Investment Guide >> China economy overview

Since the foundation of the People's Republic in 1949, China has made great achievements in the fields of economic and social development. The poor, backward old China has been marching into the initial stage of a prosperous and modern new China. China has witnessed tremendous changes especially after the reform and opening policy commencing in early 1979, thanks to the further emancipation and development of social production force. From 1979 to 1995, China's Gross Domestic Products had been growing at the annual rate of over 9%. In the past three years, China's GDP maintained the double-digit growth around 12%, made China the fastest growing economy in the world. China's GDP grew to 5,770 billion RMB Yuan ( equal to 695.2 billion US dollars ) in 1995, up 10.2% over 1994. Among countries in the world, China now ranks the seventh in GDP, after the United States, Japan, Germany, France, Italy and Great Britain.

The reform and opening policy has also enhanced the economic exchange and cooperation between China and the rest of the world.

Foreign trade of China saw an annual growth rate of over 16% for tile least 16 years. China's trade volume in 1995 reached 280.85 billion dollars, up 18.6% than the year before. Cilia's rank among world trade partners rose from the 32nd sixteen years ago to the tenth last year, in the meantime, the ratio of export in its GDP rose from 5% to 20%. China now has trade ties with 227 countries and areas in the world. It is also worth noting that foreign funded enterprises are playing a bigger role in China's foreign trade. Last year, import and export volume of these enterprises reached 109.82 billion US dollars, 39.1% of Cilia's total. It is indicated, that with further opening and more market mechanism in its economy, China is getting more and more interdependent with the world economy.

China's foreign exchange reserve also increased by large with the rapid growth of visible and invisible trade. By the end of 1995, China's foreign exchange reserve amounted to 77.3 billion US dollars.

Foreign investment in China has been playing an important role in the past 16 years in the country's rapid economic development. Up to 1995, the Chinese government has approved more than 258,000 foreign invested projects, with actual input foreign exchange capital of 135.4 billion dollars. About 120,000 foreign invested projects are now in operation, involving 16 million job opportunities, and most of these projects are running well. Besides Hong Kong and Taiwan, investors from the United States, Japan, South East Asia and Europe are very active in the field.

China's reform and opening policies have not only facilitated the country's economic growth, but also produced substantial benefit for foreign partners and made constructive contribution to trade and economic development in Asia and Pacific in particular and across the world in general.

The Chinese government will continue and perfect those policies in the foreseeable future. In recent years, China has taken a series of significant reform measures in the fields of fiscal and taxation system, banking, investment, foreign exchange, foreign trade, etc. Early 1994, China published the Outline of State Industrial Policies for the 1990s. Early last year, China issued the Provisional Regulations on Direction Guide to Foreign Investment and the Catalogue Guiding Foreign Investment in China. These documents not only included the newly expanded industries open to foreign investment, but also listed each kind of projects to be encouraged. According to these policies, a number of industries are put on top priority in future economic development, namely, infrastructures such as, transportation, telecommunications, energy industry and environmental protection; pillar industries such as machinery, electronics, petrochemical, automobile, and construction industry. The Chinese government will grant financing, legislative and administrative support to the development of these industries. Foreign investments are also encouraged in these fields. According to a recently proposed plan, China quadrupled the GDP of 1980 by the end of 1995 and do it on a per capita basis by the end of this century. China is also planning to double the GDP in 2000 by the year 2010. According to the needs and potential of modern construction, in the year 2000 total import and export volume will reach or surpass USD $400 billion, with each surpassing USD $200 billion, the business of investment, labor service technical exchange and cooperation will be developed rapidly, too.

The grand economic development plans and projects in China will create huge demand for commodities, technologies and capital from abroad, and present good opportunities for the business communities in the rest of the world.

Although China is among the top economic powers with its GDP of nearly 700 billion US dollars, ranking the seventh in the world, the per capita economic possession in China is very low due to its huge population ( over 1.2 billion ). China is now still among the low income countries with its average GDP per Capita of 500 odd dollars. China has 800 million of agricultural population, 70 million of which lives under poverty line. With insufficient capital supply and growing market mechanism to be perfected, China is still fighting to get rid of the typical low-added -value economic structure of a low-income country. In another word, China now is a developing country. There is a long way to go and a hard work to do on its road toward a developed country.

Right now, there are also some problems that must be solved in the course of China's economic development. For example, the high inflation rate dogging its fast economic growth, the weak position of agriculture sector in the economy, the inefficiency of large state-owned enterprises and problems resulting from the uneven developments of its east coast and the west inner land. The Chinese government is making every effort to find solutions for these problems.

In view of general situation, China has been able to maintain political stability, social prosperity and order. The market of 1.2 billion consumers is fascinating to any entrepreneur of deep insight with its economic development and growing living standard. The optimism for China's economy and market has encouraged many to participate in the country's development and also resulted in the continued growth of its foreign trade and absorption of foreign investment. It is my deep belief that, China will have a bright future on the way to the 21st century with a steady and admirable fast pace, and those active participants in the cause will get rewards for their efforts.

This article is brought to you courtesy of Ms. Xue-chun Shan, Commercial Consul at the Consulate General of People's Republic of China in Los Angeles.