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China Economy
China, economically extremely backward before 1949, has become one of the world's major economic powers with the greatest potential, and the overall living standard has reached that of a fairly well-off society. In the 22 years following reform and opening-up in 1979 in particular, China's economy developed at an unprecedented rate, and that momentum has been held steady into the 21st century. In 2004, the government further strengthened and improved its macro control, and the economy entered its best ever development period of recent years. The gross domestic product (GDP) for 2004 amounted to 13,687.59 billion yuan, 9.5 percent higher than the previous year.
China adopts the "five-year-plan" strategy for economic development. The 9th Five-Year Plan (1996-2000) was outstandingly successful, and the 10th Five-Year Plan (2001-2005) mapped out the first plan for the new century, setting these main targets:
-- Sustaining fairly rapid growth, strategic restructuring, improving the quality and benefits of economic growth so as to lay firm foundations for doubling the 2000 GDP by 2010; substantial perfection of the socialist market economy and putting state-owned enterprises on a modern enterprise footing, thus allowing greater participation in international cooperation and competition.
-- GDP to reach some 12,500 billion yuan, and per capita GDP 9,400 yuan by 2005 (at 2000 prices assuming annual economic growth of around 7 percent). A marked improvement in quality of life, with 5 percent annual growth in the disposable income of urban residents and in the net income of rural residents; keeping the registered urban unemployment rate stable at around 5 percent; maintaining generally stable prices and basically balancing international revenue and expenditure.
-- Optimizing and upgrading the industrial structure to sharpen China's competitive edge. By 2005, the added value of the primary, secondary and tertiary industries will account for 13 percent, 51 percent and 36 percent, respectively, of GDP; employing 44 percent, 23 percent and 33 percent, respectively, of the labor force. Further improvement to infrastructure; increased urbanization and bringing the widening development disparity between regions under effective control.
Most of these targets have already been achieved ahead of schedule. At present, the government is drafting the 11th Five-Year Plan (2006-2010).
Agriculture
China is a country with a large population but less arable land. With only 7 percent of the world's cultivated land, China has to feed one fifth of the world's population. Therefore, China's agriculture is an important issue and draws wide attention of the world. Some foreigners once raised the question, " Who will feed China?" China's leaders and agriculture experts' reply was, "We Chinese will feed ourselves."
This sector has developed rapidly since reforms in the rural areas began in 1978. The major reforms were: the household contract responsibility system, which restored to the farmers the right to use land, arrange farm work, and to dispose of their output; canceling the state market monopoly of agricultural products, and of price controls over most of agricultural and ancillary products; abolishing many restrictive policies, allowing farmers to develop diversified business and set up township enterprises so as to fire their enthusiasm for production. The reforms emancipated and developed rural productive forces, promoted the rapid growth of agriculture - particularly in grain production - and the optimization of agricultural structure. The achievements have been remarkable.
In the 1990s, China's agriculture and rural economy faced unprecedented difficulties and challenges. But development momentum maintained fairly good nonetheless, with most products in surplus and supply and demand basically in balance every year. The year 2004 was a turning point, with grain production of 469.47 million tons, reversing a five-year decline. Now China leads the world in output of grain, cotton, oil plants, fruit, meat, eggs, aquatic products and vegetables.
Output per capita has risen significantly. In 2004, grain output was 362 kg per capita; per capita figures for meat (pork, beef, and mutton), milk, and aquatic products were above world averages, reaching 44.6 kg, 17.4 kg, and 37.8 kg, respectively.
