A Report
On
People Republic Of China ECONOMY & Its Growth
Introduction
Nowadays China is one of the world's top exporters and is attracting record amounts of foreign investment. In turn, it is investing billions of dollars abroad.
The collapse in international export markets that accompanied the global financial crisis of 2009 initially hit China hard, but its economy was among the first in the world to rebound, quickly returning to growth. In February 2011 it formally overtook Japan to become the world's second-largest economy.
As a member of the World Trade Organization, China benefits from access to foreign markets. But relations with trading partners have been strained over China's huge trade surplus and the piracy of goods. The former has led to demands for Beijing to raise the value of its currency, which would make Chinese goods more expensive for foreign buyers and possibly hold back exports.
Some Chinese fear that the rise of private enterprise and the demise of state-run industries carries heavy social costs such as unemployment and instability.
Moreover, the fast-growing economy has fuelled the demand for energy. China is the largest oil consumer after the US, and the world's biggest producer and consumer of coal. It spends billions of dollars in pursuit of foreign energy supplies. There has been a massive investment in hydro-power, including the $25bn Three Gorges Dam project.
Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of there nimbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. 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 that adjusts for price differences, China in 2010 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work. One 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. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years, but China rebounded quickly, outperforming all other major economies in 2010 with GDP growth around 10%. The economy appears set to remain on a strong growth trajectory in 2011, lending credibility to the stimulus policies the regime rolled out during the global financial crisis. The government vowed, in the 12th Five-Year Plan adopted in March 2011, to continue reforming the economy and emphasize the need to increase domestic consumption in order to make the economy less dependent on exports for GDP growth in the future. However, China likely will make only marginal progress toward these re-balancing goals in 2011. Two economic problems China currently faces are inflation - which, late in 2010, surpassed the government's target of 3% - and local government debt, which swelled as a result of stimulus policies, and is largely off-the-books and potentially low-quality.
World ranking
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| Ranking for Financial Development |
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| Ranking of FOREX Exchange |
China's financial system is highly regulated and has recently begun to expand rapidly as monetary policy becomes integral to its overall economic policy. As a result, banks are becoming more important to China's economy by providing increasingly more finance to enterprises for investment, seeking deposits from the public to mop up excess liquidity, and lending money to the government.
As part of US$586 billion economic stimulus package of November 2008, the government plans to remove loan quotas and ceilings for all lenders, and increase bank credit for priority projects, including rural areas, small businesses, technology companies, iron and cement companies.
Banking System
CITIC) was previously a financial organization that smoothed the inflow of foreign funds, but is now a full bank, allowing to compete for foreign investment funds with the Bank of China. The China Construction Bank lends funds for capital construction projects from the state budget, and finally the Agricultural Bank of China functions as a lending and deposit taking institution for the agricultural sector.
The Major Banking Institution in China
• People's Bank of China
• Bank of China
• China Development Bank
• China Construction Bank
• Agricultural Bank of China
• China's central bank
1. People’s Bank of China
The People's Bank of China (PBC or PBOC) is the central bank of the People's Republic of China with the power to control monetary policy and regulate financial institutions in mainland China. The People’s Bank of China has the most financial assets of any single public finance institution ever.
The top management of the PBC is composed of the governor and a certain number of deputy governors. The governor of the PBC is appointed into or removed from office by the President of the People's Republic of China. The candidate for the governor of the PBC is nominated by the Premier of the State Council and approved by the National People's Congress.
Controlling Bodies
Ministry of Finance
The Ministry of Finance of the People's Republic of China is the national executive agency of the Central People's Government which administers macroeconomic policies and the national annual budget. It also handles fiscal policy, economic regulations and government expenditure for the state.
The ministry also records and publishes annual macroeconomic data on China's economy. This includes information such as previous economic growth rates in China, central government debt and borrowing and many other indicators regarding the Chinese economy.
The Ministry of Finance's remit is smaller than its counterparts in many other states. Macroeconomic management is primarily handled by the National Development and Reform Commission (NDRC). State-owned industries are the responsibility of the State-owned Assets Supervision and Administration Commission, and there are separate regulators for banking, insurance and securities. It also does not handle regulation of the money markets or interest rates. These, together with other aspects of monetary policy, are governed by the People's Bank of China (PBC), China's central bank. The Ministry, NDRC and PBC are equal in status, with their political heads all sitting on the State Council.
Latest Economy Data of People Republic of China
GDP (purchasing power parity): $10.09 trillion (2010 est.)
country comparison to the world: 3
$9.144 trillion (2009 est.)
$8.374 trillion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate): $5.878 trillion
note: because China's exchange rate is determine by fiat, rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China's output; GDP at the official exchange rate substantially understates the actual level of China's output vis-a-vis the rest of the world; in China's situation, GDP at purchasing power parity provides the best measure for comparing output across countries (2010 est.)
GDP - real growth rate: 10.3% (2010 est.); country comparison to the world: 6
9.2% (2009 est.)
9.6% (2008 est.)
