Economy of China

China'ssocialist market economy[17]is theworld's second largest economy by nominal GDP,[1][18]and theworld's largest economy by purchasing power parityaccording to the IMF,[19]although China's National Bureau of Statistics rejects this claim.[20]It is the world'sfastest-growing major economy, withgrowth rates averaging 10%over the past 30 years.[21]Due to historical and political facts of China's developing economy, China's public sector accounts for more share in the national economy with the burgeoning private sector.[22][23]China is a global hub for manufacturing, and is the largest manufacturing economy in the world as well as the largestexporterof goods in the world.[24]China is also the world's fastest growingconsumer marketand second largestimporterof goods.[25]China is a net importer of services products.[26]China is the largest trading nation in the world and plays a vital role in international trade,[27]and has increasingly engaged in trade organizations and treaties in recent years. China became a member of theWorld Trade Organizationin 2001.[28]China also has free trade agreements with several nations, includingChinaAustralia Free Trade Agreement,ChinaSouth Korea Free Trade Agreement,ASEANChina Free Trade Area,SwitzerlandandPakistan.[29]On aper capita incomebasis, China ranked77th by nominal GDPand89th by GDP (PPP)in 2014, according to theInternational Monetary Fund(IMF). Theprovincesin the coastalregions of China[30]tend to be moreindustrialized, while regions in the hinterland are lessdeveloped. As China's economic importance has grown, so has attention to the structure and health of the economy.[31][32]Xi JinpingsChinese Dreamis described as achieving the "Two 100s": the material goal of China becoming a "moderately well-off society" by 2021, the 100th anniversary of theChinese Communist Party, and the modernization goal of China becoming afully developed nationby 2049, the 100th anniversary of the founding of the Peoples Republic.[33]The internationalization of the Chinese economy continues to affect the standardized economic forecast officially launched in China by thePurchasing Managers Indexin 2005. At the start of the 2010s, China became the sole Asian nation to have a GDP (PPP) above the $10-trillion mark (along with the United States and theEuropean Union).[34]As China's economy grows, so does China'sRenminbi, which undergoes the process needed for its internationalization.[35]Theeconomy of Chinahas recently initiatedAsian Infrastructure Investment Bankin 2015.PudonginShanghaiin January 2014.

CurrencyRenminbi(RMB); Unit:Yuan(CNY)

Fiscal yearCalendar year(1 January to 31 December)

Trade organisationsWTO,APEC,G-20and others

Statistics

GDP$11.21 trillion (nominal; 2014 est.)[1]$19 trillion (PPP; 2014.)[1]

GDP rank2nd(nominal) /1st(PPP) (2014)

GDP growth9.5% (nominal; 2013)[2]7.4% (real; 2014)[3]

GDP per capita$8,211 (nominal;82nd; 2014)$13,992 (PPP;89th; 2014)[1]

GDP by sectoragriculture: 9.2%, industry: 42.6%, services: 48.2% (2014)[4]

Inflation(CPI)2.0% (2014)[5]

Population belowpoverty line6.1% (2013)

Gini coefficient0.469 (2014)

Labour force787.6 million (1st; 2012)[6]

Labour force by occupationagriculture: 36.7%, industry: 28.7%, services: 34.6% (2008 est.)

Unemployment4.1% (Q2 2014)[7]

Average gross salary$669 monthly (2012)[8]

Main industriesmining 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

Ease-of-doing-business rank96th[9]

External

Exports$2.34 trillion (2014[10])

Export goodsElectrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment. As well as almost every single category of industrial products.

Main export partnersUnited States18.1%Hong Kong17.4%Japan6.8%South Korea4.1% (2013 est.)[11]

Imports$1.96 trillion (2014[10])

Import goodsElectrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals

Main import partnersSouth Korea9.4%Japan8.3%Taiwan8.0%United States7.8%Australia5.0%Germany4.8% (2013 est.)[12]

FDIstock$1.344 trillion (2012)[13]

Grossexternal debt$863.2 billion (2013)

Public finances

Public debt22.15% of GDP (2012)[14]

Revenues$2.118 trillion (2013 est.)

Expenses$2.292 trillion (2013 est.)

Credit ratingAA- (Domestic)AA- (Foreign)AA- (T&C Assessment)(Standard & Poor's)[15]

Foreign reserves$3.73 trillion (1st; March 2015)[16]

Main data source:CIA World Fact BookAll values, unless otherwise stated, are inUS dollars.

