Table of Contents
Historical Overview
2
Resources
3
Socio-Economic Assessment
-
3-5
GDP and Economical Growth
Unemployment
GNI
Key Companies
- China’s Largest Companies
Key Industries
-
5
5-6
Oil
Manufacturing
Agriculture
International Presence
-
6-7
Exports and Imports
Current Account Deficit
-
FDI Structure
7-8
Key Strengths
8
Key Weaknesses
8
Opportunities
8
Legal System
8-9
Institutional Environment
9
Infrastructure
9
Business Climates
9
Bibliography
1
10-11
Historical Overview
China is the home to the oldest world civilizations. Its filled with art, political science and
philosophical point of views. China was ruled by various rulers for most of its history. The
first ruler is believed to be Xia dynasty, which established around 2250 BC. The Shang or
Yin rulers acquired power around the fourteenth century BC. The Han ruler/dynasty, which
lasted a long time from 206 BC to 220 Advertisement, was quite possibly the most impacting
in China's set of experiences. A large part of the way of life today was made during the Han
Line. In the early 1900s, the people of China wanted to reform. Mao Zedong set up the
People groups Republic of China on October 1, 1949. This new government was firmly
aligned with the Soviet Association and demonstrated its administration after Soviet
socialism. In 1958, Mao Zedong left on another arrangement called the Great Leap Forward.
this arrangement exploded backward, and China encountered an awful starvation including a
lot of starvation and early deaths. Over the years, China would face political and monetary
economical problems. After a slow recovery, China is now the second largest economy in the
world.
2
Resources
China has large land resources that includes a diversity of various mineral rare-earth, fossil
fuel, water, agriculture, and aquaculture resources. Due to the climate conditions, China has
managed to reserve most of the major minerals. It is estimated that China’s natural resources
is worth over $23 trillion. The global market has always been influenced by China’s demand
and supply for minerals. In fact, about 25% of China’s trades are through mineral trading.
Ever since the Opening and Reform period in 1978, China have been a success with their
continuous development in agriculture sector. (Blaettler, 2020)
Aquaculture (2015)
65.2 million tonnes of food fish
47.6 million tonnes from aquaculture
17.6 million from capture
Fossil Fuels (China’s energy consumption in exajoules in 2019)
coal
petroleum and other liquids
hydroelectricity
natural gas
nuclear
other renewable sources
82
28
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3
7
Water
Agriculture
Total Renewable water resources = 2,840
billion m/year
Supply of farm produce: Grain sowing area will be maintained at above 106.7 million ha,
and gross production above 540 million tons; Gross output of cotton, sugar and oil will
reach 7 million, 140 million and 35 million tons in respective; vegetables and fruits
supply will increase steadily; meat, poultry/egg, milk, and aquatic products will total no
less than 85 million, 29 million, 50 million and 60 million respectively; compliance rate
of farm produce in regular quality and safety inspection will be above 96%.
Water resources per capita = 1,971 billion
Minerals (2019)
Metal (Aluminium) produced estimated at 23 million metric tons (mt)
Cerium = 9,104 mt
Dysprosium = 156.4 mt
Europium = 13.3 mt
Lanthanum = 19,397.3 mt
Neodymium = 835 mt
Other Elements = 12,704 mt
Socio-Economic Assessment
GDP and Economical Growth
China, being a communist market economy is right now positioned the world's second
biggest economy by nominal GDP and
the largest in terms of purchasing
power parity, proving itself
substantiating itself with its huge
populace of 1,442,920,741 people and
counting. China is driven by the fast
development of its industrial and
education sectors by increasing labor
supply in order to improve the
political framework, achieving a very
high surplus and almost rivaling with
the US. As indicated by the chart,
China’s GDP started to decrease from
the first quarter of 2014 to the last
quarter to 2018 all the way from
3
7.3%, fluctuating its way to a 6.6%. We can see that most of China’s GDP is clustered around
a 6.0% GDP, showing its stability. In the first quarter of 2019, because of the woman
population working, there was an upturn in the GDP by 0.8% but is predicted to fall in the
coming quarters. GDP is the measure of all incomes and outputs in the economy of a given
country. Its total expenditures equal to all goods and services over a specific period.
Economic growth is the increase in the inflation adjusted market value of goods and services
produced in the economy. China’s GDP is anticipated to fall even significantly all the way to
5.8% if China does not deal its FDI well, as expressed in the figures.
Unemployment
The unemployment rate is not a perfect indicator of the health of the labor market since
certain people distort their work status in surveys. However, the unemployment rate is still a
valuable indicator of the workforce market and economy since it shows an estimate of the
general condition.
Looking at the diagram below, China’s unemployment rate has been decreasing from 2016 to
2019 in general. According to the Trading Economics, the highest unemployment rate in that
timeline was 4.05 % in July 2016 and has diminished to 3.8% in January 2019. This shows
that the labor market and the economy in China is progressing well. It’s easier for the
unemployed to find a job when the unemployment rate is low since organizations want to
expand their operations, they will need to hire more workers to improve their use in resources
more efficiently and effectively. This includes hiring the less educated, inexperienced,
disabled individuals, etc. Now since China is a developing country, new developed
technology will be introduced, therefore it will need new staff members to control the
technology, which can result in a
decrease in the unemployment rate
much more than what it currently is.