Increase in Outputs of Main Farm Products
(Unit: 10,000 tons) |
Type |
1978 |
1990 |
2000 |
2003 |
2004 |
Grain |
30,477 |
44,624 |
46,218 |
43,070 |
46,947 |
Cotton |
216.7 |
450.8 |
441.7 |
486.0 |
632.4 |
Oil-bearing crops |
521.8 |
1,613.2 |
2,954.8 |
2,811.0 |
3,065.9 |
Sugarcane |
2,111.6 |
5,762.0 |
6,828.0 |
9,023.5 |
8,984.9 |
Beet |
270.2 |
1,452.5 |
807.3 |
618.2 |
585.7 |
Cured tobacco |
105.2 |
225.9 |
223.8 |
201.5 |
216.3 |
Tea |
26.8 |
54.0 |
68.3 |
76.8 |
83.5 |
Fruit |
657.0 |
1,874.4 |
6,225.1 |
14,517.4 |
15,340.9 |
Meat |
856.3 |
2,513.5 |
6,125.4 |
6,932.9 |
7,244.8 |
Aquatic products |
465.4 |
1,237.0 |
4,278.5 |
4,704.5 |
4,901.8 |
Opening-up of financial industry
Over the past 20-odd years, China's financial institutions in the special economic zones, coastal open cities and inland central cities have approved a range of wholly foreign-owned and Chinese-foreign joint venture financial institutions. Every year since 2002, China has increased the number of cities where foreign banks are allowed to handle RMB business, and within five years such banks will be allowed to handle RMB business in any city. At the end of 2004, the total assets of foreign financial institutions in China reached over US$47 billion; foreign banks were allowed to handle RMB business in 16 areas, and 62 foreign banks from 19 countries and regions set up 191 business institutions in China, of which 116 were approved to handle RMB business. There were 211 foreign bank branches in China.
The CSRC has approved the establishment of 13 Sino-foreign equity joint venture fund management companies, and started to formally handle the application of establishment of joint venture fund management companies with a maximum 49 percent foreign share; the CIRC declared that: from December 11, 2004 on, foreign insurance companies could handle health insurance, group insurance, life insurance and annuity insurance businesses; regional restrictions on establishing wholly foreign-funded insurance institutions were canceled and the proportion of the foreign share in joint venture insurance agencies was allowed to reach 51 percent.
Foreign banks have expanded their China-related business scope. In November 2003, the CBRC started to implement new policies, e.g., permitting foreign banks to provide RMB services to all kinds of Chinese enterprises in areas with open RMB business (previously, these banks' RMB services were restricted to foreign-funded enterprises, foreigners and people from Hong Kong, Macao and Taiwan in cities with open RMB business). The new policy also encourages qualified international strategic investors to join the restructuring and reforming of China's banking and financial institutions on a voluntary and commercial basis.
Meanwhile, all China's commercial banks have set up branches overseas, and started an international credit business. The Bank of China ranks first in the number and scale of overseas outlets. In 1980, China resumed membership of the World Bank, and returned to the International Monetary Fund. In 1984, China started business contacts with the Bank for International Settlements. In 1985, China formally joined the African Development Bank and in 1986 formally became a member of the Asian Development Bank.
Stock market
In 1990 and 1991, China set up stock exchanges in Shanghai and Shenzhen. In the past decade, the Chinese stock market has completed a journey that took many countries over a century to cover; China's stock market today has capital approaching 3,705.6 billion yuan, 1,377 listed companies and 72.16 million investors.
The Chinese stock market has promoted the reform of state-owned enterprises and the change of their systems, and enabled a stable transition between the two systems. On the strength of the stock market in the past decade, many large state-owned enterprises have realized system change.
The change also has stimulated medium and small-sized state-owned enterprises to adopt the shareholding system, thus solving the most important issue - the system problem - during the transition from planned to a market economy. As for ordinary citizens, bank deposit is not the only way to put their money, the stock market has become one of the most important channels for investment.
Methods of stock trading are constantly being improved. Today, a network system for securities exchange and account settlement has been formed, with the Shanghai and Shenzhen exchanges as the powerhouse, radiating to all parts of the country. In 2004, China issued 123 kinds of A share, and 23 rights issues, collecting a total of 83.6 billion yuan; and 28 kinds of B and H shares, collecting a total of 67.5 billion yuan.
Insurance
China's insurance industry started to recover in 1980, after 20 years' standstill. In 1981, the People's Insurance Company of China was transformed from a government department into a specialized company, with branches or sub-branches in every part of China. 1988 witnessed the founding of the Ping An Insurance (Group) Company of China and the Pacific Insurance Company, both mainly active in the coastal areas. In 1996, the People's Insurance Company of China made a big step forward in transforming its administration and operational mode, in setting up a modern enterprise system, and integrating with the international market. The Insurance Law of 1985 and the founding of the CIRC in 1988 provided the legal basis and specific rules for the operation of the insurance market. In 1980, China only had one insurance company; by 2004 there were 62, with a total revenue of premiums of 431.8 billion yuan, of which 100.4 billion were paid as compensation and payment.