GNI per capita in 2013:China (6,560 $)Higher GNI per capita compared to ChinaLower GNI per capita compared to ChinaChina'ssocialist market economy[17]is theworld's second largest economy by nominal GDP,[1][18]and theworld's largest economy by purchasing power parityaccording to the IMF,[19]although China's National Bureau of Statistics rejects this claim.[20]It is the world'sfastest-growing major economy, withgrowth rates averaging 10%over the past 30 years.[21]Due to

China has been criticized byWestern mediafor unfair trade practices, including artificialcurrency devaluation,intellectual property theft,protectionism, and localfavoritismdue to one-partyoligopolyby theCommunist Party of ChinawithSocialism with Chinese characteristics.[36][37][38][39]

Since initiating market reforms in 1978, China has shifted from a centrally planned to a market based economy and experienced rapid economic and social development. GDP growth averaging about 10 percent a year has lifted more than 500 million people out of poverty. All Millennium Development Goals have been reached or are within reach.With a population of 1.3 billion, China recently became the second largest economy and is increasingly playing an important and influential role in the global economy.Yet China remains a developing country (its per capita income is still a fraction of that in advanced countries) and its market reforms are incomplete. Official data shows that about 98.99 million people still lived below the national poverty line of RMB 2,300 per year at the end of 2012. With the second largest number of poor in the world after India, poverty reduction remains a fundamental challenge.Rapid economic ascendance has brought on many challenges as well, including high inequality; rapid urbanization; challenges to environmental sustainability; and external imbalances. China also faces demographic pressures related to an aging population and the internal migration of labor.Significant policy adjustments are required in order for Chinas growth to be sustainable. Experience shows that transitioning from middle-income to high-income status can be more difficult than moving up from low to middle income.Chinas 12th Five-Year Plan (2011-2015) forcefully addresses these issues. It highlights the development of services and measures to address environmental and social imbalances, setting targets to reduce pollution, to increase energy efficiency, to improve access to education and healthcare, and to expand social protection. Its annual growth target of 7 percent signals the intention to focus on quality of life, rather than pace of growth

