China Economy
China is experiencing rapid social and economic developments. Their GDP growth is on an average of
10% per year- the fastest sustained expansion. China has majorly contributed to the achievement of
Millennium development goals globally. China is increasingly playing a very important role in global
economy and has become the second largest economy in the world.
GDP (Gross Domestic Product)
$16.09 trillion (nominal;2016) and $21.27 trillion
(PPP; 2016)
The GDP value of China in approx. 17.75% of the
world economy with an average of 1621.48$ from
1960 to 2015. Their economy reached an all time
high in 2015 with a value of 11007.72bn USD and
recorded the lowest as 47.21bn USD in 1962.
Growth rate in is averaged 1.84% from 2010 to
2016 with an all time high of 2.40% in 2011and
lowest as 1.20% in first quarter of 2016.
It is important to note that Chinese economy has
grown in line with the market estimates with a
growth rate of 1.7% quarter on quarter in 2016
and 1.8% growth in previous 3 months
http://www.tradingeconomics.com/china/gdpgrowth (March 24th)
GDP Per Capita
In 2015, China’s GDP per capita was 6497.50 USD.
Their GDP per capita has averaged 1467.42USD
from 1960 to 2015. The all time high was in 2015
with 6497.50 USD and the lowest in 1962 with just
132 USD.
China’s GDP Per capita is almost equivalent to 51%
of world’s average.
http://www.tradingeconomics.com/china/gdp-percapita (March 24th)
Average Income/ family Income
Wages in China have increased from 57361 CNY/ year in 2014 to 62020 CNY/year in 2015. The
average wage from 1952 to 2015 was 8822.05 CNY/year with an high of 62029 CNY (2015) and a low
of 445 CNY/year (1952). http://www.tradingeconomics.com/china/wages (March 24th)
Size of agricultural, Service and Industrial segments of economy
China is dominated by State owned enterprises (SOEs). In 2003 Beijing set upstate owned Assets
Supervision and Administration commission tp expand and strengthen their state enterprises. As a
result SOEs assets rose from 7.13 trillion yuan (2002) to 28 trillion yuan (2011) with an increase in
revenue from 3.36 trillion yuan to 20.2 trillion yuan. SOEs has become very powerful and produce
over 50% of China’s good and services by employing over half of nation’s work population. 65 of
SOEs has also made to Fortune 500 List in 2012.
Manufacturing industries comprise largest part of China’s GDP (45.3% of GDP) making China as
world leader in gross value of industrial output. Major industries are mining, ore processing, iron,
steel, aluminium, other metals, coal, machine building, armaments, textiles, apparels, petroleum,
cements, chemicals, fertilizers, consumer products, electronics, food processing, transportation,
telecom, ships, aircrafts, space launch vehicles, satellites. As of 2011, 46% of China’s national output
goes in investing in Industrial development- higher than any other nation. Machine building and
metallurgical are at highest priorities which accounts for 20-30% of gross value if industrial output
Services sector is also catching up rapidly. Services accounted for 44.6% of China’s GDP in 2012 from
a gap of 8.1% to 0.7% wrt other industries. China ranked 3rd worldwide after US and Japan in
Services output in 2010. China’s surge in services is reflected by rebalancing demand from exports
towards consumption. Services are labour-intensive so a rise in service sector will ensure faster job
creation, high wages, high household spending.
Agriculture sector accounted for 10.1% of China’s GDP in 2012. In 1978, China implemented several
economic reforms to de-collectivize agriculture, yielding huge gains in agricultural production. China
is ranked first in production of rice, wheat, potatoes, sorghum, tea, millets, barley, cotton, oilseed,
pork and fish. This sector employs 300 million people, approx. 34.8% of the total labour force.
http://www.economywatch.com/world_economy/china/structure-of-economy.html (March 24th)
Level of Economic Development
China’s economy slowed down in 2016 and is expected to slow down in 2017 also to about 6.4%
with private consumption and industrial production. Chinese authorities are mostly willing to resort
to monetary and fiscal means to obtain targeted growth of 6-6.5%. Reason for economic slowdown
is decreasing productivity growth. Labour productivity has been decreasing sharply since 2010.
Rebalancing away from export orientation to consumption led growth has been limited.
Consumption has increased but still very low (38% of GDP) and main driver for growth are
investments only.
China is still a developing nation, as per capita income is still very low, incomplete market reforms,
majority of population is still under poverty standard (RMB 2300 per year in 2010). In 2014, there
were 70 million poor in rural areas. Rapid economic growth has led to many after effects as well like
high inequality, rapid urbanization, environment sustainability. China is also facing issue of more old
and ageing population and labour migration. China needs to have significant policy adjustments to
make sustainable growth.
