Overview

• GDP (2007): $3.25 trillion.
  
• Per capita GDP (2007): $5,300.
  
• GDP real growth rate (2007): 11.4%.
  
• Natural resources: Coal, iron ore, crude oil, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, uranium, hydropower potential (world's largest).
  
• Agriculture: Products--Among the world's largest producers of rice, potatoes, sorghum, peanuts, tea, millet, barley; commercial crops include cotton, other fibers, and oilseeds; produces variety of livestock products.
  
• Industry: Types--iron, steel, coal, machinery, light industrial products, armaments, petroleum.
  
• Foreign Trade (2007):
  • Exports--$1.218 trillion: mainly apparel, electronics, appliances, footwear, toys. Main partners--U.S., Japan, E.U., South Korea.
  • Imports--$955.8 billion: mainly industrial machinery, electrical equipment, petroleum products, chemicals, textiles, steel. Main partners--Japan, E.U., South Korea, U.S.

Economic Reform

Since 1979, China has been engaged in an effort to reform its economy. The Chinese leadership has adopted a pragmatic perspective on many political and socioeconomic problems, and has sharply reduced the role of ideology in economic policy. Political and social stability, economic productivity, and public welfare are considered paramount. In these years, the government has emphasized raising personal income and consumption and introducing new management systems to help increase productivity. The government also has focused on foreign trade as a major vehicle for economic growth.

In the 1980s, China tried to combine central planning with market-oriented reforms to increase productivity, living standards, and technological quality without exacerbating inflation, unemployment, and budget deficits. China pursued agricultural reforms, dismantling the commune system and introducing a household-based system that provided peasants greater decisionmaking in agricultural activities. The government also encouraged nonagricultural activities such as village enterprises in rural areas, and promoted more self-management for state-owned enterprises, increased competition in the marketplace, and facilitated direct contact between Chinese and foreign trading enterprises. China also relied more upon foreign financing and imports.

During the 1980s, these reforms led to average annual rates of growth of 10% in agricultural and industrial output. Rural per capita real income doubled. China became self-sufficient in grain production; rural industries accounted for 23% of agricultural output, helping absorb surplus labor in the countryside. The variety of light industrial and consumer goods increased. Reforms began in the fiscal, financial, banking, price setting, and labor systems.

By the late 1980s, however, the economy had become overheated with increasing rates of inflation. At the end of 1988, in reaction to a surge of inflation caused by accelerated price reforms, the leadership introduced an austerity program.

China's economy regained momentum in the early 1990s. During a visit to southern China in early 1992, China's paramount leader at the time Deng Xiaoping made a series of political pronouncements designed to reinvigorate the process of economic reform. The 14th Party Congress later in the year backed Deng's renewed push for market reforms, stating that China's key task in the 1990s was to create a "socialist market economy." The 10-year development plan for the 1990s stressed continuity in the political system with bolder reform of the economic system.

During 1993, output and prices were accelerating, investment outside the state budget was soaring, and economic expansion was fueled by the introduction of more than 2,000 special economic zones (SEZs) and the influx of foreign capital that the SEZs facilitated. Fearing hyperinflation, Chinese authorities called in speculative loans, raised interest rates, and re-evaluated investment projects. The growth rate was thus tempered, and the inflation rate dropped from over 17% in 1995 to 8% in early 1996. In 1996, the Chinese economy continued to grow at a rapid pace, at about 9.5%, accompanied by low inflation. The economy slowed for the next 3 years, with official growth of 8.9% in 1997, 7.8% in 1998 and 7.1% for 1999. The year 2000 showed a modest reversal of this trend. Gross domestic product in 2000 grew officially at 8.0% that year.

Despite China's impressive economic development during the past two decades, reforming the state enterprise sector and modernizing the banking system remain major hurdles. During the 15th National Congress of the Chinese Communist Party that met in September 1997, President Jiang Zemin announced plans to sell, merge, or close the vast majority of SOEs in his call for increased "non-public ownership." The 9th National People's Congress endorsed the plans at its March 1998 session.

Then, especially after 2002, some SOEs of small or mid size began to sell its ownership to individuals. From the beginning of 2005, China allowed SOEs in key industries to sell part of their shares to foreigners. Private ownership began to play more and more important role in China now.