International economic report on China

¶ … Economy of China

According to Samuel P. Huntington, the economic growth and expansion of the nation of China has far exceeded the expectations of most economists. What is most surprising about this growth is that it took less than ten years for China to double its per capita output as compared to the United States which took forty-seven years, roughly from the end of World War II to the early 1990's. As Huntington points out, the Chinese economy "grew at annual rates averaging 8% during the 1980's and the first half of the 1990's" (1996, p. 103). Thus, in 1993, the World Bank declared that China "had become the world's fourth growth pole" and that by the early 21st century would become the world's largest economy (Huntington, 1993, p. 104). Obviously, this prediction came true, for today, China's economy, despite the so-called global economic downturn, continues to expand but at a slower rate than in the late 20th century.

As to China's current Gross Domestic Product and per capita output, as of 2007, GDP is approximately $3.251 trillion U.S. dollars and real growth rate in 2007 was estimated to be around 11.9%; in 2008, per capita purchasing power parity stood at approximately $5,400 U.S. dollars. In 2006, GDP in relation to private consumption was around 36.4% with government consumption at nearly 13.7%. Overall, the composition of China's GDP is made up of agriculture and heavy industry. 40.1% is service-related, while the industrial sector stands at approximately 40%. Certainly, China's service sector has always been an important part of its economy, due in part to its population which stands today at roughly 1.3 billion people and its huge tourist industry which makes up almost 6% of the entire Chinese economy ("China Economy," 2009, Internet).

In 1999, China had a GDP of about $3,800 per capita. This made it second biggest economy, preceded only by U.S.. In 2003, growth rate of China GDP was 10% and in 2004 growth rate was about 10.1%. In 2005, rate of growth of China GDP was 10.4%. GDP of China was estimated to be around $1,999,475,203,854.69. As per 11th Five-Year Program that was approved by National People's Congress in March 2006, intended rate of growth of China GDP by 2010 was supposed to be 45%. A good reason for this astonishing GDP growth has much to do with China's Five-Year Program, now in its 11th stage, "approved by the National People's Congress in March 2006" with intended GDP growth by 2010 around 45% ("China Economy," 2009, Internet).

In relation to China's current economic condition, the global economic downturn has greatly affected the country's overall economic structure with the Shanghai stock exchange losing about two-thirds of its value. Exports are also down significantly, yet despite these changes, the Chinese economy appears to be "independent and strong enough to not only cope with the global economic crisis but also to establish itself" as a major world economic powerhouse ("China Economy," 2009, Internet).

One of China's greatest economic strengths is based on foreign direct investment, for the World Bank estimates that around $80 billion U.S. dollars are invested in China on a yearly basis. However, one of its most important weaknesses is the existence of corruption at the local level, a situation which the Chinese government has attempted to eliminate through a slow and long-drawn out process. Nonetheless, economists predict that China, "via a sustained rate of growth will enable it to surpass the U.S." To become the world's largest and most powerful economy sometime in the early years of the 21st century ("China Economy," 2009, Internet).

As to unemployment and inflation, according to the Chinese National Bureau of Statistics, the total number of urban unemployed in 2008 stood as around 8.3 million with the country's total unemployment rate at approximately 4.0%. Between 2004 and 2007, the unemployment rate decreased from about 10% to 4.2%, an indication of China's rapid economic growth. With inflation, in 1980, the rate stood at about 7.5% for urban residents, then spiked in 1985 to 11.6%. Between 2003 and 2006, the rate of inflation plummeted to about 1.8%, far lower than the U.S. And other developed nations ("China Economy," 2009, Internet).