Monday, November 14, 2011

China Economy


                                    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.

Background

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
Ranking for Financial Development

Ranking of FOREX Exchange

People Republic Of China Financial System


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:

  1.   Agriculture: 10.2%
  2.   Industry: 46.9%
  3.    Services: 43% (2010 est.)

Labor force: 815.3 million (2010 est.)
country comparison to the world: 1
Labor force - by occupation:

  1. Agriculture: 38.1%
  2. Industry: 27.8%
  3. 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:

  1. lowest 10%: 3.5%
  2. 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.


I found this in one Blog And I think this represents very correct picture of  Growth Profile of INDIA & PR CHINA
Agriculture - products:
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


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.)


major exporter of manufactures


China's Ranking of Commercial Service Export





  Conclusion:


People republic of China Annual Growth Profile Till 2011
China Persistent economical development and prolong industrial growth is due to consistent change in the Chinese Foreign and Financial Policies during the last Five decades China has evolved in Financial policies in such a way so that the whole country can work as self sustain economy. Recently china has emerged as a world’s number 1 Exporter of manufactured goods taking over Germany in fourth quarter of 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.  



Tuesday, November 1, 2011

An Analysis on PRC claims over Arunachal Pradesh (South Tibet)

                      An Analysis on PRC claims over Arunachal Pradesh (South Tibet)

 Map of Arunachal Pradesh

Introduction
Arunachal Pradesh is located in the far northeast. Itanagar is the capital of the state. It borders the states of Assam and Nagaland to the south, and shares international borders with Burma in the east, Bhutan in the west, and the People's Republic of China in the north.
Arunachal Pradesh means "land of the dawn-lit mountains"
The majority of the territory is claimed by the People's Republic of China as part of South Tibet. The northern border of Arunachal Pradesh reflects the McMahon Line, a controversial 1914 treaty between the United Kingdom and a Tibetan government, which was never accepted by the Chinese government, and not enforced, by the Indian government until 1950.

Background
In 1913-1914 representatives of China, Tibet and Britain negotiated a treaty in India: the Shimla Accord. This treaty's objective was to define the borders between Inner and Outer Tibet as well as between Outer Tibet and British India. British administrator, Sir Henry McMahon, drew up the 550 miles (890 km) McMahon Line as the border between British India and Outer Tibet during the Shimla Conference. The Tibetan and British representatives at the conference agreed to the line, which ceded Tawang and other Tibetan areas to the British Empire. The Chinese representative had no problems with the border between British India and Outer Tibet, however on the issue of the border between Outer Tibet and Inner Tibet the talks broke down. Thus, the Chinese representative refused to accept the agreement and walked out. The Tibetan Government and British Government went ahead with the Shimla Agreement and declared that the benefits of other articles of this treaty would not be bestowed on China as long as it stays out of the purview. The Chinese position was that Tibet was not independent from China, so Tibet could not have independently signed treaties and per the Anglo-Chinese (1906) and Anglo-Russian (1907) conventions, any such agreement was invalid without Chinese assent.
Shimla was initially rejected by the Government of India as incompatible with the 1907 Anglo-Russian Convention. However, this agreement (Anglo-Russian Convention) was renounced by Russia and Britain jointly in 1921, thus making the Shimla Conference official However, with the collapse of Chinese power in Tibet the line had no serious challenges as Tibet had signed the convention, therefore it was forgotten to the extent that no new maps were published until 1935, when interest was revived by civil service officer Olaf Caroe. The Survey of India published a map showing the McMahon Line as the official boundary in 1937.In 1938, the British finally published the Shimla Convention as a bilateral accord two decades after the Shimla Conference; in 1938 the Survey of India published a detailed map showing Tawang as part of NEFA (North-East Frontier Agency). In 1944 Britain established administrations in the area, from Dirang Dzong in the west to Walong in the east. Tibet, however, altered its position on the McMahon Line in late 1947 when the Tibetan government wrote a note presented to the newly independent Indian Ministry of External Affairs laying claims to the Tibetan district (Tawang) south of the McMahon Line. The situation developed further as India became independent and the People's Republic of China was established in 1949. With the PRC poised to take over Tibet, India unilaterally declared the McMahon Line to be the boundary in November 1950, and forced the last remnants of Tibetan administration out of the Tawang area in 1951.The PRC has never recognized the McMahon Line, and claims Tawang on behalf of Tibetans. The 14th Dalai Lama, who led the Tibetan government from 1950 to 1959, was quoted in 2003 as saying that Tawang was "actually part of the Tibetan administration" before the Simla Accord. He clarified his position in 2008, saying that as far as Tibet was concerned "Tawang is part of India"