China’s 12th and 13th fifth year plan addresses these challenges. Pollution reduction, increasing
energy efficiency, access to healthcare and education are some focus areas. The growth target of
13th fifth year plan (2016-2020) is 6.5% as compared to 7% of 12th fifth year plan. This signifies the
focus
on
rebalancing
economy
and
quality
of
growth.
https://group.atradius.com/publications/country-report-asia-pacific-china-2017.html (March 24th)
http://www.worldbank.org/en/country/china/overview (March 24th)
Employment/ Unemployment rate
Unemployment rate has decreased in China. It has
dropped from 4.04% in 3rd quarter to 4.02% in 4th
quarter of 2016. On an average the number stands at
4.12% from 2002 to 2016 with highest as 4.30% (4th
quarter 2003) and lowest as 3.90% (3rd quarter of 2002)
http://www.tradingeconomics.com/china/unemploym
ent-rate (March 24th)
Inflation
China recorded a 2.5% rise in prices in Jan’17 as
compared to 0.8% in feb’17. In Oct 2016, consumer
prices declined for first time since Oct 2016 by 0.2%.
Inflation rate in China is on an averae 5.39% from 1986
to 2017 with highest at 28.40% (Feb 1989) and lowest 2.20% (April 1999)
http://www.tradingeconomics.com/china/inflation-cpi (March 24th)
Distribution of wealth/ Gini Index
The Gini index represents inequality in income
distribution, can be of any value between 1 to 100
points. The closer the value is to 100, the greater the
inequality. United nation has set the warning level as
40 or 0.4. However, China’s Gini Coefficient ranges
between 0.47 and 0.49 from last ten years which is
higher than warning line set by United nation for
social unrest.
https://www.statista.com/statistics/250400/inequality
-of-income-distribution-in-china-based-on-the-giniindex/ (March 24th)
Foreign Investment
Foreign direct Investments in China have been
constantly dropping year on year by 2.3% each year.
The fall has resulted FDIs to drop to USD 20.1 billion in
Jan 2017, a 9.2% drop than last year due to high
comparison base. In 2017, February showed a decent
hike of 9.2%. The average FDIs is 418.68 USD from
1997 to 2017 with highest of 1262.67 USD (December
2015) and lowest of 18.32 USD HML (Jan2000)
http://www.tradingeconomics.com/china/foreign-direct-investment (March 24th)
Primary Natural resources
China is one of the major producer of coal, gold, antimony, natural graphite, zinc, aluminium, rare
earths, tungsten and barite. It also produces other minerals like diamond, coal, bauxite, iron ore,
petroleum, magnetite, lead mercury, molybdenum, manganese, uranium, natural gas, magnetite
phosphate rock, uranium, tin, vanadium. China is largest exporter of Coal, industrial minerals, tin,
magnesium.
“The major areas of production in 2004 were coal (nearly 2 billion tons), iron ore (310 million tons),
crude petroleum (175 million tons), natural gas (41 million cubic meters), antimony ore (110,000
tons), tin concentrates (110,000 tons), nickel ore (64,000 tons), tungsten concentrates (67,000 tons),
unrefined salt (37 million tons), vanadium (40,000 tons), and molybdenum ore (29,000 tons). In
order of magnitude, bauxite, gypsum, barite, magnesite, talc and related minerals, manganese ore,
fluorspar, and zinc also were important. In addition, China produced 2,450 tons of silver and 215
tons of gold in 2004” Cited: Facts & details.com
Approximately 30% world’s supply of phosphates comes from China. China is also a major country
producing other important natural products like Pine resin which is an important ingredient for
printing inks, vehicle tyres etc
http://factsanddetails.com/china/cat9/sub63/item341.html (March 24th)
Primary Industries
China’s economy has multiplied 50times over what it was in 1978. Initially all the reforms were
focussed on agriculture which later included services and manufacturing sectors. This led to banking
reforms, one of the most important radical change.
Manufacturing: China is one of the biggest goods manufacturers in the world with products ranging
from iron, aluminium, steel, cement, textiles, electronics, chemical, toys, aircrafts, ships etc.
Manufacturing is one of the most diverse sector in China as of 2015. China is a leader in producing
personal computers, solar cells, cellphones, shoes and is third largest car manufacturer in the world
The common theme being observed in Chines manufacturing sector is- the products are
manufactured for govt use or are immediately exported to other countries. In fact cars were initially
made to be exported considering the local consumers were too poor to buy, though the
consumption started developing later.
Services: China demonstrates a healthy service sector which means there is good domestic
consumption and per capita income has increased. Even though there are more Chinese employed in
agriculture as compared to service sector, the service sector is 43% of total Chinese production. By
2015, the increase of service market had boosted tourism, internet, mobile phones. The entrance of
companies like Microsoft, IBM in China has helped to boost telecom industry, cloud computing and
ecommerce.
