Since the late 1970s, China has shifted from a closed, centrally planned system to a more market-oriented economy, which is one of the largest in the world, in 2010, China became the world's largest exporter.
The reforms began with collectivized agriculture and expanded through gradual price liberalization, financial decentralization, increased autonomy for state enterprises, the creation of diverse banking the system, the development of stock markets, the rapid growth of the private sector, and increased openness to foreign trade and investment.
China implemented reforms gradually. In recent years, China has resumed its support for state-owned enterprises in sectors that it considers important for economic security, clearly aiming at leading the way in global competition.
Economic restructuring and efficiency improvements have contributed to a more than tenfold increase in China’s GDP. Measured on the basis of purchasing power parity (PPP), this indicator in 2010, became the second largest in the world after the United States, surpassing Japan in 2001.
The dollar value of the volume of agricultural and industrial production in China already exceeds that of the United States; China is second only to the United States at the aggregate value of the service sector, it produces. However, per capita income remains below the world average.
The Chinese government faces many economic difficulties, including:
- Reducing the high domestic savings rate and, accordingly, low domestic demand.
- Supporting appropriate employment growth for tens of millions of migrants and the creation of new jobs.
- Reducing corruption and other economic crimes; and
- Harming the environment and increasing social inequality, this is related to the rapid transformation of the economy. Economic development proceeded at a much faster pace in coastal areas than in the interior of the country and approximately 200 million rural laborers and their children moved to the cities to find work.
The consequence of the one-child policy is that China is now one of the fastest growing countries in the world. Degradation in the environment, especially air pollution, soil erosion, and the steady decline of the groundwater horizon, especially in the north, is another long-term problem.
China continues to lose arable land due to erosion and economic development. The Chinese government seeks to add the ability to generate energy from sources other than coal and oil, focusing on nuclear and alternative energy development.
In 2009, the global economic crisis lowered demand for Chinese exports for the first time in many years, but China quickly recovered to a growth of about 10% per year, beating all other major industrialized countries. China’s economy appears to be growing at a steady pace in 2011-2016, mainly due to the incentive policies that the regime pursued during the global financial crisis.
The government promises in the 12th Five-Year Plan, adopted in March 2011, are aimed at continuing the transformation of the economy and emphasize the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China is likely to make only isolated progress towards these goals.
China at the beginning of the XXI century is a space and nuclear power. The construction of a market economy is carried out in China under the leadership of the Communist Party on the basis of five-year plans.
The economy maintains its multi-structure. With a high proportion of foreign investment, almost 80% of all foreign investors in the PRC economy are ethnic Chinese (huaqiao) living abroad. By 2020, China should, according to the CCP's plans, catch up with the United States in terms of total GDP income.
To promote structural changes, China is developing its own education system, teaching students abroad (especially in the USA and Japan), encouraging the import of technologies that allow developing such advanced sectors of the economy as software, new materials, telecommunications, biotechnology, and health care.
In China, there are more than 384 million Internet users, and the country also leads the world in the number of mobile phone users (487.3 million users as of April 2007). China’s Silicon Valley has been created in the Haidian District north of Beijing.
Intensification of production also brings side effects: the level of hidden unemployment in rural areas is approximately twice the official figures (4.6%). China tacitly encourages emigration.
China is the largest steelmaker in the world and the steel industry has rapidly increased its production in recent years. Iron ore production kept pace with steel production in the early 1990s but was significantly lagging due to the start of imports of iron ore and other metals in the early 2000s.
Steel production increased from about 140 million tons in 2000 to 419 million tons in 2006. Most of the steel produced in small enterprises. China is the main exporter of steel in the world. The volume of steel exports in 2008 amounted to 59.23 million tons (a decrease of 5.5% compared with 2007).
By 2006, China became the third largest vehicle manufacturer in the world (after the USA and Japan) and the second largest consumer (only after the USA). Production of cars literally took off during the reform.
In 1975, only 139800 cars were produced, but by 1985 production reached 443377 units, then jumped to almost 1.1 million in 1992 and then increased evenly each year until 2001, when it reached 2.3 million units.
In 2002, car production in China grew to almost 3.25 million, in 2003 - to 4.44 million, in 2004 - to 5.07 million, in 2005 - to 5.71 million, in 2006 - to 7.28 million, in 2008 - up to 8.88 million, in 2009 - up to 9.35 million and in 2009 - up to 13.83 million units. China became the number one car maker in the world in 2009. Domestic sales kept pace with production.
After representative annual growths in the mid- and late 1990s, passenger car sales soared in the early 2000s. In 2006, a total of 7.22 million vehicles were sold in China, including 5.18 million passenger cars and 2.04 million trucks. Since 2010, China has become the world's largest vehicle manufacturer as well as the largest customer.
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