                 Fig: Disputed Area known as Arunachal Pradesh or China claimed South Tibet

Shimla Agreement

In 1913, the British convoked a conference at Shimla, India to discuss the issue of Tibet's status. The conference was attended by representatives of the British Empire, the newly founded Republic of China, and the Tibetan government at Lhasa. The British plenipotentiary, Sir Henry McMahon, introduced the plan of dividing Tibetan-inhabited areas into "inner Tibet" and "outer Tibet" and apply different policies. "Inner Tibet," includes Tibetan-inhabited areas in Qinghai, Gansu, Sichuan and Yunnan provinces, would be under the jurisdiction of the Chinese government. "Outer Tibet," covering approximately the same area as the modern "Tibet Autonomous Region" would enjoy autonomy. A boundary between Tibet and British India, later called the McMahon Line, was drawn on a map referred to in the treaty.
The Tibetan Indian boundary was negotiated in Shimla between representatives from British and Tibet, in the presence of the Chinese representative. During the Shimla conference a map of the Tibetan Indian border was provided as an annex to the proposed agreement.
The Schedule appended to the Accord contained further notes. For example, it was to be understood that "Tibet forms part of Chinese territory" and after the Tibetans selected a Dalai Lama, the Chinese government was to be notified and the Chinese commissioner in Lhasa would "formally communicate to His Holiness the titles consistent with his dignity, which have been conferred by the Chinese Government"; that the Tibetan government appointed all officers for "Outer Tibet", and that "Outer Tibet" was not to be represented in the Chinese Parliament or any such assembly.
Negotiations failed when China and Tibet could not agree over the Sino-Tibetan boundary. After the Chinese plenipotentiary, Ivan Chen, withdrew from the convention, the British and Tibetan plenipotentiaries attached a note denying China any privileges under the agreement and signed it as a bilateral accord. At the same time the British and Lochen Shatra signed a fresh set of trade Regulations to replace those of 1908.

The McMohan Line

The line is named after Sir Henry McMahon, foreign secretary of British India and the chief negotiator of the convention. It extends for 550 miles (890 km) from Bhutan in the west to 160 miles (260 km) east of the great bend of the Brahmaputra River in the east, largely along the crest of the Himalayas. Shimla (along with the McMahon Line) was initially rejected by the British-run Government of India as incompatible with the 1907 Anglo-Russian Convention. This convention was renounced in 1921. After Shimla, the McMahon Line was forgotten until 1935, when British civil service officer Olaf Caroe convinced the government to publish the Shimla Convention and use the McMahon Line on official maps.
The McMahon Line is regarded as the legal national border of India it is lacking only the final process of joint demarcation. The Dalai Lama's Tibetan government-in-exile also accepts the line as an official border.

Fig: 1914 McMohan Line map, The same was officially signed between Tibet and British Govts.


Chinese View over Shimla Accord
China rejects the Shimla Accord, contending that the Tibetan government was not sovereign and therefore did not have the power to conclude treaties. Chinese maps show some 56,000 square miles (150,000 km2) of the territory south of the line as part of the Tibet Autonomous Region, popularly known as South Tibet in China. Chinese forces briefly occupied this area during the Sino-Indian War of 1962-63. China does recognize a Line of Actual Control which includes a portion of the McMahon line in the eastern part of its border with India, according to a 1959 diplomatic note by Prime Minister Zhou Enlai. The Chinese claims have been varying in last five decades. These claims vary from major part of Arunachal Pradesh to Whole Arunachal Pradesh.
Detailed eight miles to the inch scaled McMahon Line map of 24–25 March 1914 is signed only by the Tibetan and British representatives. This map and McMahon Line negotiations were both done without Chinese participation, although the Chinese counter part was present during the discussion.


PRC interests in Arunachal Pradesh
The Chinese claims over Arunachal Pradesh are not very clear these claim have been varying over the last five decades.
Arunachal Pradesh geographically difficult region so far the economical advantages are concerned the area only contain the untapped potential of Hydro-electric power, currently some 27 project had started in Arunachal by many Indian Companies in collaboration with Arunachal Pradesh government. the estimates says that the potential of more than 27000 MW hydro-electricity is available with the state. The region in neither rich state in terms of minerals nor it contains any untapped potential of oil or natural gases.
During the 1962 war china occupied most of Arunachal Pradesh (North-East Fortier Agency). The same occupied area was returned back to India after the ceasefire and withdrawal of Chinese forces from the area.

Latest trend of PRC foreign policies

Currently the PRC territorial claims and policies are more based on the requirements to sustain the economic growth of nation rather than to revive old claims of the disputed territories such as Arunachal Pradesh.
The People's Republic of China (PRC) ranks as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. The country's per capita GDP (PPP) was $7,544 (International Monetary Fund, 94th in the world) in 2010. Since the Area such as Arunachal Pradesh are not as economically lucrative and welcoming as South China Sea and Its Island, the PRC claims for these areas are not so intense. The claims are extension of the Chinese claims over Tibet Autonomous Region since these claims are based on the claims of old Tibetan government for the area of TAWANG and other part of Arunachal Pradesh.
The difficult terrain, poor transport infrastructure and difficulty to access the internal and remotely located area make these Chinese claims weaker. these weaker claims are followed by dearth of economical Interest and returns. Arunachal had been part of India for more than 110 year by now which also abolish the Chinese interests over Arunachal. Although if the PRC claims over Arunachal were so intense the withdrawal of the Chinese forces after the occupation of major parts of Arunachal had not been taken place immediately after 1962 Military campaign.


Conclusion
With all these points above it may be concluded that the claims of Arunachal Pradesh by China are not as serious as they have been exaggerated for past five decades. Today PRC is more interested in the area which can support it growing economy instead of being liabilities against its development. Moreover the Chinese Claims on Arunachal Pradesh may be taken as a point to create pressure on our (Indian) government.