User:Slashem/eco
From Wikipedia, the free encyclopedia
Beginning in late 1978, the Chinese leadership has been reforming the economy from a Soviet-style centrally planned economy to a more market-oriented economy that is still within a rigid political framework under Party control. The reforms replaced collectivization of Chinese agriculture with privatization of farmlands, increased the responsibility of local authorities and industry managers, allowed a wide variety of small-scale enterprises to flourish, and promoted foreign investment. Price controls were also relaxed. These changes resulted in mainland China's shift from a planned economy to a mixed economy.
The government emphasizes personal income and consumption by introducing new management systems to help increase productivity. The government also focuses on foreign trade as a major vehicle for economic growth, which led to five Special Economic Zones (SEZ: Shenzhen, Zhuhai, Shantou, Xiamen, Hainan) where investment laws are relaxed so as to attract foreign capital. Since the 1990s, SEZs and similar concepts have been expanded to major Chinese cities, including Shanghai and Beijing. The result has been a six-fold increase of GDP since 1978.
Chinese economic development is among the fastest in the world and has been growing at an average annual GDP rate of 9.4% for the past twenty-five years.[1]
Mainland China has a reputation of being a low-cost manufacturer, which caused notable disputes in global markets. This is largely because Chinese corporations can produce many products far more cheaply than other parts of Asia or Latin America and because expensive products produced in developed countries like the United States are in large part uncompetitive compared to European or Asian goods. Another factor is the unfavorable exchange rate between the Chinese yuan and the United States dollar to which it was pegged.
On July 21, 2005, the People's Bank of China announced that it would move to a floating peg, allowing its currency to move against the United States dollar by 0.5% (effective 18 May 2007, which was earlier 0.3%) a day, while 3% a day against other currencies.[2] Many high-tech American companies have difficulty exporting to China because of U.S. federal government restrictions, which exacerbated the trade gap between the PRC and the US, widespread software piracy and illegal copying of intellectual property (a major US export), and perceived low quality of US goods. At the end of 2005, the PRC became the fourth-largest economy in the world by exchange rate and the second-largest in the world after the United States by purchasing power parity at US$8,158 trillion.[3] But with its large population, this still gives an average GDP per person of only an estimated US$8,000 (2006).
Today, only ten percent of the Chinese population is below the poverty line. 90.9% of the population is relatively literate,[4] compared to 20% in 1950.[5] The life expectancy in China is the third highest in East Asia, after Japan and South Korea. There is a large wealth disparity between the coastal regions and the remainder of the country. To counter this potentially destabilizing problem, the government has initiated the China Western Development strategy (2000), the Revitalize Northeast China initiative (2003), and the Rise of Central China policy (2004), which are all aimed at helping the interior of China to catch up.
As of 2006, approximately 70% of China's growth came from the private sector. The private sector was dominated by about 200 large enterprises concentrated mostly in utilities, heavy industries, and energy resources.[6] China is undergoing major reforms in its financial sector, which has been plagued by nonperforming loans made in the 1980s and early 1990s to inefficient state-owned enterprises. The government has spent five years and more than US$400 billion cleaning bad loans off the books of the big four state-owned banks, helping prepare them to become shareholder corporations.[7] By the end of 2006, China had restructured three of its four largest banks and listed them publicly. China's largest bank, the Industrial and Commercial Bank of China (ICBC) in October 2006 raised US$21.6 billion in the world's largest initial public offering (IPO) in history. As of 2008, ICBC is now the world's largest bank in market value.
The People's Republic of China has the second largest economy in the world after the US with a GDP of nearly $ 7 trillion (2007) when measured on a purchasing power parity (PPP) basis. In November 2007, it became the third largest in the world after the US and Japan with a nominal GDP of US$3.42 trillion (2007) when measured in exchange-rate terms.[8] China has been the fastest-growing major nation for the past quarter of a century with an average annual GDP growth rate above 10%.[9] 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.[10] The country's per capita income is classified as low 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 IMF.
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 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 enterprise 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.[11] As of 2007, most of china's growth came from the Private Sector instead of exports. Particularly the smaller public sector, which was dominated by about 200 large state enterprises concentrated mostly in utilities, heavy industries, and energy resources.[12]
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.[13] 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.[14] Nevertheless, key bottlenecks continue to constrain growth. Available energy is insufficient to run at fully-installed industrial capacity,[15] the transport system is inadequate to move sufficient quantities of such critical items as coal,[16] and the communications system[17] 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. Although 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, most of its industrial output still comes from relatively backward and ill-equipped factories. The technological level and quality standards of its industry as a whole are still fairly low.[18]