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China Economy 2008


Economy - overview: China's economy during the last quarter century has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. China has generally implemented reforms in a gradualist or piecemeal fashion, including the sale of minority shares in four of China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in 2005. After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg reached 15% in January 2008. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis, China in 2007 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. Annual inflows of foreign direct investment in 2007 rose to $75 billion. By the end of 2007, more than 5,000 domestic Chinese enterprises had established direct investments in 172 countries and regions around the world. The Chinese government faces several economic development challenges: (a) to sustain adequate job growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; (b) to reduce corruption and other economic crimes; and (c) to contain environmental damage and social strife related to the economy's rapid transformation. Economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers have relocated to urban areas to find work. One demographic consequence of the "one child" policy 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 economic development. In 2007 China intensified government efforts to improve environmental conditions, tying the evaluation of local officials to environmental targets, publishing a national climate change policy, and establishing a high level leading group on climate change, headed by Premier WEN Jiabao. The Chinese government seeks to add energy production capacity from sources other than coal and oil as its double-digit economic growth increases demand. Chinese energy officials in 2007 agreed to purchase five third generation nuclear reactors from Western companies. More power generating capacity came on line in 2006 as large scale investments - including the Three Gorges Dam across the Yangtze River - were completed.
GDP (purchasing power parity): $7.099 trillion (2007 est.)
GDP (official exchange rate): $3.251 trillion (2007 est.)
GDP - real growth rate: 11.9% (2007 est.)
GDP - per capita (PPP): $5,400 (2007 est.)
GDP - composition by sector: agriculture: 11.3% industry: 48.6% services: 40.1% (2007 est.)
Labor force: 800.7 million (2007 est.)
Labor force - by occupation: agriculture: 43% industry: 25% services: 32% (2006 est.)
Unemployment rate: 4% unemployment in urban areas; substantial unemployment and underemployment in rural areas (2007 est.)
Household income or consumption by percentage share: lowest 10%: 1.6% highest 10%: 34.9% (2004)
Distribution of family income - Gini index: 47 (2007)
Investment (gross fixed): 42.7% of GDP (2007 est.)
Budget: revenues: $674.3 billion expenditures: $651.6 billion (2007 est.)
Public debt: 18.4% of GDP (2007 est.)
Inflation rate (consumer prices): 4.8% (2007 est.)
Central bank discount rate: 3.33% (31 December 2007)
Commercial bank prime lending rate: 7.47% (31 December 2007)
Stock of money: $2.09 trillion (31 December 2007)
Stock of quasi money: $3.437 trillion (31 December 2007)
Stock of domestic credit: $4.653 trillion (31 December 2007)
Agriculture - products: rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish
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
Industrial production growth rate: 13.4% (2007 est.)
Electricity - production: 3.256 trillion kWh (2007)
Electricity - consumption: 2.859 trillion kWh (2006)
Electricity - exports: 14.04 billion kWh (2007 est.)
Electricity - imports: 4.771 billion kWh (2007 est.)
Oil - production: 3.725 million bbl/day (2008 est.)
Oil - consumption: 7.578 million bbl/day (2007 est.)
Oil - exports: 79,060 bbl/day (2007)
Oil - imports: 3.19 million bbl/day (2007)
Oil - proved reserves: 16 billion bbl (1 January 2008 est.)
Natural gas - production: 69.27 billion cu m (2007 est.)
Natural gas - consumption: 70.51 billion cu m (2007 est.)
Natural gas - exports: 2.69 billion cu m (2007 est.)
Natural gas - imports: 3.92 billion cu m (2007 est.)
Natural gas - proved reserves: 2.265 trillion cu m (1 January 2008 est.)
Current account balance: $371.8 billion (2007 est.)
Exports: $1.22 trillion f.o.b. (2007 est.)
Exports - commodities: machinery, electrical products, data processing equipment, apparel, textile, steel, mobile phones
Exports - partners: US 19.1%, Hong Kong 15.1%, Japan 8.4%, South Korea 4.6%, Germany 4% (2007)
Imports: $904.6 billion f.o.b. (2007 est.)
Imports - commodities: machinery and equipment, oil and mineral fuels, plastics, LED screens, data processing equipment, optical and medical equipment, organic chemicals, steel, copper
Imports - partners: Japan 14%, South Korea 10.9%, Taiwan 10.5%, US 7.3%, Germany 4.7% (2007)
Reserves of foreign exchange and gold: $1.534 trillion (31 December 2007 est.)
Debt - external: $363 billion (31 December 2007 est.)
Stock of direct foreign investment - at home: $758.9 billion (2007 est.)
Stock of direct foreign investment - abroad: $93.75 billion ( 2007 est.)
Market value of publicly traded shares: $4.477 trillion (31 December 2007 est.)
Currency (code): Renminbi (RMB); note - also referred to by the unit yuan (CNY)
Exchange rates: Renminbi yuan (RMB) per US dollar - 7.61 (2007), 7.97 (2006), 8.1943 (2005), 8.2768 (2004), 8.277 (2003)

NOTE: The economy information regarding China on this page is re-published from the 2008 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of China Economy 2008 information contained here. All suggestions for corrections of any errors about China Economy 2008 should be addressed to the CIA.