China Economics and Business

According to cheeroutdoor, the People’s Republic of China is the second largest economy in the world, with a GDP valued at over $14 trillion USD and a population of 1.4 billion people. The Chinese economy has grown rapidly over the past several decades and is now considered to be one of the most powerful economies in the world. China’s economy is largely driven by exports, with manufactured goods such as electronics, machinery, textiles and apparel making up a large portion of its exports. Other important industries include agriculture, construction and financial services as well as tourism and retail.

In recent years, the Chinese government has implemented a number of reforms to promote economic growth and development such as encouraging foreign investment through tax incentives, reducing import tariffs and improving access to markets for Chinese businesses. In addition to this, efforts have also been made to diversify the economy by promoting sectors such as renewable energy, technology and services which could create more job opportunities for its citizens in the future.

Despite these efforts there remain many challenges facing China’s economy such as high levels of inequality, corruption within certain sectors and an aging population. In order to address these issues the government has implemented measures such as increasing access to education, improving infrastructure projects and providing financial incentives for businesses to invest in research and development activities.

Given its vast size it is clear that China has great potential for further economic growth if it can continue to implement reforms that promote innovation and increase access to basic services like healthcare and education across all parts of society. With continued investment in infrastructure projects, increased foreign investment through tax incentives and improved access to markets there is hope that China can build a more prosperous future for itself in the coming years.


After 1978, economic development has been faster in China than in any other country. Per capita GDP grew by 8.6 per cent per year from 1978-2010. China is the country with the second largest US GDP. However, per capita GDP is still much lower in China than in most industrialized countries, as a consequence of the country’s large population. The strongest drivers of growth have been the gradual liberalization of the economy, increasing foreign investment and a rapidly growing export of mainly simple industrial goods. Development has been particularly intense in the coastal regions of southeastern and eastern China.

China GDP (Nominal, $USD) 2003-2017

Around 1950, when Communist China was established, the country was extremely poor with undeveloped agriculture and insignificant industry. During the following decades, the country was entirely a planning economy with five-year plans. The word of honor was self-confidence, and after the break-up with the Soviet Union in 1960, China had virtually no economic contacts with abroad. The five-year plans prioritized grain production and/or heavy industry. The development was at an uneven pace. A decline occurred in 1958-60 (the ※big leap§) and 1966-68 (at the beginning of the Cultural Revolution), and a stagnation began to be felt even in the mid-1970s. Throughout this time, food production per capita had increased, and thus the food standard, but it seemed increasingly difficult to increase agricultural production in the longer term.

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During the 1960s and the early 1970s, the increase in population was rapid and the pressure increased on the state to ensure that in the future, everyone will provide food, housing, work, healthcare and education. In the autumn of 1978, a new economic policy was presented, “The politics of the open door”, which meant a gradual liberalization. The reforms first affected the countryside, where the strict organization in public municipalities was dissolved and the so-called system of responsibility was implemented. Around 1985, more than 90 percent of farmer households leased the land they used individually by the local community. They could decide to a greater extent what they would produce, but the rent fee had to be paid with grain. A corresponding liberalization began in 1984 within the urban industries. The five-year plans emphasized the important role of light industry. It would produce consumer goods for households, such as watches, bikes and radios, and more goods on the market would make the Chinese strive for increased income through more work of their own. Economic decisions were gradually decentralized and various forms of economic contacts abroad were encouraged, including foreign investment. The state’s monopoly on foreign trade was gradually withdrawn and four special economic zones were established on the south-east coast.

The increase in production was exceptional. Annual agricultural production increased by 10 percent and the production of consumer goods by 15 percent. At the same time, the strict child restraint was implemented, and officially the dual responsibility system was talked about: the responsibility of the individual household for what was to be produced and the responsibility for having only one child. The future supply problems no longer seemed as serious. Fourteen coastal cities were opened for foreign investment. Industrialization increased rapidly, both in and out of neighboring countryside. But from the mid-1980s, problems in the economy appeared more and more clearly. Central planning had been abandoned, but new forms of governance had not yet been developed. The tremendous growth rate caused economic imbalance, income disparities increased and inflation led to a deteriorating standard of living for more and more people. Corruption grew and so did dissatisfaction. The background to the demonstrations in Beijing in the spring of 1989 thus contained important economic components. After the demonstrations were closed down, the party regained control of the economy, and the following years were marked by a tightening policy.

