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Economy of China

China's socialist market economy[17] is the world's second largest economy by nominal
GDP,[1][18] and the world's largest economy by purchasing power parity according to the
IMF,[19]although China's National Bureau of Statistics rejects this claim. [20] It is the
world's fastest-growing major economy, with growth rates averaging 10% over the past
30 years.[21] Due to historical and political facts of China's developing economy, China's
public sector accounts for more share in the national economy with the burgeoning
private sector.[22][23]
China is a global hub for manufacturing, and is the largest manufacturing economy in
the world as well as the largestexporter of goods in the world.[24] China is also the
world's fastest growing consumer market and second largest importer of goods.
China is a net importer of services products.[26]
China is the largest trading nation in the world and plays a vital role in international
trade,[27] and has increasingly engaged in trade organizations and treaties in recent
years. China became a member of the World Trade Organization in 2001.[28] China also
has free trade agreements with several nations, including ChinaAustralia Free Trade
Agreement, ChinaSouth Korea Free Trade Agreement, ASEANChina Free Trade
Area, Switzerland and Pakistan.[29]
On a per capita income basis, China ranked 77th by nominal GDP and 89th by GDP
(PPP) in 2014, according to theInternational Monetary Fund (IMF). The provinces in the
coastal regions of China[30] tend to be more industrialized, while regions in the hinterland
are less developed. As China's economic importance has grown, so has attention to the
structure and health of the economy.[31][32]
Xi Jinpings Chinese Dream is described as achieving the "Two 100s": the material goal
of China becoming a "moderately well-off society" by 2021, the 100th anniversary of
the Chinese Communist Party, and the modernization goal of China becoming a fully
developed nation by 2049, the 100th anniversary of the founding of the Peoples
The internationalization of the Chinese economy continues to affect the standardized
economic forecast officially launched in China by the Purchasing Managers Index in
2005. At the start of the 2010s, China became the sole Asian nation to have a GDP

(PPP) above the $10-trillion mark (along with the United States and the European
Union).[34] As China's economy grows, so does China's Renminbi, which undergoes the
process needed for its internationalization. [35] The economy of China has recently
initiated Asian Infrastructure Investment Bank in 2015.

Pudong in Shanghai in January 2014.


Renminbi (RMB); Unit: Yuan (CNY)

Fiscal year

Calendar year (1 January to 31 December)

Trade organisations

WTO, APEC, G-20 and others



$11.21 trillion (nominal; 2014 est.)[1]

$19 trillion (PPP; 2014.)[1]

GDP rank

2nd (nominal) / 1st (PPP) (2014)

GDP growth

9.5% (nominal; 2013)[2]

7.4% (real; 2014)[3]

GDP per capita

$8,211 (nominal; 82nd; 2014)

$13,992 (PPP; 89th; 2014)[1]

GDP by sector

agriculture: 9.2%, industry: 42.6%, services: 48.2% (2014) [4]

Inflation (CPI)

2.0% (2014)[5]

Population belowpoverty line

6.1% (2013)

Gini coefficient

0.469 (2014)

Labour force

787.6 million (1st; 2012)[6]

Labour force by occupation

agriculture: 36.7%, industry: 28.7%, services: 34.6% (2008 est.)


4.1% (Q2 2014)[7]

Average gross salary

$669 monthly (2012)[8]

Main 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

Ease-of-doing-business rank



$2.34 trillion (2014[10])

Export goods

Electrical and other machinery, including data processing equipment, apparel,

textiles, iron and steel, optical and medical equipment. As well as almost every
single category of industrial products.

Main export partners

United States 18.1%

Hong Kong 17.4%
Japan 6.8%
South Korea 4.1% (2013 est.)[11]


$1.96 trillion (2014[10])

Import goods

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

Main import partners

South Korea 9.4%

Japan 8.3%
Taiwan 8.0%
United States 7.8%
Australia 5.0%
Germany 4.8% (2013 est.)[12]

FDI stock

$1.344 trillion (2012)[13]

Gross external debt

$863.2 billion (2013)

Public finances

Public debt

22.15% of GDP (2012)[14]


$2.118 trillion (2013 est.)


$2.292 trillion (2013 est.)