Other Industries
In 2004, state-owned industrial enterprises and non-state enterprises with annual turnover exceeding five million yuan achieved industrial added value of 5,480.5 billion yuan and realized profits of 1,134.2 billion yuan, representing 16.7 percent and 36 percent year-on-year rises respectively, and revealing a gratifying simultaneous improvement in speed, quality and benefit. Since 1996, China has led the world in the production of steel, coal, cement, farm-use chemical fertilizer and television sets.
| Increase in outputs of major industrial products |
Product |
Unit |
1978 |
1990 |
2000 |
2003 |
2004 |
Raw coal |
100 million tons |
6.18 |
10.80 |
9.98 |
16.67 |
19.56 |
Crude oil |
10,000 tons |
10,405 |
13,831 |
16,300 |
16,960 |
17,500 |
Power |
100 million kwh |
2,566 |
6,212 |
13,556 |
19,106 |
21,870 |
Steel |
10,000 tons |
3,178 |
6,635 |
12,850 |
22,234 |
27,280 |
Cement |
10,000 tons |
6,524 |
20,971 |
59,700 |
86,208 |
97,000 |
Automobiles |
10,000 |
14.91 |
51.40 |
207.00 |
444.39 |
507.4 |
Large and medium-sized tractors |
10,000 |
11.35 |
3.94 |
4.10 |
4.88 |
9.83 |
Color TV sets |
10,000 |
0.38 |
1,033.04 |
3,936.00 |
6,541.40 |
7,328.80 |
Chemical fibers |
10,000 tons |
28.46 |
165.42 |
694.00 |
1,181.15 |
1,424.50 |
Yarn |
10,000 tons |
238.2 |
462.6 |
657.0 |
983.6 |
1,120.0 |
Cloth |
100 million m |
110.3 |
188.8 |
277.0 |
353.5 |
420.0 |
Sugar |
10,000 tons |
227 |
582 |
700 |
1,084 |
1,018 |
Sulfuric acid |
10,000 tons |
661 |
1,197 |
2,427 |
3,371 |
3,994 |
Farm-use chem-ical fertilizers |
10,000 tons |
869.3 |
1,879.7 |
3,186.0 |
3881.3 |
4,469.5 |
Ethylene |
10,000 tons |
38.0 |
157.2 |
470.0 |
611.8 |
626.6 |
Integrated circuits |
100 million pieces |
0.3 |
1.1 |
58.8 |
148.3 |
211.5 |
Program-controlled Switchboards |
10,000 lines |
-- |
-- |
7,136.0 |
7,379.9 |
8,464.8 |
Telephones |
10,000 |
-- |
-- |
5,247.9 |
18,231.4 |
23,344.6 |
Micro-electronic computers |
10,000 |
-- |
8.2 |
672.0 |
3,216.7 |
4,512.4 |
Science and Technology
In 1900, China had no modern science and technology at all - fewer than 10 people in all of China understood calculus. Now, in the early 21st century, the gap in high-technology research and development between China and the world's advanced countries has visibly shrunk; 60 percent of technologies, including atomic energy, space, high-energy physics, biology, computer and information technology, have reached or are close to the world advanced level. On October 15, 2003, the successful launch of the "Shenzhou V" manned spacecraft made China the third country to master manned spaceflight technology. According to the Moon Probe Project started in February 2004, China will launch unmanned probes to the moon before 2010, and gather moon soil samples before 2020.
China's development of science and technology and its system of granting science and technology awards are underpinned by the basic Law on Progress of Science and Technology promulgated in July 1993. This stipulates the objectives, functions and sources of funds, and the system of rewards for science and technology development. The Law on Popularization of Science and Technology promulgated in June 2002 makes a societal goal to popularize science and technology knowledge among all citizens. Local regulations have been issued for attracting talented people, ensuring investment in science and technology, and developing high technology.
Since the 1990s, state budgets for science and technology have greatly increased. In 2004, the appropriation for science and technology reached 97.55 billion yuan, 19.5 percent more than in 2003; the government spent 184.3 billion yuan on scientific research and development, 19.7 percent more than in 2003, accounting for 1.35 percent of GDP, the highest in China's history.