The graph of the left shows the
unemployment rate from 2016-2018.
According to the Trading
Economics,983 thousand was the
highest number of unemployment in
July 2016 and over the years it has
diminished to 968 thousand in July
2018.
4
Unemployment Compared to other Countries
The unemployment rate for China is low in
comparison to the other countries. The average
unemployment rate amongst 24 other countries in the
table is 6.5% in 2018 compared to the unemployment
rate in China which is 3.8%. However, this does not
imply that it’s a problem. If the rate continues to
decline, then the employers will be forced to increase
salary payment to hold on to their current workers.
The drawback from having a low rate is that it could
lead to an increase of interest-rates.
GNI
China’s overall growth in GNI in 2019 was $14,555.44 billion, which is an 8.85% increase
from 2018. GNI per capita was $10,410. GNI basically measures value produced by a
country’s economy in a given year, whatever the source of its value is made local production
or earnings abroad.
Key Companies
China’s Largest Companies (Reiff, 2021)
China Petroleum & Chemical Corp. (SNP) - producer and distributor of a variety of
petrochemical and petroleum products
PetroChina – Oil and gas company
Ping An Insurance – Financial Services Company
China Railway Group – Transportation of Infrastructure
Key Industries
OIL
One of the biggest factors of the Chinese economy is its import and export in oil. China is the
biggest merchant of oil and the fourth greatest manufacturer of oil. After the United States
forced constraints on Iran, the prices of oil had a significant downfall by approximately 20%,
which was considered as a rare event. As the prices dropped, China exceeded the US and
became the largest importer of oil. Since then, the Chinese economy has been monitored by
5
the oil traders as it is headed into a massive recession. December 2017, China’s raw oil was
accounted to be at 97.667 Barrel/Day.
Manufacturing
China is known for their increase of production and assembling goods for it to be sold.
Chinese goods include, electronics, toys, rails cars, aircrafts, and many others. There is no
country that can match China when it comes to product availability. With technology
advancing, China has set itself a goal to upgrade their machinery so that its able to produce
major machine goods. A $3,868.46 billion output from manufacturing goods in 2018, which
is a significant 11.8% increase from 2017. The manufacturing sector has contributed to an
estimated 39% of China’s GDP and have managed to employ 28.2%.
Agriculture
According to the World Bank, an estimated 24.7% have been employed in the agriculture
sector which has contributed to 7.1% of the overall GDP. China is at the top of the market for
producing cereals, rice, cotton, potatoes, and tea. It also dominates in the livestock industry,
specifically towards pork, sheep, and fish production.
International Presence
Exports in 2018 - $2.49 trillion
Imports in 2018 - $2.13 trillion
Majority of their trade was between them,
US, and Hong Kong. $480 billion goods
exported to the US in 2018, which is 19%
of all their exports, and imported $156
billion, a 7.3%. However, with Hong
Kong, China exported $303 billion in
2017, which is 12.2% of the accumulated
number of exports and imported $9 billion
(0.4% of total imports). The graph on the
right highlights China’s exports and
imports between them, US, Hong Kong,
and other countries.
6
Current Account Deficit
Current account in any country is a history of their trades with the other countries in the
world and it is one of the major instruments used by a country in order to evaluate their
foreign trade. The net balance of trade is inclusive to the current account (the exports minus
imports of goods and services), net earnings and net transfer payments at a certain period. A
negative balance in this account is called a current account deficit. This happens when the
amount of goods and services a country imports are more than the value it exports. In the case
of China, they do not have a current account deficit but instead, they have a current account
surplus. However, throughout the years, their current account surplus has been declining and
is anticipated to further decrease in the coming years.
Projections
Current account balance
Trade balance
Exports
Imports
Services balance
Income balance
Current transfers
2013
1.5
3.7
22.3
18.6
-1.3
-0.8
-0.1
2014
2.2
4.1
21.3
17.2
-2.0
0.1
0.0
2015
2.7
5.1
19.1
14.0
-1.9
-0.4
-0.1
2016
1.8
4.4
17.7
13.4
-2.1
-0.4
-0.1
2017
1.4
4.0
18.4
14.5
-2.2
-0.3
-0.1
2018
0.9
3.3
17.5
14.3
-2.1
-0.2
-0.1
2019
0.8
3.1
17.0
13.9
-2.0
-0.1
-0.1
2020
0.8
2.9
16.4
13.5
-2.0
-0.1
-0.1
2021
0.7
2.7
15.7
13.0
-2.0
0.0
-0.1
2022
0.5
2.5
14.9
12.5
-1.9
0.0
-0.1
2023
0.4
2.3
14.2
11.9
-1.9
0.0
-0.1
FDI Structure
Over the past few years, China has been reported to have an improved economy throughout
2019 to 2020 which has resulted in a 4% FDI, up to $163 billion. 19 It’s currently reported
to be the largest FDI receiver. Reasons for that was the continuous inflow worth $163 billion
to support the Chinese economy from the coronavirus outbreak. Specific factors that has
driven China’s investment is the capital availability, competitiveness, regulatory
environment, stability, local Chinese market, business climate and its openness to regional
and international trade.
