Overview of China’s Economic Development
China has scored tremendous economic achievements in the last three decades since the adoption of reform and opening-up, reflected by its significantly higher economic strength, international standing and influence. China is currently integrated into the world economy, becoming an indispensable part of economic globalization and regional development.
1. Economic scale expands rapidly
Since the beginning of the 21st century, China’s GDP has followed a continuous upward trend. Before the 2008 financial crisis unfolded, China’s GDP logged over-10% growth for five consecutive years. In 2006, its GDP exceeded RMB 20 trillion for the first time – reaching RMB 21.6 trillion, the fourth largest globally. In 2008, it rose to RMB 31.4 trillion, No. 3 in the world. In 2010, it hit a new high of RMB 40 trillion, surpassing Japan for the first time to become the world’s second largest economy. In 2012, with a RMB 50 trillion GDP, China maintained its position as the world’s second largest economy. In the same time, the country’s GDP per capita also ballooned from RMB 2,998 in 1993 to RMB 35,181 in 2011, with an annual growth rate of 13.8%, indicating that China has graduated from the low-income country group into to a mid-income country.
2. Economic structure becomes more balanced and optimized
Since late 1970s, China’s economy has become more balanced and coordinated through a series of restructuring and upgrading. China’s economic structure has shifted from an agriculture-based one to a more balanced one with coordinated development of the primary, secondary and tertiary industries. From 1978 to 2012, the primary industry’s share in GDP fell from 28.2% to 10.1%; the secondary industry dropped slightly from 47.9% to 45.3%, while the tertiary industry jumped from 23.9% to 44.6%. Meanwhile, the industrial structure has transformed from being light industry-based to co-development of light and heavy industries and from being labor-intensive industry-led to co-development of labor-intensive, capital-intensive and technology-intensive industries. The percentage of heavy industry has increased significantly and the roles of hi-tech industry, large enterprises and conglomerates have been strengthened, which created a solid basis for China’s industrial economy to grow from big to strong.
3. Foreign exchange reserve posts sharp increases
Since the reform and opening up, China’s foreign exchange reserve has first experienced a shortage and volatile growth period, then a slow growth period with a sizable accumulation, next a incremental and steady growth period, and after that a hyper-growth period. In 1990, China’s foreign exchange reserve exceeded USD 10 billion, reaching USD 11.1 billion. In 1996, the foreign exchange reserve exceeded USD 100 billion, hitting USD 105 billion. In 2006, the foreign exchange reserve surpassed USD 1 trillion to reach USD 1.0663 trillion, replacing Japan for the first time to secure the first place in the world. During the period from 2007 to 2011, China’s foreign exchange reserve rose by more than USD 400 billion each year, with an accumulated growth of 2.1 folds or an annual growth rate of 16%. By the end of 2012, China’s foreign exchange reserve remained in the first spot by expanding further to USD 3.31 trillion.
4. Residents’ income increases greatly
The per capita disposable income of urban residents rose from RMB 6,280 in 2000 to RMB 21,810 in 2011, an increase of 3.5 folds or an annual growth rate of 10.9%. The per capita net income of rural residents grew from RMB 2,253 in 2000 to RMB 6,977 in 2011, an increase of 3.1 folds or an annual growth rate of 9.9%. Income growth led to rapid increase of wealth owned by urban and rural residents. By the end of 2011, the outstanding of RMB deposit of urban and rural residents amounted to RMB 34.4 trillion, 5.4 times the figure of RMB 6.4 trillion in 2000, with an annual growth rate of 15%. The per capita outstanding of RMB deposit rose from RMB 5,076 in 2000 to RMB 25,505 in 2011, an increase of 5 folds or an annual growth rate of 14%.
5. China ranks among the top in trade and foreign investment utilization
China’s trade has been expanding continuously and now ranks the third in the world in terms of trade value. Between 2003 and 2011, China’s total import and export volume grew averagely by 21.7% per annum, with an annual export and import growth rate of 21.6% and 21.8% respectively. In 2011, its total import and export volume reached USD 3.6 trillion, lifting China to the second and making China the world’s largest exporter and second largest importer for three consecutive years. In addition, China has been the top country for many consecutive years in terms of utilization of foreign investment. From 2003 to 2011, China’s total actual utilization of non-financial foreign direct investment reached USD 716.4 billion, with an annual growth rate of 9.2%. In 2011, foreign direct investment in China hit USD 116 billion, placing China at the second spot in the world and topping all other developing countries for 19 consecutive years. Meanwhile, China has implemented the “go global” strategy and its foreign economic cooperation is right on track. By the end of 2011, China’s total non-financial overseas direct investment amounted to USD 318.9 billion. In 2011 alone, it reached USD 60.1 billion, 19.7 times that of 2003, with an annual growth rate of 46.4%.
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