Agriculture: China is a major producer of Rice, wheat, pork, millet, peanut, potatoes, tea, corn,
soyabean, oilseeds, vegetable, fruits, novel meats. Large amount of fruits, vegetables n meats go to
Hong Kong particularly. Chinese farms aren’t that productive quite may be due to unfavourable
topography. But, a Deutsche study claims that Korean farms are 40 times more productive than
Chinese ones despite of same topography. There is too much state control on Chinese farms which
hampers innovation and development in terms of getting credit purchase, mortgaging farmland etc
Up and Coming industries: The seven strategic industries laid by 12th fifth year plan(2011-2015) are
biotechnology, new energy, IT, environmental maintenance, new materials, alternative fuels, high
end manufacturing. It doesn’t include healthcare sector but due to rose of middle class income
groups and modernization there is a huge upsurge in health care services. Thus, wholly owned
foreign entities were allowed in China in 2011 and players like GSK, Pfizer, Merck entered China. It is
fastest growing sector in the world.
http://www.investopedia.com/articles/investing/091515/3-industries-driving-chinas-economy.asp
(March 24th)
Notable Locally owned companies
The top 12 companies are state owned that are controlled by government through State Owned
asset supervision and administration Commission (SASAC). This commission has the sole authority to
appoint CEOs to decide on bigger investment decisions. There were approx. 98 Chinese companies in
fortune 500 list and only 22 of those are private, this number is expected to hit 130 by 2020. These
state-owned enterprises (SOEs) enjoy massive support from government with govt amongst largest
stakeholders which protects them from competition.
Below mentioned are 12 biggest Chinese companies ranking among 75 biggest companies in terms
of revenue, all of them are state-owned.
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
Sinopec Group
China National Petroleum
State Grid
Industrial & Commercial Bank of China
China Construction Bank
Agriculture Bank Of China
China State Construction Engineering
Bank Of China
China Mobile Communications
SAIC Motor
China Railway Engineering
China National Offshore Oil (CNOOC)
http://fortune.com/2015/07/22/china-global-500-government-owned/ (March 24th)
Major China Exports
“Exports from China unexpectedly declined by 1.3 percent
year-on-year to USD 120.08 billion in February of 2016,
following a 7.9 percent rise in January while markets
expected a 12.3 percent growth. Considering the first two
months of 2017, exports went up 4.0 percent from the
same period a year earlier with sales increasing to Hong
Kong (1.5 percent), India (5.3 percent), Japan (2.4 percent),
South Korea (16.3 percent), Taiwan (13.1 percent), ASEAN countries (7.5 percent), the EU countries
(1.9 percent), South Africa (10.7 percent), Brazil (31.3 percent), Russia (15.5 percent), the US (4.4
percent), Australia (1.7 percent) and New Zealand (2.3 percent. In yuan-denominated terms, exports
went up 4.2 percent from a year earlier in February, compared to a 15.9 percent rise in a month
earlier. Exports in China averaged 587.36 USD HML from 1983 until 2017, reaching an all time high of
2273.72 USD HML in December of 2014 and a record low of 13 USD HML in January of 1984”
Citation: http://www.tradingeconomics.com/china/exports (March 24th )
China Exports by Category
Category
Electrical, electronic equipment
Machinery, nuclear reactors, boilers
Furniture, lighting signs, prefabricated
buildings
Articles of apparel, knit or crocheted
Articles of apparel, not knit or crocheted
Optical, photo, technical, medical apparatus
Plastics
Vehicles other than railway, tramway
Articles of iron or steel
Footwear, gaiters and the like, parts thereof
Iron and steel
Toys, games, sports requisites
Organic chemicals
Articles of leather, animal gut, harness, travel
good
Pearls, precious stones, metals, coins
Ships, boats, and other floating structures
Mineral fuels, oils, distillation products
Other made textile articles, sets, worn
clothing
Ceramic products
Aluminum
Rubbers
Paper and paperboard, articles of pulp, paper
and board
Miscellaneous articles of base metal
Manmade filaments
Glass and glassware
Year
(2015)
$600.29B
$364.54B
$98.73B
$83.84B
$78.51B
$73.78B
$65.84B
$62.65B
$60.63B
$53.61B
$49.22B
$42.74B