HISTORY OF CHINAThe history of China reaches back over 4,000 years. In that time, China has created a culture rich in philosophy and the arts. China has seen the invention of amazing technologies such as silk,paper,gunpowder, and many other products.Over the millennia, China has fought hundreds of wars. It has conquered its neighbors, and been conquered by them in turn. Early Chinese explorers such asAdmiral Zheng Hesailed all the way to Africa; today, China's space program continues this tradition of exploration.This snapshot of the People's Republic of China today includes a necessarily brief scan of China's ancient heritage.Capital and Major Cities:Capital:Beijing, population 11 million.Major Cities:Shanghai, population 15 million.Shenzhen, population 12 million.Guangzhou, population 7 million.Hong Kong, population 7 million.Dongguan, population 6.5 million.Tianjin, population 5 million.Government:The People's Republic of China is a socialist republic ruled by a single party, the Communist Party of China.Power in the People's Republic is divided between the National People's Congress (NPC), the President, and the State Council. The NPC is the single legislative body, whose members are selected by the Communist Party. The State Council, headed by the Premier, is the administrative branch. The People's Liberation Army also wields considerable political power.The current President of China and General Secretary of the Communist Party is Xi Jinping. The Premier is Li Keqiang.Official Language:The official language of the PRC is Mandarin, a tonal language in the Sino-Tibetan family.Within China, however, only about 53 per cent of the population can communicate in Standard Mandarin.Other important languages in China include Wu, with 77 million speakers; Min, with 60 million; Cantonese, 56 million speakers; Jin, 45 million speakers; Xiang, 36 million;Hakka, 34 million; Gan, 29 million;Uighur, 7.4 million; Tibetan, 5.3 million; Hui, 3.2 million; and Ping, with 2 million speakers.Dozens of minority languages also exist in the PRC, including Kazakh, Miao, Sui, Korean, Lisu, Mongolian, Qiang, and Yi.Population:China has thelargest populationof any country on Earth, with more than 1.35 billion people.The government has long been concerned about population growth, and introduced the "One-Child Policy" in 1979. Under this policy, families were limited to just one child. Couples who got pregnant for a second time faced forced abortions or sterilization. This policy was loosened in December of 2013 to allow couples to have two children if one or both of the parents were only children themselves.There are exceptions to the policy for ethnic minorities, as well. Rural Han Chinese families also have always been able to have a second child if the first is a girl or has disabilities.Religion:Under thecommunistsystem, religion has been officially discouraged in China. Actual suppression has varied from one religion to another, and from year to year.Many Chinese are nominally Buddhist and/orTaoist, but don't practice regularly. People who self-identify as Buddhist total about 50 per cent, overlapping with the 30 per cent who are Taoist. Fourteen percent are atheists, four percent Christians, 1.5 per cent Muslims, and tiny percentages are Hindu, Bon, or Falun Gong adherents.Most Chinese Buddhists followMahayanaor Pure Land Buddhism, with smaller populations of Theravada andTibetanBuddhists.Geography:China'sarea is 9.5 to 9.8 million square kilometers; the discrepancy is due to border disputes withIndia. In either case, its size is second only to Russia in Asia, and is either third or fourth in the world.China borders 14 countries:Afghanistan,Bhutan,Burma, India,Kazakhstan,North Korea,Kyrgyzstan,Laos,Mongolia,Nepal,Pakistan, Russia,Tajikistan, andVietnam.From the world's tallest mountain to the coast, andthe Taklamakan desertto the jungles of Guilin, China includes diverse landforms. The highest point is Mt. Everest (Chomolungma) at 8,850 meters. The lowest is Turpan Pendi, at -154 meters.Climate:As a result of its large area and various landforms, China includes climate zones from subarctic to tropical.China's northern province of Heilongjiang has average winter temperatures below freezing, with record lows of -30 degrees Celsius.Xinjiang, in the west, can reach nearly 50 degrees. Southern Hainan Island has a tropical monsoon climate. Average temperatures there range only from about 16 degrees Celsius in January to 29 in August.Hainan receives about 200 centimeters (79 inches) of rain annually. The western Taklamakan Desert receives only about 10 centimeters (4 inches) of rain and snow per year.Economy:Over the past 25 years, China has had the fastest-growing major economy in the world, with annual growth of more than 10 per cent. Nominally a socialist republic, since the 1970s the PRC has remade its economy into a capitalist powerhouse.Industry and agriculture are the largest sectors, producing more than 60 per cent of China's GDP, and employing over 70 per cent of the work force. China exports $1.2 billion U.S. in consumer electronics, office machinery, and apparel, as well as some agricultural produce each year.The per capita GDP is $2,000. The official poverty rate is 10 per cent.China's currency is the yuan renminbi. As of March 2014, $1 US = 6.126 CNY.History of China:Chinese historical records reach back into the realm of legend, 5,000 years ago. It is impossible to cover even the major events of this ancient culture in a short space, but here are some highlights.The first non-mythical dynasty to rule China was the Xia (2200- 1700 BCE), founded by Emperor Yu. It was succeeded by theShang Dynasty(1600-1046 BCE), and then theZhou Dynasty(1122-256 BCE). Historical records are scanty for these ancient dynastic times.In 221 BCE,Qin Shi Huangdiassumed the throne, conquering neighboring city-states, and unifying China. He foundedthe Qin Dynasty, which lasted only until 206 BCE. Today, he is best-known for his tomb complex in Xian (formerly Chang'an), which houses the incredible army ofterracotta warriors.Qin Shi Huang's inept heir was overthrown by the army of commoner Liu Bang in 207 BCE. Liu then founded theHan Dynasty, which lasted until 220 CE. In theHan era, China expanded west as far as India, opening trade along what would later become theSilk Road.When the Han Empire collapsed in 220 CE, China was thrown into a period of anarchy and turmoil. For the next four centuries, dozens of kingdoms and fiefdoms competed for power. This era is called the "Three Kingdoms," after the three most powerful of the rival realms (Wei, Shu, and Wu), but that is a gross simplification.By 589 CE, the Western branch of the Wei kings had accumulated enough wealth and power to defeat their rivals, and unite China once more. TheSui Dynastywas founded by Wei general Yang Jian, and ruled until 618 CE. It built the legal, governmental, and societal framework for the powerful Tang Empire to follow.TheTang Dynastywas founded by a general called Li Yuan, who had the Sui emperor assassinated in 618. The Tang ruled from 618 to 907 CE, and Chinese art and culture flourished. At the end of the Tang, China descended into chaos again in the "5 Dynasties and 10 Kingdoms" period.In 959, a palace guard named Zhao Kuangyin took power and defeated the other small kingdoms. He established theSong Dynasty(960-1279), known for its intricate bureaucracy andConfucianlearning.In 1271, the Mongolian rulerKublai Khan(grandson ofGenghis) established theYuan Dynasty(1271-1368). The Mongols subjugated other ethnic groups including the Han Chinese, and eventually were overthrown by the ethnic-Han Ming.China flowered again under theMing(1368-1644), creating great art and exploring as far as Africa.The finalChinese dynasty, theQing, ruled from 1644 to 1911, whentheLast Emperorwas overthrown. Power struggles between warlords such asSun Yat-Sentouched off the Chinese Civil War. Although the war was interrupted for a decade by the Japanese invasion andWorld War II, it picked up again once Japan was defeated.Mao Zedongand the Communist Peoples Liberation Army won the Chinese Civil War, and China became the Peoples' Republic of China in 1949. Chiang Kai Shek, leader of the losing Nationalist forces, fled toTaiwan.

