revising downward its estimate for the size of China's economy, what the figures really show is that China has indeed overtaken the United States in manufacturing output. As an industrial giant, China needs to be taken seriously as an international economic force and a strategic and military power.
China's new status is not surprising. China has been the world's leading producer of steel, copper, aluminum, cement, and coal for several years. As a consumer, China surpassed Japan as the globe's second largest importer of petroleum in 2005. In 2006, China surpassed Japan as the world's No. 2 auto market, with total sales of 7.2 million vehicles and production of 7.3 million. In 2007, China also became the world's top producer of merchant ships. In short, Albert you don't have to worry so much china is going to improve globally and it would not be long till china will overtake the global countries development, one needs no number-juggling from the World Bank to know that China is an economic superpower.
Source from:(http://www.heritage.org/research/asiaandthepacific/wm1762.cfm)
The calculations of so-called purchasing-power parity, which compares the buying power of citizens around the world, put China’s output at roughly 40 percent less than the bank’s previous estimates. Is there any body ready to buy as before? The world’s financial crisis has halted the growth and china may suffer a lot during the coming year.
Let me give my opinion if the financial crisis wouldn’t be happened this year; China’s huge and growing trade surplus, its ever rising foreign exchange reserves, market speculation on a further appreciation of the Yuan, it has already risen more than 5.9 percent this year, and signs that the Chinese economy might be overheating as exports soared. But for how long more it may continue? For any economy there is the need to stop or reduce the speed of growth as you guys did it by increasing the rates.
The current stagflation and unemployment in China governs the reduce of foreign demand, now is the time that the communist politicians must design the scenario to restructure the society by giving incentives to the biotechnology and agriculture firms to gain the market trust and create more jobs and boost the economy and tackle the food shortage. After the mentioned ideal scenario you guys may enjoy from more cash if the dominants allow the society enjoy from the hatches. (In my idea they should not allow the public to enjoy from it, in order to keep the demand pull inflation and keep the labor rates low enough to induce the FDI fellows for more investment) ;)
Market liberalization in the Chinese Economy has brought its huge economy forward by leaps and bounds – but rural China still remains poor, even as its cities increase in affluence.
"While more and more people are accepting China's positive contribution to world economy and international peace, there are still others who have cooked up arguments about the 'China threat'. Still others have predicted its 'collapse' due to problems resulting from rapid development," Mei, also a former Chinese ambassador to Germany, told the forum organised by the European Policy Centre and the Japan-based Sasakawa Peace Foundation.
According to Mei, “peaceful development” is the more apt way to describe China's progress over the decades. This progress did not happen overnight and one that would benefit the rest of the world, he added.
Since the economic reforms pushed by Chinese leader Deng Xiaoping in 1978, Mei says that the country has enjoyed quite a number of gains in development and international relations.
First, he cited the 9.6 percent annual growth of the China’s economy, ranking fourth in the world in 2006 in terms of GDP, which amounted to 2.6 trillion U.S. dollars. In the same year, he said, the volume of import and export trade totalled 1.7 trillion dollars, the third highest in the world.
Second, Mei continued, the quality of life among the population has significantly improved in the rural and urban areas, with annual income growing 5.1 and 5.2 times for urban and rural areas respectively. Moreover, the number of poor people has dropped from 250 million to 23.65 million, he said, citing official figures. The nine-year compulsory education has been implemented on a wide scale, allowing poor children in rural areas to go to school for free.
A social security system covering both urban and rural residents is gradually being set up and last year, the 2,000-year-old agricultural tax that burdened farmers was repealed, he added.
Mei also cited as an achievement China's entry into the World Trade Organisation (WTO) in 2001, because it paved the way for more than 50 countries to recognise China's market-economy status.
This remarkable economic progress, however, does not make China a threat to the rest of the world. The reality is, Mei said, China is also saddled with problems, such as “a huge population, weak economic foundation, generally under-developed productivity and imbalances”.
China also faces social problems as it pursues economic reforms toward more market-economy features.