Credit rating

AA- (Domestic)
AA- (Foreign)
AA- (T&C Assessment)
(Standard & Poor's)[15]

Foreign reserves

$3.73 trillion (1st; March 2015)[16]

Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

GNI per capita in 2013:

China (6,560 $)
Higher GNI per capita compared to China
Lower GNI per capita compared to China
China's socialist market economy[17] is the world's second largest economy by nominal
GDP,[1][18] and the world's largest economy by purchasing power parity according to the

IMF,[19]although China's National Bureau of Statistics rejects this claim. [20] It is the
world's fastest-growing major economy, with growth rates averaging 10% over the past
30 years.[21] Due to

China has been criticized by Western media for unfair trade practices, including
artificial currency devaluation, intellectual property theft, protectionism, and
local favoritism due to one-party oligopoly by the Communist Party of
China with Socialism with Chinese characteristics.[36][37][38][39]

Since initiating market reforms in 1978, China has shifted from a centrally
planned to a market based economy and experienced rapid economic and social
development. GDP growth averaging about 10 percent a year has lifted more than 500
million people out of poverty. All Millennium Development Goals have been reached or
are within reach.
With a population of 1.3 billion, China recently became the second largest economy and
is increasingly playing an important and influential role in the global economy.
Yet China remains a developing country (its per capita income is still a fraction of that in
advanced countries) and its market reforms are incomplete. Official data shows that
about 98.99 million people still lived below the national poverty line of RMB 2,300 per
year at the end of 2012. With the second largest number of poor in the world after India,
poverty reduction remains a fundamental challenge.
Rapid economic ascendance has brought on many challenges as well, including high
inequality; rapid urbanization; challenges to environmental sustainability; and external

imbalances. China also faces demographic pressures related to an aging population

and the internal migration of labor.
Significant policy adjustments are required in order for Chinas growth to be
sustainable. Experience shows that transitioning from middle-income to high-income
status can be more difficult than moving up from low to middle income.
Chinas 12th Five-Year Plan (2011-2015) forcefully addresses these issues. It highlights
the development of services and measures to address environmental and social
imbalances, setting targets to reduce pollution, to increase energy efficiency, to improve
access to education and healthcare, and to expand social protection. Its annual growth
target of 7 percent signals the intention to focus on quality of life, rather than pace of

The history of China reaches back over 4,000 years. In that time, China has created a
culture rich in philosophy and the arts. China has seen the invention of amazing
technologies such as silk,paper, gunpowder, and many other products.
Over the millennia, China has fought hundreds of wars. It has conquered its neighbors,
and been conquered by them in turn. Early Chinese explorers such as Admiral Zheng
He sailed all the way to Africa; today, China's space program continues this tradition of
This snapshot of the People's Republic of China today includes a necessarily brief scan
of China's ancient heritage.
Capital and Major Cities:
Beijing, population 11 million.
Major Cities:

Shanghai, population 15 million.

Shenzhen, population 12 million.
Guangzhou, population 7 million.
Hong Kong, population 7 million.
Dongguan, population 6.5 million.
Tianjin, population 5 million.
The People's Republic of China is a socialist republic ruled by a single party, the
Communist Party of China.
Power in the People's Republic is divided between the National People's Congress
(NPC), the President, and the State Council. The NPC is the single legislative body,
whose members are selected by the Communist Party. The State Council, headed by
the Premier, is the administrative branch. The People's Liberation Army also wields
considerable political power.
The current President of China and General Secretary of the Communist Party is Xi
Jinping. The Premier is Li Keqiang.
Official Language:
The official language of the PRC is Mandarin, a tonal language in the Sino-Tibetan
Within China, however, only about 53 per cent of the population can communicate in
Standard Mandarin.
Other important languages in China include Wu, with 77 million speakers; Min, with 60
million; Cantonese, 56 million speakers; Jin, 45 million speakers; Xiang, 36

million; Hakka, 34 million; Gan, 29 million; Uighur, 7.4 million; Tibetan, 5.3 million; Hui,
3.2 million; and Ping, with 2 million speakers.
Dozens of minority languages also exist in the PRC, including Kazakh, Miao, Sui,
Korean, Lisu, Mongolian, Qiang, and Yi.
China has the largest population of any country on Earth, with more than 1.35 billion
The government has long been concerned about population growth, and introduced the
"One-Child Policy" in 1979. Under this policy, families were limited to just one child.
Couples who got pregnant for a second time faced forced abortions or sterilization. This
policy was loosened in December of 2013 to allow couples to have two children if one or
both of the parents were only children themselves.
There are exceptions to the policy for ethnic minorities, as well. Rural Han Chinese
families also have always been able to have a second child if the first is a girl or has
Under the communist system, religion has been officially discouraged in China. Actual
suppression has varied from one religion to another, and from year to year.
Many Chinese are nominally Buddhist and/or Taoist, but don't practice regularly. People
who self-identify as Buddhist total about 50 per cent, overlapping with the 30 per cent
who are Taoist. Fourteen percent are atheists, four percent Christians, 1.5 per cent
Muslims, and tiny percentages are Hindu, Bon, or Falun Gong adherents.
Most Chinese Buddhists follow Mahayana or Pure Land Buddhism, with smaller
populations of Theravada and Tibetan Buddhists.