At the beginning of the 1990s, the divide within the party leadership emerged clearly. The Conservatives considered reform policy dangerous because it brought about less control, while the reform-friendly, with Deng Xiaoping as the figurehead, argued that economic progress was the most effective way to retain power over the people. In the fall of 1992, the position of the reformers was strengthened, and the concept of “socialist market economy” was introduced. Increased economic liberalization appeared mainly in four fields. A number of new areas were opened for foreign investments with joint ventures and companies wholly owned by Chinese overseas (mainly residents in Hong Kong, Macao and Taiwan). These companies became a strong driving force in China’s economic development. Furthermore, a comprehensive restructuring of the state-owned enterprises was started in order to increase production and efficiency in the existing industry, reduce resource wastage and promote innovation. Companies were privatized, many new limited companies were formed and other state companies were reconstructed or closed down. Exchanges were established in Shanghai and Senzhen. In 1990, private and foreign-owned companies accounted for 10 percent of the value added of the Chinese industry; In 2005, the proportion was just over 75 percent. Also in terms of taxes, pricing and banking, rapid liberalization took place. At the end of the 1990s, more than 90 percent of retail prices and about 80 percent of raw materials and agricultural products were determined by market demand. As a result, the state’s revenue was greatly reduced, but it was gradually compensated by several new taxes. In general, the state’s control over the Chinese business sector declined sharply, and it was also affected by a fourth important change: after years of negotiations, China became a member of the World Trade Organization (WTO) in 2001. It had been preceded by a further liberalization of Chinese trade.

Annual growth in the economy during the 2000s was 8-10 percent. The restructuring of state-owned enterprises has continued. They had about 112 million employees in 1995; In 2007, the number was down to 64 million, working primarily in mines and in heavy industry of strategic importance. Growth is fastest happening in private companies, and Chinese leaders are taking more care of these now than before. Production in agriculture and fisheries takes most years to reach the national target of 95 percent self-sufficiency.

Abbreviated as CHN by, China has also experienced the fastest increase in foreign trade during the 2000s. It is the world’s leading manufacturer of inexpensive industrial goods. The country has also shown strong potential for growth in new sectors of the business sector, such as the automotive and telecommunications industry and financial services. In addition, China is now one of the world’s largest markets for investment goods such as factory equipment and materials for new infrastructure. From 1992, the overall goal of Chinese leaders was the maximum economic growth. But in parallel with the reforms, more and more serious problems were noticed. The strategy of growth maximization led to increasing pressure on the environment and resources, with increased destruction of agricultural land and increasingly worse air and water pollution. At the beginning of the 2000s, it became clear that China was the country in the world that had the biggest environmental problems. Social problems were also becoming more serious, with sharply growing income gaps, corruption and local abuse of power, including in matters of access to land and other limited resources. To this was added an increasingly noticeable lack of water, energy and some minerals.

The new leaders who emerged in 2003-04 have realized that only maximizing economic growth is not enough. Sustainable development is required in the long term. An even more serious problem for the party is the growing income gaps. Increasingly, there are ※social concerns§ at the local level. Leaders’ honors words have become “harmonious development”, ie. sustainable development with social stability. Five key areas have been identified in the overall planning, and the focus should be on agriculture and rural development. In order to achieve better regional balance, investments in central China are emphasized. The global economic crisis that deepened in 2009 has, for China’s part, significantly reduced foreign demand for the country’s industrial goods. During the first half of 2009, foreign trade decreased by 25 percent. Millions of Chinese who worked in export-oriented industries lost their jobs. At the same time, investments in transport and other infrastructure grew, banks’ lending increased substantially and economic growth continued, albeit at a slower pace. The regime’s guideline is to stimulate domestic consumption to compensate for reduced demand from the world market. Despite factory closures and tens of millions of new unemployed, China’s economy continued to grow during the second half of 2009. During the 2000s, China has made ever greater investments in all parts of the world, for example in South America, West Africa and Central and Southeast Asia. This will ensure access to mineral and energy raw materials and also food in the long term.


China has 22 percent of the world’s population but only 7 percent of the cultivated land. More than 10 percent of China is cultivated, and most of the arable land is in the eastern and northeastern parts of the country as well as in Sichuan. More land can hardly be used as a field at reasonable costs. However, since double harvests are taken in central and southern China and even three harvests per year in the far south, the area sown for one year is considerably larger. More than half of the arable land is irrigated and China has more than a fifth of the world’s irrigated area.

In the plains in the north, wheat is the main crop, while rice is most important in the south. In addition, they have traditionally grown sorghum, millet, corn and soybeans in the north and sugar cane, tea and tobacco in the south as well as sweet potatoes, root vegetables and vegetables throughout China.