Key Strengths
China’s strength outweighs their weaknesses when it comes to the benefits their foreign
investors receiver. Having a significant population of 1.4 billion people can help promote
higher internal marketing, and due to their economical growth, they are one of the top
economies that have a high purchasing power. China has been advantageous when it comes
to their low labour costs, creating opportunities for investment without having to worry about
7
labour expense. They have had more success in gaining opportunities with western provinces,
for instance, Sichuan province.
Key Weaknesses
Although China has many strengths, they have their weaknesses. Firstly, their lack of
transparency and have little control over intellectual property rights protection has affected
their FDI. Secondly, there is a high ageing population in China, this means that there will be a
significant number of people who are unable to work due to their age. Also, they are more
likely to save money and not spend it on consumer goods which can lower inflation.
Furthermore, China’s production exceeds their capacity in multiple sectors. This can lower
profits for certain businesses and the economy itself.
Opportunities
There are many opportunities that China can exploit which can assist in their overall
economical growth and GDP. One of the opportunities is utilizing on the technological
advancement that man kind has built. This helps produce higher-valued goods and can
promote in the manufacture of higher technological products. In addition, the employment in
the agriculture sector is likely to decrease due to the future generation’s preferences of the
type of job people seek, people will want to gain work experience in cities, leaving the
agriculture sector open. China could target this and begin to increase some mechanized
machines that is able to practice crop and livestock management, this could lower the labour
costs even further. Lastly, with the vast amount of capital that China has accumulated,
developing a more advanced and effective monetary system is a major opportunity.
Legal System
The Chinese legal system is known as the People’s Republic of China (PRC) and its defined
by the higher ups as a “socialist legal system”. The system is
based around the model of a civil law. The highestranking law within China is the Constitution of the
People’s Republic of China. The current version was
implemented in 1982 with further revisions in 1988,
1993, 1999, and 2004.
There are four levels of the court system in China: the grassroots, intermediate, higher and
supreme people's courts, in addition to special courts such as the military, maritime, railway
and forestry courts.
Institutional Environment
The rule of law is known as a principle of international human right norms and standards that
is equally enforced which everyone must follow, this includes people, institutions, and
entities, public and private. China is planning on building a rule of law. The plan is set in the
same direction as a socialist rule with Chinese characteristics. It emphasizes on following a
people-centered philosophy and focusing on problem solving in order to achieve a modern
socialist country. It is predicted that the rule of law is set to take shape by 2025 and would be
fully developed by 2035.
8
Infrastructure
The liberal economic policies in the 1980s have boosted China’s wealth. However, the
country still suffers from poor transportation, communication, and energy resources.
Therefore, China is set to begin infrastructure projects that are worth approximately $131
billion. Due to the outbreak of coronavirus and its effect on the economy, China decided to
continue its growth by increasing its investment on future infrastructure projects. One of the
projects is to build a high-speed railway and an urban transit that connects Hong Kong,
Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen
and Zhaoqing. This network aims to cover 4,700 km within Guangdong province and costs
around $73.5 billion. Other projects have a similar goal by connecting other provinces from
every direction.
Business Climate
China has stayed an essential beneficiary of the world's objective of FDI lately. FDI accounts
for 27% of the value-added production, 4.1% of domestic tax revenue, and 58% of foreign
trade. More 190 countries from around the world finance in China, which includes 450 of the
Worlds Fortune 500 companies. Member Priorities Survey, completed a survey that most US
companies finance in China to provide the Chinese domestic market, not export back to the
United States.
Conclusion
China is on a continuous path to a growing market that is infused with rapid development. It
has large land resources that includes a diversity of various mineral rare-earth, fossil fuel,
water, agriculture, and aquaculture resources that they can utilize on when trading. As a
communist market economy, China right now is positioned as the world's second biggest
economy by nominal GDP and the largest in terms of purchasing power parity, proving itself
substantiating itself with its huge population. The unemployment rate for China is low in
comparison to the other countries. However, this does not imply that it’s a problem. If the
rate continues to decline, then the employers will be forced to increase salary payment to hold
on to their current workers. The drawback from having a low rate is that it could lead to an
increase of interest-rates. One of the biggest factors of the Chinese economy is its import and
export in oil. China is the biggest merchant of oil and the fourth greatest manufacturer of oil.
Other industries include China’s increase of production and assembling goods for it to be
sold. Chinese goods include, electronics, toys, rails cars, aircrafts, and many others. There is
no country that can match China when it comes to product availability. Many of China’s
GDP was the contribution of the agriculture industry.
9
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