“The equally indisputable facts are that the big population, weak economic foundation, generally underdeveloped productivity and imbalances between regions and between urban and rural areas still remain China’s basic national conditions,” Mei continued. “In a considerably long time, China will remain a developing country.”
Market-oriented reforms in education, health care and housing systems will also give ordinary people “heavier economic burdens”, he added. Social contradictions -- China has in recent years seen protests from sectors hurt by some of these changes – “might, if not properly tackled with, lead to social turbulence”.
“Even though these are all problems in the course of development and the developed countries in the West all had this kind of experience in their 300 years’ industrialisation process, it is more difficult for China to solve all these problems given that the size of China is far beyond comparison by European countries,” Mei explained.
Besides, the statistics about China need to be taken in the context of the size and breadth of this country of 1.3 billion people. "The evaluation of China's development should not be based simply on the economic aggregate and its growth rate. Only by taking into account the country's 1.3 billion population, the central and western regions and the vast rural areas can we come to a comprehensive and objective evaluation," he said.
For instance, he noted that China's current per capita GDP only amounts to 2,000 dollars, way below the 1999 average level of 4,900 dollars in other middle-income countries. While the poverty level has decreased in recent years, he said that there are still 23 million people living under the poverty line in China today. Besides, he added, the more than 50 million people who have been freed from poverty are still in an unstable situation.
"Apart from that, China has more than 82 million handicapped people in need of special care.
Looking at the above information, it could said that even though China’s economy is increasing Leap and Bound, it certainly needs to take issue of raising of population into account.
Article source:- http://www.ipsnewsasia.net/bridgesfromasia/node/89
China's economic growth faces few challenges. There are only few other countries have been able to match the pace of China's sustained economic growth. With gross domestic product (GDP) increasing, on average, more than 8 percent annually since 1978, China has become a major player in the global economy.
In the long term, however, this extraordinarily high GDP growth—which is driving China's increasing demand for agricultural imports—may be dampened by several obstacles:
=Undervalued currency. China's exports rely on what may be an unsustainably low fixed exchange rate. China has maintained its currency at a fixed rate of approximately 8.28 yuan per U.S. dollar since 1997, a rate that some economists suggest is undervalued by as much as 40 percent. There is substantial international political pressure on China to appreciate its currency. Any significant appreciation of the yuan would reduce China's export competitiveness and slow down the growth of China's exports, a major factor in China's rapid economic growth.
=Nonperforming bank loans. China's banking system has historically made loans under government direction to unprofitable state-owned industries, with little regard for repayment or risk. The result is a substantial portfolio of nonperforming loans estimated at 30 to 100 percent of annual GDP, a larger share than that of Japan, for example. By using its stock of foreign reserves, Chinese authorities have managed to maintain liquidity in the banking system in spite of the nonperforming loans. However, at some point a continued escalation of nonperforming loans will restrict further expansion of bank credit, constraining growth in the business sector.
(source:http://www.ers.usda.gov/amberwaves/february05/findings/chinaeconomicgrowth.htm)
Well,I wouldn't say that China's economy and population could take over the world. China social living standard is not that bad compare to Indonesia,Nigeria and Zimbabwe because there is a lots of local manufacturer industry and foreign manufacturer company that give employment opportunities to others.However, the foreign manufacturer company have used most of the Chinese labor and their resources with low wages for their own benefits and not to the people of China. China's government may have some benefits from the taxes of foreign investment but it can't cover all the population in China as we know that China is one of the largest population in the world.Therefore, China should really strong in economy like United States' economy before and even stronger because the populations of China if they may think of taking over the world's economy which it may take some time.
China which was booming and developing so fast to become one of the world's economic power in the past few years, is facing a long, cold winter.
The economic growth has been affected because of weaker housing demand and softer private investment and consumption as well as the global downturn.
http://online.wsj.com/article/SB122764073537457243.html
Albert, though your country mates are not equally educated or does not have the similar income compared to some of the Chinese administrative regions like Hong Kong, Beijing or Shanghai, will be developed quite soon IF there will be NO political instability...
