People’s Republic of China Economy Sectors

By | February 15, 2024

The economy of the People’s Republic of China is the second largest global economy after the economy of the United States, and it preceded the economy of Japan in 2010, with a simple domestic product estimated at 4.91 trillion US dollar (2009) according to the exchange rate measure and the second largest economy after the United States economy with a total output estimated at 8.8 trillion dollars (2009) according to the purchasing power parity measure. China is thus considered the fastest growing major economy and the fastest in the past thirty years with an annual growth rate exceeding 10%. The growth of the national product per capita reduced poverty at a rate of 8% annually in the last three decades, but its rapid growth was accompanied by disparities in the per capita share. China falls into the lower middle category in the world according to its per capita GDP of $3,180 and ranks 104th out of 178 countries and 97th out of 178 countries according to its per capita GDP of 5,943 in 2008 according to the International Monetary Fund classification. The International Monetary Fund also raised its forecast for China’s economic growth in 2023 to 5.4%. Therefore, China is the largest trading country, the largest exporter, and the second largest importer in the world.

Basic data

According to elaineqho, the per capita income in China is about 6,100 dollars, while the size of the labor force is estimated at about 807.7 million people, and the unemployment rate reached 4% in 2008. China’s budget in 2008 included total incomes of 868.6 billion dollars, and total expenses worth 850.5 billion dollars, while the rate reached Inflation 6%.

The volume of China’s cash reserves amounts to 2.3 trillion dollars and the growth rate of industrial production reached 10.7%, while the volume of exports (2008) reached 1.465 trillion dollars and the volume of imports 1.156 trillion dollars.

In the past thirty years, the Chinese economy has been able to achieve steady economic growth and was able to shift from local centralization to become more open to the world and dependent on international trade.

Stages of development

China has witnessed rapid economic growth since the establishment of the People’s Republic of China in 1949, especially since the implementation of the policy of reform and openness to abroad in 1978, as the Chinese economy has continued to grow in a stable and sound manner, with its annual growth rate reaching more than 9%. In 2003, China’s gross domestic product reached 1.4 trillion US dollars, ranking sixth in the world after the United States, Japan, Germany, Britain and France. By the end of 2003, China’s per capita GDP exceeded 1,000 US dollars.

In the past thirty years, the Chinese economy has been able to achieve steady economic growth and was able to shift from local centralization to become more open to the world and dependent on international trade.

At the end of 2007, the volume of foreign investments in China reached $84 billion. While Chinese investments abroad amounted to $118 billion. The development of the Chinese economy can be divided into two important stages:

The socialist construction phase (1949-1976)

The socialist construction phase was characterized by the reorganization of agriculture and reliance on basic and processing industry, in addition to the elimination of the feudal system.

The stage of openness to capital

Since 1978, the phase of openness to capitalism has been characterized by the introduction of radical reforms to the economy by allowing the establishment of private enterprises, modernizing industry, allowing private ownership of land, and importing Western technology.

In 2003, the total value of Chinese investments in fixed assets amounted to more than 5.5 trillion Chinese yuan, the volume of retail sales of consumer goods was approximately 4.6 trillion Chinese yuan, and the volume of Chinese foreign trade more than 850 billion US dollars, ranking fourth after the United States, Germany, and Japan and before Britain. And France. At the end of 2003, China’s foreign currency reserves exceeded 400 billion US dollars, ranking second only to Japan.

The Chinese economy is now 18% of the size of the US economy in terms of dollars, but it is 76% of the US economy in terms of purchasing power.

Currency

The Renminbi (people’s currency) is the currency of China and is known as the Chinese yuan, divided into ten jiao or one hundred fen. The committee responsible for the RMB is the Central Bank of China and is the Monetary Commission of the People’s Republic of China. The currency abbreviation in the ISO 4217 standard is CNY or RMB and its Latin symbol is ¥. Foreign observers estimate the yuan is undervalued by about 30%.

Since January 1, 1994, the Central Bank of China began using the midpoint rate against the US dollar, based on the previous day’s prevailing interbank rate in the foreign exchange market.

The renminbi uses a false exchange system against the dollar. On July 21, 2005, China raised the value of its currency by 2.1% against the dollar. Since then, it has moved to an exchange system that deals with a range of currencies that allowed the renminbi to increase at a rate of 0.5% daily.