$42.68B
$31.11B
$29.19B
$28.79B
$27.95B
$26.95B
$26.34B
$23.82B
$20.36B
$18.85B
$18.51B
$16.38B
$15.86B
China Imports
“Imports to China soared 38.1 percent from a year earlier to USD 129.23 billion in February of 2017,
compared to a 16.7 percent in the prior month and way above consensus of a 20.3 percent rise. It
was the fastest increase since early 2012, driven by strong demand for commodities from iron ore to
crude oil and coal. From January to February 2017,
purchases jumped 26.4 percent from a year earlier, mainly
due to higher purchases of electronics (15.1 percent), hightech products (16.5 percent), integrated circuits (17.9
percent), crude (70.1 percent), agricultural products (24.3
percent) and iron ore and concentrates (94.6 percent). The
European Union was the main import partner (imports rose
19.4 percent), followed by the ASEAN countries (imports up 29.5 percent), South Korea (15.7
percent), the US (32.8 percent), Japan (24.7 percent), Taiwan (21.5 percent) and Australia (77.6
percent). Imports in China averaged 497.44 USD HML from 1983 until 2017, reaching an all time high
of 1830.94 USD HML in March of 2013 and a record low of 16.60 USD HML in July of 1983”
Citation: http://www.tradingeconomics.com/china/imports (March 24th)
Value
Electrical, electronic equipment
Mineral fuels, oils, distillation products
Machinery, nuclear reactors, boilers
Optical, photo, technical, medical
apparatus
Ores slag and ash
Commodities not specified according to
kind
Vehicles other than railway, tramway
Plastics
Organic chemicals
Oil seed, oleagic fruits, grain, seed, fruits
Copper
Aircraft, spacecraft
Pharmaceutical products
Wood and articles of wood, wood charcoal
Iron and steel
Pulp of wood, fibrous cellulosic material,
waste
Pearls, precious stones, metals, coins
Miscellaneous chemical products
Rubbers
Cotton
Articles of iron or steel
Inorganic chemicals, precious metal
compound, isotope
Cereals
Animal, vegetable fats and oils, cleavage
products
Year
$431.61B
$198.68B
$157.19B
$99.72B
$95.06B
$80.52B
$69.61B
$65.61B
$47.88B
$39.82B
$38.39B
$28.00B
$19.23B
$18.63B
$18.23B
$18.04B
$17.96B
$14.43B
$14.16B
$10.26B
$10.11B
$9.92B
$9.35B
$7.89B
Major Trading Partners for Exports
United States
Hong Kong
Japan
South Korea
Germany
Vietnam
United Kingdom
Netherlands
India
Singapore
Malaysia
Australia
Thailand
United Arab
Emirates
Russia
Indonesia
Mexico
Canada
Italy
Brazil
France
Philippines
Spain
Saudi Arabia
Turkey
Value in Year (2015)
$410.80B
$334.29B
$135.90B
$101.47B
$69.22B
$66.38B
$59.67B
$59.63B
$58.26B
$53.14B
$44.19B
$40.38B
$38.31B
$37.07B
$34.81B
$34.38B
$33.81B
$29.43B
$27.85B
$27.43B
$27.06B
$26.69B
$21.90B
$21.68B
$18.63B
China imports by Country
South Korea
United States
China
Japan
Germany
Australia
Malaysia
Brazil
Switzerland
Thailand
Russia
South Africa
Saudi Arabia
Value in year 2015
$174.56B
$150.54B
$144.43B
$143.09B
$87.69B
$73.87B
$53.26B
$44.34B
$41.21B
$37.22B
$33.22B
$30.23B
$30.15B
Singapore
Canada
Vietnam
France
Indonesia
Philippines
United Kingdom
Chile
Italy
Iran
Angola
Oman
$27.56B
$26.28B
$25.13B
$24.99B
$19.81B
$19.02B
$18.93B
$18.68B
$16.87B
$16.03B
$16.00B
$15.06B
Balance of payments Current account
China’s trade surplus is at USD 118.3 billion & service
deficit is at USD 59.3 billion.
Primary income gap is USD 19.6 billion, secondary income
deficit is USD 1.7 billion
Current account average is 417.77 USD HML from 1998 to
2016 with highest of 1330.85 USD (Q4, 2008) and lowest of
-8.96 USD HML (Q2, 2001)
In 2016, current account surplus dropped to 210.4 bn USD
from 330.6 bn USD (2015).
Level of economic Freedom
Heritage Foundation in association with Wall Street Journal
developed a ranking of nations based on their economic
freedom. China falls in the “mostly unfree” category as per
Index of Economic Freedom 2016. China ranked 144th and
scored 52.0 and was behind other developing nations like
India, Brazil, Pakistan. The main reason is severe
environmental problems, child labor, poverty, corruption,
poor human rights and suppression of expression.
http://marketrealist.com/2016/08/chinas-ranking-indexeconomic-freedom-2016/ (March 24th
Corruption level
China scores 40 out of 100 on this index with an average of
33.99 points (1995 to 2016) and scoring highest of 40
points (2013) and lowest of 21.60 points (1995)
http://www.tradingeconomics.com/china/corruptionindex (March 24th)