China's area is 9.5 to 9.8 million square kilometers; the discrepancy is due to border
disputes with India. In either case, its size is second only to Russia in Asia, and is either
third or fourth in the world.
China borders 14 countries: Afghanistan, Bhutan, Burma, India, Kazakhstan, North
Korea,Kyrgyzstan, Laos, Mongolia, Nepal, Pakistan, Russia, Tajikistan, and Vietnam.
From the world's tallest mountain to the coast, and the Taklamakan desert to the jungles
of Guilin, China includes diverse landforms. The highest point is Mt. Everest
(Chomolungma) at 8,850 meters. The lowest is Turpan Pendi, at -154 meters.
As a result of its large area and various landforms, China includes climate zones from
subarctic to tropical.
China's northern province of Heilongjiang has average winter temperatures below
freezing, with record lows of -30 degrees Celsius. Xinjiang, in the west, can reach nearly
50 degrees. Southern Hainan Island has a tropical monsoon climate. Average
temperatures there range only from about 16 degrees Celsius in January to 29 in
Hainan receives about 200 centimeters (79 inches) of rain annually. The western
Taklamakan Desert receives only about 10 centimeters (4 inches) of rain and snow per
Over the past 25 years, China has had the fastest-growing major economy in the world,
with annual growth of more than 10 per cent. Nominally a socialist republic, since the
1970s the PRC has remade its economy into a capitalist powerhouse.
Industry and agriculture are the largest sectors, producing more than 60 per cent of
China's GDP, and employing over 70 per cent of the work force. China exports $1.2

billion U.S. in consumer electronics, office machinery, and apparel, as well as some
agricultural produce each year.
The per capita GDP is $2,000. The official poverty rate is 10 per cent.
China's currency is the yuan renminbi. As of March 2014, $1 US = 6.126 CNY.
History of China:
Chinese historical records reach back into the realm of legend, 5,000 years ago. It is
impossible to cover even the major events of this ancient culture in a short space, but
here are some highlights.
The first non-mythical dynasty to rule China was the Xia (2200- 1700 BCE), founded by
Emperor Yu. It was succeeded by the Shang Dynasty (1600-1046 BCE), and then
theZhou Dynasty (1122-256 BCE). Historical records are scanty for these ancient
dynastic times.
In 221 BCE, Qin Shi Huangdi assumed the throne, conquering neighboring city-states,
and unifying China. He founded the Qin Dynasty, which lasted only until 206 BCE.
Today, he is best-known for his tomb complex in Xian (formerly Chang'an), which
houses the incredible army of terracotta warriors.
Qin Shi Huang's inept heir was overthrown by the army of commoner Liu Bang in 207
BCE. Liu then founded the Han Dynasty, which lasted until 220 CE. In the Han era,
China expanded west as far as India, opening trade along what would later become
the Silk Road.
When the Han Empire collapsed in 220 CE, China was thrown into a period of anarchy
and turmoil. For the next four centuries, dozens of kingdoms and fiefdoms competed for
power. This era is called the "Three Kingdoms," after the three most powerful of the rival
realms (Wei, Shu, and Wu), but that is a gross simplification.
By 589 CE, the Western branch of the Wei kings had accumulated enough wealth and
power to defeat their rivals, and unite China once more. The Sui Dynasty was founded

