China’s Economy

By | February 15, 2024

At the end of the 1980s, China faced the same problem as many other states of the collective society type. The West insistently offered these states a “democratic” way of development belonging to the individual society. Some post-Soviet states accepted this proposal and changed the historically formed type of society. China, on the other hand, resolutely prevented the supporters of this path in Tiananmen Square and preserved the people’s power in this powerful country. Based on this historical basis, China began to actively study the world economic experience and apply advanced technologies taking into account its specificity. However, China did not destroy the foundations of ideology, economic and political structure, as in most countries of the former Soviet Union. As a result, during the reform period, GDP per capita in China increased from 180 to 1100 US dollars, that is, more than 6 times. The number of people on the poverty line decreased 10 times from 250 million to 25 million (in relation to the population of 1.3 billion), that is, from 25% to 2%. China did not dismantle its enterprises through privatization and the free market. The state market took the right path of regulation and actively increased the production of goods. According to the volume of produced goods and services, China has already reached the 6th place in the world, and the first place according to the GDP growth rate (10% per year). Today, China is called the ” workshop of the world “. Azerbaijan’s stores are full of its products, as well as in the USA, Canada, and Europe. Communist China has become the first place in the world in attracting investment. In 2004 alone, 60 bln. More than US dollars have been invested. In terms of gold currency reserves, China has become the second in the world.

According to itypeauto, one of the important external factors that ensure the socio-economic development prospects of the country, as well as the strengthening of China’s economic influence in the world, is the accession of the PRC to the WTO in November 2001, which in turn gradually removed the customs barriers and restrictions on the import of products to China by foreign partners. leads to lifting. However, the period after the PRC’s accession to the WTO showed that the main result of the country’s entry into the WTO was the increase in the volume of foreign trade – 510 billion for 2001. 851 billion from US dollars for 2003. It is a strong increase to the US dollar. According to this indicator, China ranked 4th in the world after only the USA, EU and Japan. It should be added here that the volume of foreign direct investments in 2001 was 46.9 billion. 60 billion from US dollars in 2005. In 2001, the volume of the country’s foreign exchange reserves amounted to 212.2 billion dollars. 710 billion dollars in 2005. increased continuously up to USD. At present, China is not only integrating more closely into the world economy, but at the same time, as a result of entering the open world trade system from the first years of membership in the WTO, it has achieved important progress for the development of the country’s economy.

Two years after the accession to the WTO, the PRC economic development results of 2002-2003 show that some sectors that were previously considered uncompetitive, such as the automobile industry, began to develop at higher growth rates. For example, the growth rate of car sales in the domestic market of the PRC reached 50% in 2002-2004 compared to previous years. The Chinese government is taking all steps to expand the overseas sales market. In the last decade, and especially after joining the WTO, it has been doing this more actively. If the development plans of the national economy of the People’s Republic of China, which envisage an annual increase of 7.5% of the GDP, will be fulfilled, in addition to the overcapacity Chinese market for the realization of the manufactured products, the opportunities for increasing exports will expand, especially in the coastal regions. China is resolutely following this path. China is a country with market elements. The entire Chinese banking system belongs to the state, and all large corporations are controlled by the state. Prices are free only in 1/3 of the states, in the rest it is under state control. China has reduced customs duties at all its borders, but imposed restrictions inside the country. That is, on paper it is liberalism in China, but in reality there is skillful and strict control over the economy by the state. China, which opened up to the outside world with the help of the WTO, is in no hurry to fulfill the requirements of the WTO and continues to finance the agricultural sector of its economy.

The Chinese government cares about the problem of making its citizens live richer, it creates conditions for the development of entrepreneurship and provides loans to entrepreneurs at low interest rates. Unlike most countries of the former Soviet Union, the PRC’s gold reserves are stored in China.

All conditions have been created in China to attract investment to the country.

China’s economy is a miracle of its own, attracting investment from all over the world. The investment of foreign companies in the Chinese economy is increasing at a record pace. The world’s noticeable and consistently growing interest in the Chinese economy has continued for the past twenty-five years. In the mid-70s of the XX century, it was impossible to even imagine this. Currently, according to many signs, it is clear that this country will develop on an increasing line in the near future. China has the opportunity to repeat the experience of Japan and South Korea.

The reforms initiated by Deng Xiaoping in 1978 in the economic system and at the same time implementing the political openness of the state have already led to great positive results by 2000. In a short period of time, the gross domestic product (GDP) increased 4 times, which allowed hundreds of millions of people to get out of poverty. In 2005, according to purchasing power parity, China was the second country in the world, although according to the per capita income of the population, it remains very poor. Economic reforms in China continue today. As stated in the documents of the 16th Congress of the CCP, China has successfully completed the tasks of the first and second stages of the “three steps” program, which has allowed to solve the task of “warming and feeding” the people and ensuring the improvement of the population’s standard of living. The implementation of the third stage of the program, which aims to reach the same level as economically developed countries, has started. It is planned to implement this stage in a certain sequence. For example, by 2020, it is planned to increase the GDP by 4 times compared to 2000. In other words, according to the official exchange rate, GDP is 4 trillion. should amount to more than US dollars. This, in turn, will greatly strengthen the country’s overall strength and international competitiveness, and help to implement industrialization, create a perfect and free market economy system, increase the specific weight of the urban population, eliminate the tendency of the deepening of the gap between industry and agriculture, cities and villages, and individual regions., will help to improve the social security system, increase the incomes of the population and raise the welfare of the people. By 2050, the following strategic goals should be achieved in China:

  • – to ensure comprehensive socialist modernization in order to complete socio-economic development;
  • – to significantly increase the status of the country in the international arena and to place the state in the first place in the world in terms of overall power;
  • – to ensure that the country ranks with middle-level states in terms of GDP per capita;
  • – to create a rich and happy life for the people;
  • – turning the country into a powerful state with a high level of material, legal and moral civilization.

According to the country’s development program, the average annual growth rate of GDP in the PRC is 7.5% until 2010, 6.5% until 2020, 5.5% until 2030, until 2040 4.5% and by 2050 it should be 3.5%.

In recent years, in the development of economic policy in the PRC, more attention is paid to the change in general demand, which has been the main factor in the formation of the socio-economic development trends of the country. As a result of this approach, the average annual growth rate of GDP was 9.5% per year in comparative prices from 1979 to 2005, and 8.0% in the last five years from 2000 to 2005, which is the growth rate of the world economy. is much higher than the average annual growth rates – 3.8%.

Thus, if the United States’ current GDP growth rate of 3.24% is maintained and China’s projected GDP growth rates until 2050 are met, by the middle of the 21st century, China will be able to surpass the United States in terms of GDP.

Characteristics of economic regions

Since 1978, the Chinese government has been changing the economic system, and at the same time, it has been systematically and consistently implementing the country’s openness policy.

Starting from 1980, 5 special economic regions were established in China: Shenzhen, Zhuhai, Shantou (Guangdong Province), Xiamen (Fujian Province) and Hainan (covering the entire Hainan Province). In 1984, the Chinese government took a new step to open the country to the outside world: 14 cities – Dalian, Tsinghuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Guangzhou, Fuzhou, Zhangjiang and Beihai open sea cities received the status.

Since 1985, open economic zones have been established in the Yangtze and Zhujiang deltas, the economic triangle south of Fujian Province, the Shandong and Liaoning Peninsulas, Hebei Province and Guangxi-Zhuang Autonomous Region. As a result, an open economic zone was formed in the coastal areas of the country. Starting from 1992, with the sanction of the State Council, a number of coastal cities, as well as the administrative centers of interior provinces and autonomous regions, received the status of an open zone for the outside world.

In large and medium-sized cities of the country, 15 toll-free zones, 32 technical-economic exploitation zones and 52 state-important new and high technology adoption zones have been established. Thus, the structure of China’s multi-level and comprehensive openness to the outside world has been formed in the coastal base, the Yangtze basin, and the border and interior regions of the country. All these regions, which are open to the outside world, play the role of “window” and intermediary in the development of the economy tending to the foreign market, in the increase of foreign exchange earnings, and in the import of modern foreign equipment and technologies. 5 special economic districts are zones oriented to the outside world. These regions mainly develop the processing industry, which produces export products, and also integrate scientific research, production and trade into a whole complex. A specific economic policy is implemented in its territory and a special system of economic management is applied. Special Economic Zones (SEZs) have accumulated great experience in attracting foreign investment and mastering international markets for the development of China’s foreign trade. In recent years, the Republic of Iran has been leading the way in the search for innovation, increasing industrial potential, expanding foreign relations and other fields, thus playing the role of an example for the whole country. In 1998, Shenzhen was announced as the second experimental city where banks with the participation of foreign capital could conduct transactions with the renminbi (the currency of China). One after the other, multinational corporations from Europe and America are negotiating capital investment here, which gives new impetus to Shenzhen FIR.

The Chinese government granted the new Pudong district more concessions than the PRC. Thus, not only all the laws and regulations developed by the government for FIR and technical-economic exploitation zones work in Pudun (for example, partial and full exemption from customs duties and value added tax), but also concessions operating only in the territory of Pudun are defined. For example, the state has increased its powers by allowing foreign investors to establish third industrial financial offices and enterprises in Pudong, opening a stock exchange and issuing shares in Shanghai, and even according to the approval of capital investment, and allowing banks to conduct transactions in renminbi with the participation of foreign capital.

Currently, 70 financial institutions with foreign investment are registered in Pudu. 18 banks with foreign capital have been allowed to transact in renminbi, and 28 provinces, central cities and autonomous regions have established their own trade campaigns in Pudong. 38 well-known large associations and enterprises from 14 provinces and cities of the country are registered in this district; facilities from more than 60 countries and regions of the world have already taken root in Pudun and gained significant economic effect from it. As the “dragon’s head”, Pudu’s influence on the development of the entire country’s economy is growing day by day.

China's Economy