In 2004 there were 55.75 million scientific and technological personnel in state-owned enterprises and institutions, and the number of scientific and technological personnel out of every ten thousand employees had increased from 870 in 1985 to 3,900. Over half the academicians of the Chinese Academy of Engineering are scholars who have returned during the past two decades after finishing their studies abroad.
From 2002, the national strategy for developing science and technology shifted from following on the heels of others to making independent innovations and technological strides, aiming at the international sci-tech heights. According to a national plan, by 2005 China should be in the world's advanced ranks in certain fields, attaining or approaching the front rank in some important scientific and strategic hi-tech fields; expenditure for developing experimental and research science will increase to over 1.5 percent of GDP; by 2010 a preliminary national innovation system will be established, the building of basic science and technology conditions will be obvious, national key bases for scientific research will reach the world advanced level, China's innovation ability in key fields will soar, and expenditure for developing experimental and research science will reach two percent of GDP; by 2020, a relatively complete national innovation system will be in place, expenditure for developing experimental and research science will account for three percent of GDP, and China's competitiveness in science and technology will step up to the world's first rank.
Tourism Market
Thanks to its rich tourist resources -- high mountains, elegant rivers, springs and waterfalls, rich and varied folk customs, rare species, scenic spots and historical sites, distinctive opera, music and dance,and world-famous cuisine -- China attracts a large number of domestic and foreign tourists every year.
Today, China has one of the world's largest domestic tourist markets and an outbound market growing at a rate unequalled anywhere. In 2004, the incoming tourists reached 109.038 million person-times, 19 percent up on 2003; foreign exchange revenue from tourism reached US$ 25.74 billion, a 47.8 percent year-on-year increase; the number of tourists from the 16 main source countries hit a record level, far surpassing the 2003 total.
China is emerging as the country with the world's highest growth rate for outbound tourism. According to a survey conducted by an international tourism monitoring agency of Asia-Pacific region, the average daily expenses (excluding purchases) of a Chinese tourist during one long holiday reach US$175; a German Chamber of Commerce survey shows average daily expenses of US$110 in Germany, second to American tourists' US$117; the Swiss Information Network report puts the figure for Switzerland at $313, the highest spending for any source country.
According to the World Tourist and Travel Council (WTTC), China's travel industry may grow by 10.4 percent a year over the next 10 years, lifting China to fourth rank in terms of industry size. The World Tourism Organization predicts that by 2020 China will be the world's top tourist destination, and fourth in outbound tourist numbers with 100 million Chinese people traveling abroad every year.
Education
Since 1950 China has provided nine-year compulsory education for a fifth of the world's population. Nine-year compulsory education operates in 90 percent of China's populated areas, and illiteracy in the young and mid-aged population has fallen from over 80 percent down to five percent. The system trained some 60 million mid- or high-level professionals and near 400 million laborers to junior or senior high school level. Today, 250 million Chinese get three levels of school education, (elementary, junior and senior high school) doubling the rate of increase in the rest of the world during the same period. Net elementary school enrolment has reached 98.9 percent, and the gross enrollment rate in junior high schools 94.1 percent.
China's educational horizons are expanding. Ten years ago the MBA was virtually unknown but by 2004 there were 47,000 MBAs, trained at 62 MBA schools. Many people also apply for international professional qualifications, such as EMBA and MPA; close to 10,000 MPA students are enrolled in 47 schools of higher learning, including Peking University and Tsinghua University. The education market has rocketed, with training and testing for professional qualifications, such as computer and foreign languages, thriving. Continuing education is the trend, once in one's life schooling has become lifelong learning.
International cooperation and education exchanges increase every year. China has more students studying abroad than any other country; since 1979, there have been 697,000 Chinese students studying in 103 countries and regions, of whom 185,000 have returned after finishing their studies. The number of foreign students studying in China has also increased rapidly; in 2004, over 110,000 students from 178 countries were studying at China's universities.
Investment in education has increased in recent years; the proportion of the overall budget allocated to education has been increased by one percentage point every year since 1998. According to a Ministry of Education program, the government will set up an educational finance system in line with the public finance system, strengthen the responsibility of governments at all levels in educational investment, and ensure that their financial allocation for educational expenditure grows faster than their regular revenue. The program also set out the government's aim that educational investment should account for four percent of GDP in a relatively short period of time.
