China Economy 1997

Economy - overview Beginning in late 1978 the Chinese leadership has been trying to movethe economy from a sluggish Soviet-style centrally planned economy to onethat is more market-oriented but still within a rigid political frameworkof Communist Party control. To this end the authorities switched to a systemof household responsibility in agriculture in place of the old collectivization,increased the authority of local officials and plant managers in industry,permitted a wide variety of small-scale enterprise in services and light manufacturing,and opened the economy to increased foreign trade and investment. The resulthas been a quadrupling of GDP since 1978. Agricultural output doubled in the1980s, and industry also posted major gains, especially in coastal areas nearHong Kong and opposite Taiwan, where foreign investment helped spur outputof both domestic and export goods. On the darker side, the leadership hasoften experienced in its hybrid system the worst results of socialism (bureaucracy,lassitude, corruption) and of capitalism (windfall gains and stepped-up inflation).Beijing thus has periodically backtracked, retightening central controls at intervals. In 1992-96 annual growth of GDP accelerated, particularly in thecoastal areas - averaging more than 10% annually according to official figures.In late 1993 China's leadership approved additional long-term reforms aimedat giving still more play to market-oriented institutions and at strengtheningthe center's control over the financial system; state enterprises would continueto dominate many key industries in what was now termed "a socialist marketeconomy." In 1995-96 inflation dropped sharply, reflecting tighter monetarypolicies and stronger measures to control food prices. At the same time, thegovernment struggled to (a) collect revenues due from provinces, businesses,and individuals; (b) reduce corruption and other economic crimes; and (c)keep afloat the large state-owned enterprises, most of which had not participatedin the vigorous expansion of the economy and many of which have been losingthe ability to pay full wages and pensions. From 60 to 100 million surplusrural workers are adrift between the villages and the cities, many subsistingthrough part-time low-paying jobs. Popular resistance, changes in centralpolicy, and loss of authority by rural cadres have weakened China's populationcontrol program, which is essential to maintaining growth in living standards.Another long-term threat to continued rapid economic growth is the deteriorationin the environment, notably air pollution, soil erosion, and the steady fallof the water table especially in the north. China continues to lose arableland because of erosion and economic development; furthermore, the regimegives insufficient priority to agricultural research. The next few years willwitness increasing tensions between a highly centralized political systemand an increasingly decentralized economic system. Rapid economic growth likelywill continue but at a declining rate.

GDP purchasing power parity - $3.39 trillion (1996 estimate as extrapolatedfrom World Bank estimate for 1995 with use of official Chinese growth figurefor 1996; the result may overstate China's GDP by as much as 25%)

GDP - real growth rate 9.7% (1996 est.)

GDP - per capita purchasing power parity - $2,800 (1996 est.)

GDP - composition by sector
agriculture: 20%
industry: 49%
services : 31% (1995 est.)

Inflation rate - consumer price index 10% (1996 est.)

Labor force
total : 614.7 million (1994)
by occupation: agriculture and forestry 54%, industry and commerce 26%, constructionand mining 7%, social services 6%, other 7% (1994)

Unemployment rate officially 3% in urban areas; probably 8%-10%; substantial unemploymentand underemployment in rural areas (1996 est.)

Budget
revenues : $NA
expenditures: $NA, including capital expenditures of $NA

Industries iron and steel, coal, machine building, armaments, textiles and apparel,petroleum, cement, chemical fertilizers, consumer durables, food processing,autos, consumer electronics, telecommunications

Industrial production growth rate 13% (1996 est.)

Electricity - capacity 210 million kW (1995)

Electricity - production 859 billion kWh (1994)

Electricity - consumption per capita 684 kWh (1995 est.)

Agriculture - products rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton,other fibers, oilseed; pork and other livestock products; fish

Exports
total value : $151.07 billion (f.o.b., 1996)
commodities: clothing, miscellaneous consumer goods, fabrics, footwear, toys, electricalmachinery and switchgear (1995)
partners: Hong Kong, Japan, US, South Korea, Germany, Singapore (1995)

Imports
total value : $138.83 billion (c.i.f., 1996)
commodities: plastics, fabrics, telecommunications equipment, electrical machineryand switchgear, transistors, other industrial machinery (1995)
partners: Japan, US, Taiwan, South Korea, Hong Kong, Germany, Russia (1995)

Debt - external $92 billion (1994 est.)

Economic aid
recipient: ODA, $1.977 billion (1993)

Currency 1 yuan (%) = 10 jiao

Exchange rates yuan (%) per US$1 - 8.2963 (January 1997), 8.3142 (1996), 8.3514(1995), 8.6187 (1994), 5.7620 (1993), 5.5146 (1992)
note: beginning 1 January 1994, the People's Bank of China quotes the midpointrate against the US dollar based on the previous day's prevailing rate inthe interbank foreign exchange market

Fiscal year calendar year

NOTE: The information regarding China on this page is re-published from the 1997 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of China Economy 1997 information contained here. All suggestions for corrections of any errors about China Economy 1997 should be addressed to the CIA.