by Wei general Yang Jian, and ruled until 618 CE. It built the legal, governmental, and
societal framework for the powerful Tang Empire to follow.
The Tang Dynasty was founded by a general called Li Yuan, who had the Sui emperor
assassinated in 618. The Tang ruled from 618 to 907 CE, and Chinese art and culture
flourished. At the end of the Tang, China descended into chaos again in the "5
Dynasties and 10 Kingdoms" period.
In 959, a palace guard named Zhao Kuangyin took power and defeated the other small
kingdoms. He established the Song Dynasty (960-1279), known for its intricate
bureaucracy and Confucian learning.
In 1271, the Mongolian ruler Kublai Khan (grandson of Genghis) established the Yuan
Dynasty (1271-1368). The Mongols subjugated other ethnic groups including the Han
Chinese, and eventually were overthrown by the ethnic-Han Ming.
China flowered again under the Ming (1368-1644), creating great art and exploring as
far as Africa.
The final Chinese dynasty, the Qing, ruled from 1644 to 1911, when the Last
Emperor was overthrown. Power struggles between warlords such as Sun YatSen touched off the Chinese Civil War. Although the war was interrupted for a decade by
the Japanese invasion and World War II, it picked up again once Japan was
defeated. Mao Zedong and the Communist Peoples Liberation Army won the Chinese
Civil War, and China became the Peoples' Republic of China in 1949. Chiang Kai Shek,
leader of the losing Nationalist forces, fled to Taiwan.

China Trade, Imports and Exports

China is the worlds second largest trading nation behind the US leading the world in
exports and coming in second for imports. From 2009-2011ITS TRADE to GDP ratio
was 53.1 percent, while its trade per capita was $2,413.

Since its accession into the WTO in 2001, Chinas share inGLOBAL TRADE has
doubled accounting for 10.38 percent of the worlds merchandise trade exports and
9.43 percent of merchandise trade imports.
For many countries around the world, China is rapidly becoming their most important
bilateral trade partner. In 2011, they were the largest exporting/importing partner for 32
and 34 countries respectively.
However, there have been concerns over large trade imbalances between China and
the rest of the world. The US in particular has the largest trade deficit in the world with
China at $315 billion, more than three times what it was a decade ago.
There have also been a growing number of trade disputes brought against, mainly for
dumping, unfair subsidies by the Chinese government, intellectual property and the
valuation of the yuan. Nonetheless its WTO entry ensures that the country will remain a
key figure in international trade.
Domestically, the Chinese government has been keen to reduce the economys reliance
on exports and focus on internal consumption. In March 2013, Chinas new leadership
announced that they would move to recalibrate the economy, acknowledging that there
is a growing conflict between downward pressure on economic growth and excess
production capacity.
Chinas Import and Export Indicators and Statistics at a Glance
Total value of exports: US$2.05 trillion
Primary exports - commodities: electrical and other machinery, including data
processing equipment, apparel, radio telephone handsets, textiles, integrated circuits
Primary exports partners: US (17.2 of total exports), Hong Kong (15.8 percent),
Japan (7.4 percent), South Korea (4.3 percent), Germany (3.4 percent)
Total value of imports: US$1.817 trillion

Primary imports - commodities: electrical and other machinery, oil and mineral
fuels, optical and medical equipment, metal ores, motor vehicles
Primary imports partners: Japan (9.8 percent of total imports), South Korea (9.3
percent), US (7.3 percent), Germany (5.1 percent), Australia (4.6 percent)

by Dr. Noor Ahmed Memon

TRADE Relations

China and Pakistan are close and friendly neighbors. Pakistan has treated
China as its most important economic partners. Rapid economic
development in China and consequent inter-regional activity has caused
increased demand for raw materials, exchange of parts, components,
intermediate products and development of cross country production works
and processes. Consistent growth in economic relations amplifies the
strength of their relationship. China and Pakistan also have witnessed steady
growth in mutual investments in recent years. The Chinese have invested in
Pakistan in telecommunications, energy, infrastructure, heavy engineering,
IT, mining and defense related industries.
Pakistan and China are already co-operating closely in the development of
Gwadar Port, which would help economic activity in Pakistan and provide an
important access route to the sea for Chinas Western regions, Afghanistan
and Central Asian states. A large number of important projects such as the
up-gradation of Karakoram Highway, Thar Coal Mining, up-gradation of
Pakistan Railways and Power Generation Projects both nuclear and nonnuclear are some of the examples of this expanding economic
Free Trade Agreement: Pakistan and China signed a Free Trade Agreement
in 2006. The base year for tariff reduction/elimination for China was 2006
and for Pakistan fiscal year of 2006-2007. Pakistan received market access
at zero duty on industrial alcohol, cotton fabrics, bed-linen and other home
textiles and other goods. China also reduced its tariff by 50% on knitwear
and woven garments.
Bilateral trade had reached US$ 5.79 billion in 2011. The balance is,
however, in favour of China. The balance of trade increased from US$ 2.34
billion in 2007-08 to US$ 2.5 billion in 2010-11. Important factor of trade
deficit with China is growing exports of Chinese products to Pakistan