China Trade, Imports and ExportsChina is the worlds second largest trading nation behind the US leading the world in exports and coming in second for imports. From 2009-2011ITS TRADEto GDP ratio was 53.1 percent, while its trade per capita was $2,413.Since its accession into the WTO in 2001, Chinas share inGLOBAL TRADEhas doubled accounting for 10.38 percent of the worlds merchandise trade exports and 9.43 percent of merchandise trade imports.For many countries around the world, China is rapidly becoming their most important bilateral trade partner. In 2011, they were the largest exporting/importing partner for 32 and 34 countries respectively.However, there have been concerns over large trade imbalances between China and the rest of the world. The US in particular has the largest trade deficit in the world with China at $315 billion, more than three times what it was a decade ago.There have also been a growing number of trade disputes brought against, mainly for dumping, unfair subsidies by the Chinese government, intellectual property and the valuation of the yuan. Nonetheless its WTO entry ensures that the country will remain a key figure in international trade.Domestically, the Chinese government has been keen to reduce the economys reliance on exports and focus on internal consumption. In March 2013, Chinas new leadership announced that they would move to recalibrate the economy, acknowledging that there is a growing conflict between downward pressure on economic growth and excess production capacity.Chinas Import and Export Indicators and Statistics at a Glance (2012)Total value of exports:US$2.05 trillionPrimary exports - commodities:electrical and other machinery, including data processing equipment, apparel, radio telephone handsets, textiles, integrated circuitsPrimary exports partners:US (17.2 of total exports), Hong Kong (15.8 percent), Japan (7.4 percent), South Korea (4.3 percent), Germany (3.4 percent)Total value of imports: US$1.817 trillionPrimary imports - commodities:electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, motor vehiclesPrimary imports partners:Japan (9.8 percent of total imports), South Korea (9.3 percent), US (7.3 percent), Germany (5.1 percent), Australia (4.6 percent)

Pak-CHINA TRADERelationsby Dr. Noor Ahmed MemonChina and Pakistan are close and friendly neighbors. Pakistan has treated China as its most important economic partners. Rapid economic development in China and consequent inter-regional activity has caused increased demand for raw materials, exchange of parts, components, intermediate products and development of cross country production works and processes. Consistent growth in economic relations amplifies the strength of their relationship. China and Pakistan also have witnessed steady growth in mutual investments in recent years. The Chinese have invested in Pakistan in telecommunications, energy, infrastructure, heavy engineering, IT, mining and defense related industries.

Pakistan and China are already co-operating closely in the development of Gwadar Port, which would help economic activity in Pakistan and provide an important access route to the sea for Chinas Western regions, Afghanistan and Central Asian states. A large number of important projects such as the up-gradation of Karakoram Highway, Thar Coal Mining, up-gradation of Pakistan Railways and Power Generation Projects both nuclear and non-nuclear are some of the examples of this expanding economic cooperation.Free Trade Agreement:Pakistan and China signed a Free Trade Agreement in 2006. The base year for tariff reduction/elimination for China was 2006 and for Pakistan fiscal year of 2006-2007. Pakistan received market access at zero duty on industrial alcohol, cotton fabrics, bed-linen and other home textiles and other goods. China also reduced its tariff by 50% on knitwear and woven garments.Bilateral trade had reached US$ 5.79 billion in 2011. The balance is, however, in favour of China. The balance of trade increased from US$ 2.34 billion in 2007-08 to US$ 2.5 billion in 2010-11. Important factor of trade deficit with China is growing exports of Chinese products to Pakistan including raw materials and capital goods. Since these are more economical, businessmen are inclined to buy more from China.Pakistan, therefore, should be looking at China not simply as an export market, but as a primary source for import of capital goods and industrial raw material.Table-1shows trade balance between Pakistan and China. It is however encouraging that over the last five years, average rate of growth in exports from Pakistan has been 33% while average increase inIMPORTS FROM CHINAwas 19%. Pakistan and China will enter Phase II of FTA in 2013 when the present FTA will conclude by the end of 2012.Table 1: Pak-China Trade (Value: US $ Million)

YearExportsImportsTrade Balance

2005 - 064371,843- 1,406

2006 - 075482,321- 1,773

2007 - 086853,029- 2,344

2008-096612,708- 2,344

2009-01,2113,284- 2,073

2010-111,6454,145- 2,500

Source: (i) Trade Development Authority of Pakistan. (ii) State Bank of Pakistan.