For non-compulsory education, China adopts a shared-cost mechanism, charging tuition at a certain percentage of the cost. Meanwhile, to ensure that students from low-income families have access to higher education, the government has initiated effective ways of assistance, with policies and measures as scholarships, work-study programs, subsidies for students with special economic difficulties, tuition reduction or exemption and state stipends.
The government is committed to markedly raising educational levels generally, as evidenced in a Ministry of Education program; by 2020, of every 100,000 people, 13,500 will have had junior college education or above and some 31,000 will have had senior high school schooling; rates for illiteracy and semi-literacy rate will fall below three percent; and average schooling duration across the population will increase from today's eight years to nearly 11.
Transportation--Ports
China's coastal ports enable the transportation of coal, containers, imported iron ore, and grain; roll-on-roll-off operations between mainland and islands; and deep-water access to the sea. In port construction, China has especially strengthened the container transport system, concentrating on the construction of a group of deep-water container wharves at Dalian, Tianjin, Qingdao, Shanghai, Ningbo, Xiamen and Shenzhen, and thus laying the foundations for China's container hubs. The coal transportation system has been further strengthened with the construction of a number of coal transport wharves. In addition, wharves handling crude oil and iron ore imports have been reconstructed or expanded. At the end of 2004, China's coastal ports had over 2,500 berths of medium size or above, of which 650 were 10,000-ton-class berths; their handling capacity was 61.5 million standard containers for the year, ranking first in the world. Freight volumes handled by some large ports exceed 100 million tons a year; and the Shanghai, Shenzhen, Qingdao, Tianjin, Guangzhou, Xiamen, Ningbo and Dalian have been listed among the world's top 50 container ports.
Transportation---Civil aviation
At the end of 2004, China had 133 airports for civil flights. In 2004, the turnover of airfreight reached 7.18 billion ton-km, the passenger turnover was 178.2 billion person-km, and the volume of freight traffic 2.767 million tons. China had a total of 1,279 civil flight routes, 1,035 of them domestic routes reaching all large and medium-sized cities, and 244 of them international, connecting China with more than 70 cities overseas.
Transportation---Highways
The building of highways is seen as key to accelerating infrastructure construction. In 2003, completed investment in highway construction was 350 billion yuan and 219 key highway projects progressed, focusing mainly on the five north-south and seven east-west national arterial highways as well as highways in western China and in rural areas. By the end of 2004, the total length of highways open to traffic reached 1.871 million km, including 34,300 km of expressways up to advanced modern transportation standard, ranking second in the world. The nation's highway density has now reached 19.5 km/100 sq km.
With the completion in 2008 of the five north-south and the seven east-west national arterial highways, totaling 35,000 km, Beijing and Shanghai will be linked by major highways, chiefly expressways, to the capitals of all provinces and autonomous regions of China, creating highway connections between over 200 cities.
The aim of the National Expressway Network Plan approved in early 2005 is an expressway system connecting all capitals of provinces and autonomous regions with Beijing and with each other, linking major cities and important counties. The network will have a total length of about 85,000 km, including seven originating in Beijing; the Beijing-Shanghai, Beijing-Taipei, Beijing-Hong Kong-Macao, Beijing-Kunming, Beijing-Lhasa, Beijing-Urumchi, and Beijing-Harbin expressways. Half of the projects are already underway.
Transportation----Railways
From 1990 to 2001, on average some 1,092 km of new railways, 837 km of multiple-track, and 962 km of electrified railways were opened to traffic annually, 2.4-fold, 1.7-fold and 1.8-fold increases respectively over the previous 10 years. At the end of 2004, railways in operation reached 74,200 km, including 24,100 km of multiple track and 18,900 km of electrified railways. On a global basis, China's rail transport volume is one of the world's largest, having six percent of the world's operating railways, and carrying 25 percent of the world's total railway workload. China also leads in terms of the growth rate of transport volume and in the efficient use of transport equipment.
Since 1988, train speed has been raised significantly five times, across some 17,000 km of track. The top speed of express trains increased from 120 km to 160 km per hour, and passenger trains can reach maximum speed of 200 km per hour on some sections of the arterial railways.
Source: China.org.cn |
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