including raw materials and capital goods. Since these are more economical,
businessmen are inclined to buy more from China.
Pakistan, therefore, should be looking at China not simply as an export
market, but as a primary source for import of capital goods and industrial
raw material. Table-1 shows trade balance between Pakistan and China. It
is however encouraging that over the last five years, average rate of growth
in exports from Pakistan has been 33% while average increase inIMPORTS
FROM CHINA was 19%. Pakistan and China will enter Phase II of FTA in
2013 when the present FTA will conclude by the end of 2012.
Table 1: Pak-China Trade
US $ Million)




2005 - 06



- 1,406

2006 - 07



- 1,773

2007 - 08



- 2,344




- 2,344




- 2,073




- 2,500

Source: (i) Trade Development Authority of Pakistan.

(ii) State Bank of Pakistan.
Exports: Exports from Pakistan to China increased from US$ 685 million in
2007-08 to US$ 1.64 billion in 2010-11, thus showing an average increase of
33% per annum. The main items of Pakistans exports to China are cotton
fabrics, cotton yarn, bed wear, surgical instruments, tent and canvas,
marble, fish and its preparations and leather. Unfortunately, the variety of
Pakistans products exported to China is very narrow. Almost around 80% of
its exports consist of cotton yarn and other textile products. Export of textile
and other items from Pakistan to China is given in Table-2. The FTA
between Pakistan and China does not include some major value added
textile categories such as woven and knitted garments.

Table 2: Import of Textile Machinery from China

to Pakistan
(Rs. 000) (Major Items)

2010-11 2009-10 2008-09









Machinery Preparing
Textile Fibre




Textile Spinning




Textile Doubling /Twist





Weft Winding Machines




Cone / Bobbin Winding





Textile Winding






Carding Machines
Drawing / Roving
Blow Room Machinery

Textile Fibre Machinery 401,324

Machines/Power Looms




Weaving (Shuttleless







Circular Knit Machines

Flat Knitting Machines

165 mm
Embroidery Machines
Circular Knitting




2,619,09 2,861,69 1,121,60













Spindles Textile




Spinning Rings




Reeds for Looms




Healds and Healds











Dobbies Jacquards
Top and Flat Card
Other Card Clothing

Parts of Weaving

Source: Federal Bureau of Statistics, Government of

Despite this exclusion Pakistan has ben able to show remarkable increase in
the exports of these categories.
Imports: China has become one of the top five import sources of Pakistan.
MajorIMPORTS FROM CHINA are machinery, chemicals, garments and other
textile products, stationery products, construction materials like tiles,
sanitary wares and crockery, etc. Imports from China also increased from
US$ 3.03 billion in 2007-08 to US$ 4.14 billion in 2010-11, thus showing an
average increase of 9% per annum. Textile machinery and electrical
appliances are the major parts of overall exports.

However, amongst other reasons, one of the reasons for improvement in

trade and investment from China is the Chinese governments persuasion of
its state-controlled enterprises to import Pakistani products in order to
improve the trade balance and make more project specific investments.
Statistics regarding the import of textile machinery from China to Pakistan is
given in Table-3. The excellent political and strategic partnership between
Pakistan and China has contributed in increased trade and economic
cooperation, enhanced investment and mutual economic prosperity.
Table 3: Export of Textile and other
products from Pakistan to China (Major
Items) (Value : US $000)


Raw Cotton



Cotton Yarn



Cotton Fabrics



Knitted Fabrics



Ready made



Textile made



Bed wear



Tents and






Leather Tanned



Leather gloves






Sports goods

Carpet and rugs











Chemical and
its products



Marble and



Petroleum and
its products

Source : Trade Development Authority of

Pakistans exports to China represent only 0.65% market share of a range of
products constituting 13% of Chinas total imports. This share is very low in
view of the US$ one trillion Chinese market. However it reflects the potential
which exists for Pakistans exports to China. In the negotiations for the
Phase II of FTA Pakistan should get the same preferential tariff as given to
the ASEAN countries and the categories should include high value added
textile products particularly ready made garments.