Exports:Exports from Pakistan to China increased from US$ 685 million in 2007-08 to US$ 1.64 billion in 2010-11, thus showing an average increase of 33% per annum. The main items of Pakistans exports to China are cotton fabrics, cotton yarn, bed wear, surgical instruments, tent and canvas, marble, fish and its preparations and leather. Unfortunately, the variety of Pakistans products exported to China is very narrow. Almost around 80% of its exports consist of cotton yarn and other textile products. Export of textile and other items from Pakistan to China is given inTable-2.The FTA between Pakistan and China does not include some major value added textile categories such as woven and knitted garments.Table 2: Import of Textile Machinery from China to Pakistan(Rs. 000) (Major Items)

Machinery2010-112009-102008-09

Carding Machines1,273,960660,41888,993

Drawing / Roving Machines100,65310,00714,914

Blow Room Machinery188,20239,39942,886

Machinery Preparing Textile Fibre199,18413,972197,058

Textile Spinning Machines539,225362,621255,450

Textile Doubling /Twist Machines150,323157,07775,867

Weft Winding Machines6,6829,7752,607

Cone / Bobbin Winding Machines14,70225,48514,954

Textile Winding Machines44,71913,52157,958

Textile Fibre Machinery401,324113,036125,080

Weaving Machines/Power Looms133,42535,565719,60

Weaving (Shuttleless Looms)423,171247,47731,612

Circular Knit Machines27,4671,97817,039

Flat Knitting Machines 165 mm10,30714,34746,393

Embroidery Machines2,619,0912,861,6921,121,603

Circular Knitting Machines321,55690,00871,256

Dobbies Jacquards93,36445,74028,590

Top and Flat Card Clothing160,698111,91273,495

Other Card Clothing136,572105,356101,134

Spindles Textile Machines275,938179,6272,527

Spinning Rings189,986194,141142,540

Reeds for Looms30,45348,81339,270

Healds and Healds Frame197,056157,58293,322

Shuttles9,6675,91511,068

Parts of Weaving Machinery109,66171,50643,862

Source: Federal Bureau of Statistics, Government of Pakistan.

Despite this exclusion Pakistan has ben able to show remarkable increase in the exports of these categories.Imports:China has become one of the top five import sources of Pakistan. MajorIMPORTS FROM CHINAare machinery, chemicals, garments and other textile products, stationery products, construction materials like tiles, sanitary wares and crockery, etc. Imports from China also increased from US$ 3.03 billion in 2007-08 to US$ 4.14 billion in 2010-11, thus showing an average increase of 9% per annum. Textile machinery and electrical appliances are the major parts of overall exports.However, amongst other reasons, one of the reasons for improvement in trade and investment from China is the Chinese governments persuasion of its state-controlled enterprises to import Pakistani products in order to improve the trade balance and make more project specific investments. Statistics regarding the import of textile machinery from China to Pakistan is given inTable-3.The excellent political and strategic partnership between Pakistan and China has contributed in increased trade and economic cooperation, enhanced investment and mutual economic prosperity.Table 3: Export of Textile and other products from Pakistan to China (Major Items) (Value : US $000)

Item2010-112009-10

Raw Cotton75,81929,836

Cotton Yarn914,594634,029

Cotton Fabrics137,33977,474

Knitted Fabrics1,26487

Ready made garments2,6541,019

Textile made ups3,3591,519

Bed wear16,3497,422

Tents and Canvas347--

Synthetics textiles2,0352,140

Leather Tanned47,86241,891

Leather gloves158128

Sports goods1,1771,101

Carpet and rugs599259

Surgical instruments3,1942,163

Petroleum and its products18,0672,037

Fruits6,8923,342

Vegetables26728

Chemical and its products61,60922,809

Marble and Stone30,67715,760

Source : Trade Development Authority of Pakistan

Pakistans exports to China represent only 0.65% market share of a range of products constituting 13% of Chinas total imports. This share is very low in view of the US$ one trillion Chinese market. However it reflects the potential which exists for Pakistans exports to China. In the negotiations for the Phase II of FTA Pakistan should get the same preferential tariff as given to the ASEAN countries and the categories should include high value added textile products particularly ready made garments.