GDP - per capita (PPP): $7,600 (2010 est.)
country comparison to the world: 125
$6,900 (2009 est.)
$6,400 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
- Agriculture: 10.2%
- Industry: 46.9%
- Services: 43% (2010 est.)
Labor force: 815.3 million (2010 est.)
country comparison to the world: 1
Labor force - by occupation:
- Agriculture: 38.1%
- Industry: 27.8%
- Services: 34.1% (2008 est.)
Unemployment rate: 4.3% (September 2009 est.)
country comparison to the world: 39
4.2% (December 2008 est.)
note: official data for urban areas only; including migrants may boost total unemployment to 9%; substantial unemployment and underemployment in rural areas
note: 21.5 million rural population live below the official "absolute poverty" line (approximately $90 per year); an additional 35.5 million rural population live above that level but below the official "low income" line (approximately $125 per year) (2007)
Household income or consumption by percentage share:
- lowest 10%: 3.5%
- highest 10%: 15%
note: data are for urban households only (2008)
Distribution of family income - Gini index: 41.5 (2007)
country comparison to the world: 52
40 (2001)
Investment (gross fixed): 46.2% of GDP (2010 est.)
country comparison to the world: 1
Budget: revenues: $1.227 trillion
expenditures: $1.35 trillion (2010 est.)
Taxes and other revenues: 20.9% of GDP (2010 est.)
country comparison to the world: 148
Budget surplus (+) or deficit (-): -2.1% of GDP (2010 est.)
country comparison to the world: 79
Public debt: 18.9% of GDP (2010 est.)
country comparison to the world: 112
18.8% of GDP (2009 est.)
Inflation rate (consumer prices): 3.2% (2010 est.)
country comparison to the world: 106 ;-0.7% (2009 est.)
figures:
NOTE: The Indian Inflation rate(Consumer prices) are Shockingly four times higher than the Chinese Counter parts the latest Indian Figures are
12% (2010 est.) ; 10.9% (2009 est.)
The Figure Below explains the Growth rate difference in between India and China. The Red line represents the India Growth Profile where as Blue graph indicates PRC GDP growth Profile.
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| I found this in one Blog And I think this represents very correct picture of Growth Profile of INDIA & PR CHINA |
world leader in gross value of agricultural output; rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish
Industries:
world leader in gross value of industrial output; 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: 15.7% (2010 est.); country comparison to the world: 9
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| World Ranking in Energy/Petroleum Production |
Electricity - production: 3.446 trillion kWh (2009 est.)
country comparison to the world: 2
Electricity - consumption: 3.438 trillion kWh (2008 est.)
country comparison to the world: 2
Oil - production: 4.273 million bbl/day (2010 est.)
country comparison to the world: 4
Oil - consumption: 9.189 million bbl/day (2010 est.)
country comparison to the world: 3
Oil - exports: 480,600 bbl/day (2009 est.)
country comparison to the world: 30
Oil - imports: 4.753 million bbl/day (2009 est.)
country comparison to the world: 3
Oil - proved reserves: 20.35 billion bbl (1 January 2011 est.)
country comparison to the world: 14
Natural gas - production: 94.41 billion cu m (2010 est.)
country comparison to the world: 8
Natural gas - consumption: 106.7 billion cu m (2010 est.)
country comparison to the world: 5
Natural gas - exports: 4.02 billion cu m (2010 est.)
country comparison to the world: 29
Natural gas - imports: 16.33 billion cu m (2010 est.)
country comparison to the world: 17
Natural gas - proved reserves: 3.03 trillion cu m (1 January 2011 est.)
country comparison to the world: 13
Current account balance: $305.4 billion (2010 est.)country comparison to the world: 1; $297.1 billion (2009 est.)
Exports: $1.581 trillion (2010 est.)
country comparison to the world: 1
$1.204 trillion (2009 est.)
Exports - commodities: electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment
Exports - partners: US 18%, Hong Kong 13.8%, Japan 7.6%, South Korea 4.4%, Germany 4.3% (2010)
Imports: $1.327 trillion (2010 est.)
country comparison to the world: 3
$954.3 billion (2009 est.)
Imports - commodities: electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals
Imports - partners: Japan 12.6%, South Korea 9.9%, US 7.3%, Germany 5.3%, Australia 4.3% (2010)
Reserves of foreign exchange and gold: $2.876 trillion (31 December 2010 est.)
country comparison to the world: 1
$2.426 trillion (31 December 2009 est.)
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| major exporter of manufactures |
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| China's Ranking of Commercial Service Export |
Conclusion:
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| People republic of China Annual Growth Profile Till 2011 |
If we take a closer look over the Chinese policy it can be easily identified that framing of the financial policies was started way back in 1975 in the first economic reforms when china opened its market for the foreign supplier and buyers, the same reforms in 1975 are responsible for today growth and Lead over India of Chinese Economy. Indian economic reforms where more complex and implemented in year 1995 almost 20 year behind China.
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