The exchange rate (yuan per dollar) on July 31, 2008 was RMB 6.846, in mid-2007 RMB 7.45, and at the beginning of 2006 it was RMB 8.07: $1 = 8.2793 yuan (January 2000), 8.2783 (1999), 8.2790 (1998), and 8.2898. (1997), 8.3142 (1996), and 8.3514 (1995).

There is a complex relationship between China’s trade balance and inflation, measured by the consumer price index and the value of the currency. In addition to falsifying the value of the yuan, the Chinese central bank has the right to decide the value of the yuan and its relationship with other currencies. Inflation in 2007 was reflected in a sharp rise in meat and fuel prices, possibly linked to the rise in global commodities used as animal feed or fuel. Consequently, the value of the yuan rose rapidly in December 2007, with the government aiming to reduce inflation by giving the renminbi a greater value.

Tax system

From the 1950s until the 1980s, government revenues were mainly derived from government companies and contracting, and the rest came from taxes, the most important of which was the general industrial and commercial tax. With the beginning of the country’s capitalization process, profits transferred from state-owned companies were replaced by taxes imposed on those profits. Initially, this tax system was modified to allow some variations and pricing situations for different companies, but a unified tax system was passed in the 1990s. In addition, value added tax and income tax were imposed at that time.

Agriculture

  • Peanuts: 18.5 million tons, 50% of global production.
  • Cereals:
    • the rice: 150.6 million tons (28.7%, No. 1 in the world)
    • Wheat: 56.1 million tons (15.4%)
    • Corn: 154.2 million tons (18%, No. 2 behind the United States)
  • Turnip: 15.5 million tons (31.2%), No. 1 in the world)
  • Cotton4850
  • fruits
  • Potatoes: 66.8 million tons (21.4%)

Evolution of wheat production between 1961 and 2002 ( FAO figures, 2004). Production in tons.

Industry

The Chinese industry is considered a distinguished industry, like other major countries such as the United States of America. As a result, China occupies important ranks in several industries, such as the manufacture of steel, iron, shoes, electronic games, televisions, cars, and smart phones. It is considered the world’s factory, and the industry constitutes 45% of the gross domestic product.

Services

Services constitute important proportions and play an important and effective role in the Chinese economy at the present time, after the service sector’s contribution was 20% in 1996, represented in financial, health and communications services.

Business partners

Today, China is the largest partner:

  • North Korea (in 2008)
  • Sudan (in 2008)
  • Mongolia (in 2008)
  • Angola (in 2008)
  • Taiwan (in 2008)
  • South Korea (in 2008)
  • Japan (in 2008)
  • Iran (in 2008)
  • Vietnam (in 2008)
  • India (in 2008)
  • Brazil (in 2009)
  • Australia (in 2009)

China’s largest partner is:

  • United States (in 2008)

Communications

China has a diverse communications system that connects all countries of the country through Internet, telephone, telegraph, radio, and television services. None of these means has reached the level of development of Western countries’ means of communication, but the system as a whole contains advanced technology and forms the basis for any attempt to develop a modern network. Internet users have reached 680 million users, which is the country with the most Internet users, while the number of Internet users in China in 2006 reached Approximately 137 million increased by 23.4% in one year and reached 162 million in June 2007, making China the second largest user of the Internet after the United States, according to the Chinese Ministry of Information Industry. The rate of use of mobile phones reached 34% until 2007, sending approximately 429 billion text messages, or an average of 976 messages per capita. In 2006, the rate of use of fixed telephone lines increased by 79%, especially in rural areas.

Finance

China is keen to have an active role in international financial institutions and demands amendments to the financial system that is subject to the control of Western countries, led by the United States. Beijing is demanding that the G20 implement a gradual process of reform away from the dollar, and move towards a global currency under the supervision of the International Monetary Fund. China announced the Belt and Road Plan, led by Chinese President Xi Jinping, and aims for investments of $900 billion, which will swell to $8 trillion, and the countries through which the road passes constitute a third of the global economy and 65%. Of the world’s population, Western experts say that China aims to increase its influence in the world

People's Republic of China Economy Sectors