However, Chinese people need to appreciate the step made by the government...This is because, Chinese Government will likely to introduce more measures to support growth and rebalance of the economy before March 2009, building on is earlier four trillion yuan ($586 billion) package that included investments in railways and housing...
http://www.nytimes.com/2008/11/10/world/asia/10china.html
This stimulus package will definitely help to stabilize the weaken economy and this eventually will drive the country to grow further...
China has adopted a slow but steady method in implementing their economic reforms. It has also sold the equity of some of the major Chinese state banks to overseas companies and bond markets during the middle phase of the first half of the 21st century. In recent years the role played by China in international trade has also increased.
Economic reforms started in China in the 70s and 80s. The initial focus of these reforms was on collectivizing the agricultural activities of the country. The leaders of the Chinese economy, at that point in time, were trying to change the center of agriculture from farming to household activities. At later stages the reforms extended to the liberalization of prices, in a gradual manner. The process of fiscal decentralization soon followed.
http://www.economywatch.com/world_economy/china/
China’s economy is huge and expanding rapidly. In the last 30 years the rate of Chinese economic growth has been almost miraculous, averaging 8% growth in Gross Domestic Product (GDP) per annum. The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars by 2007. In Purchasing Power Parity GDP, China already has the biggest economy after the United States. Most analysts project China to become the largest economy in the world this century using all measures of GDP.
http://www.economywatch.com/world_economy/china/
I would not call the country poor but yes I do agree when you say that with the GDP that China has and the number of population of people, which is not much, I would say that the average income that is earned is low. China has one of the largest and main industries are manufacturing, this is one of the ways foreign direct investments are able to take place.
The other main industry is Development where “In 2003, the industrial added value of the state-owned enterprises as well as non-state-owned enterprises which have an annual sales volume of five million yuan or above was 4,104.5 billion yuan, and the amount of profit reached its highest ever level of 815.2 billion, or an increase of 17 percent and 42.7 percent, respectively, over the previous year, presenting a good situation of the simultaneous development of speed, quality and profit. Since 1996, China has been in the lead in the production of steel, coal, cement, farm-use chemical fertilizer and television sets.” (http://www.gac-china.com/China_Insight/China_Facts/China_Major_Industries/china_major_industries.html)
With main industries like this, and with the rapid growth China is growing, it is possible for them to increase their GDP and people’s standard of living in time to come.
Quite true, China is growing magnificiently, with terrific manufacturing increases.As a business student, you should understand that gross output is less important to net output, and per capita income.No doubt, China is becoming an economic giant, but is this growth sustainable,can it directly challenge the european and US economies?In future,probable,but as of now,no.It's good to note that the chinese economy is very DEPENDENT on exports,meaning a cough in foreign markets would make her 'sneeze'.It would do alot of good to the chinese economy if per capita incomes and quality issues are resolved.Though,one thing is for sure, you can count on China as a big player in the future
Another important aspect of China’s reform period economic performance is its foreign trade. China is now the third-largest global trader. Its total foreign trade volume in 2005 was $1.4 trillion. In 1978, when reform began, China’s total trade was about $20 billion and it was the 30th-largest global trader. In the first nine months of 2006 its foreign trade was up by an additional 25 percent. In 2007 China will overtake the U.S. in terms of exports, and in 2007 or 2008 China is expected to become the second-largest trading economy.
Another aspect of China’s integration into the world economy is large inflows of foreign direct investment (FDI). Its ranking varies year to year, but China has recently ranked from first to third in this. Cumulative FDI into China is about $650 billion, far more than into any other emerging market economy, some of which opened up to FDI decades before China. Of equal interest, remembering when CNOOC tried to buy Unocal in 2005, Chinese companies are starting to invest outward. The biggest and most notable successful transaction was Lennovo’s purchase of IBM’s PC business, which vaulted it into the very top ranks of global PC companies. More recently, China is making substantial investments in natural resources abroad, primarily in petroleum but also in iron ore and other minerals and metals that it is importing. It is investing substantial amounts, especially in Latin America, Africa, the Middle East, and some of the Central Asian republics.
In short, China’s “global footprint” has expanded dramatically.
Reference:
http://www.fpri.org/footnotes/124.200702.lardy.chinaseconomy.html
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