During Mao Zedong’s time, the emphasis was placed on the cultivation of cereals and root vegetables, and in the late 1970s these crops accounted for 4/5 of agricultural production value. Households had pigs and poultry, but incidentally, livestock care was only available to minority peoples in northern and western China. During the period 1952-78, the production of basic foods increased annually by 2.6 percent, ie. slightly faster than the population. At the end of the 1970s, the peasants were still close to 3/4 of China’s population.

During the first half of the 1980s the system of responsibility was implemented, which meant that the farmers signed contracts on agricultural land. The lease fee was paid in the form of grain deliveries to the state, while the remaining harvest could be sold to the state at a fixed price or on the local market where demand determined the price. Gradually, agriculture was further liberalized and it became possible to pay the rental fee in cash as well. Trade and transport systems were improved, which facilitated contacts between the farmers/producers in the countryside and the consumers in the cities. For farmer households with good resources and proximity to the market, prosperity increased when they could increasingly decide what to produce. Production mainly increased from crops other than basic foods. But at the same time, the differences between fertile,

During the 1990s, the Chinese leadership was fully focused on developing the urban industries. It required more and more land for industrial and residential areas and for transport routes, and the area of fertile agricultural land shrank each year. In the 1950s, there were 0.18 ha of cultivated land per capita in China, now that figure is halved.

The role of agriculture in economy and employment has been significantly reduced, but still 45% work in agriculture. More than half of them are likely to devote themselves to low-productivity cereal cultivation, and in poorer agricultural areas, the crop does not provide much more than what is needed for rent and self-sufficiency. There is also great underemployment and unemployment, as other types of work are often missing. In well-established agricultural areas, production has widened, as a result of changing demand for food from the increasingly affluent urban population. The cultivation of industrial crops, such as oilseeds and cotton, has also increased sharply as they generate higher incomes. The same applies to non-vegetable production. Of livestock production value in 2007, livestock management accounted for 33 percent and fish farming accounted for 9 percent.

China’s leaders still have 95 percent self-sufficiency with food as a guideline. Harvests vary greatly between different years. Food shortages are mainly the result of devastating floods or droughts in the most important agricultural areas. Years of great need for grain imports can be replaced by years of net exports of rice, maize and wheat. The sharp increase in production since 1980 is mainly due to the intensive use of the soil with the addition of increasingly chemical agents. It also requires much more water, a scarce resource, at least in northern China. Increased soil degradation is a serious problem. In addition, increasing mechanization will result in a large surplus of labor in agricultural areas. The future of Chinese agriculture is uncertain and since 2004 there has been a strong emphasis on agriculture and rural development in the national five-year plan.


China has been a forest-rich country, but harvesting and natural disasters reduced the forest area until the mid-20th century. At that time, only 8.5 percent of the country’s area was covered by forests and land degradation was severe in hilly areas. Since then, ambitious forest planting programs have been implemented with varying results. China is thought to be the country with the most planted forest, and forests now account for at least 16 percent of its land area. Of the country’s 2,300 nature reserves, 3/4 are forest reserves. More than half of the productive forest land is in the provinces of Heilongjiang and Jilin in the northeast. In southwestern China there are also large forest areas, but they are mostly difficult to access. China has little to do with sustainable forestry. Illegal felling and soil degradation due to unforeseen interventions are likely to be at least as big a problem now as before. In 1998, powerful restrictions on logging were introduced, but compliance with the rules cannot be controlled at the local level. The very rapid economic growth in China has led to an increasing demand for forest raw materials, both for building materials and for paper and packaging. China’s imports of timber and forest products are therefore increasing significantly.


China is by far the largest fishing nation in the world and has a two-thousand-year tradition of growing freshwater fish. Fishing has been one of the most expansive industries since 1978. Of the total catch then 4.6 million tonnes, 3.6 million came from sea fishing. In 2006, the corresponding figures were 51.5 million, and just over 34 million. This means that China accounted for 36 percent of all fishing in the world and Chinese fishing fleets fish in all continents. China is also the world’s largest producer of farmed fish; 33 percent of all such fish are caught there. China also has probably the most developed forms of fish farming. Polyculture with 4 to 7 species together is common, as is fish farming integrated in agriculture. Cultivation of freshwater fish occurs mainly around Lower Chang Jiang and Zhu Jiang and cultivation of sea fish, shellfish and molluscs occur in sheltered bays and embankment ponds along the entire coast. The leading provinces in both sea fishing and fish farming are Guangdong, Shandong, Zhejiang and Fujian.


China is a vast expanse of land and naturally well supplied with various mineral and energy resources. Several peripheral parts are resource-rich, e.g. Xinjiang in the northwest, Yunnan in the southwest and the three northeastern provinces. The occurrences of iron ore are very extensive and well distributed. The ore is mainly mined in a belt in northeastern China from Liaoning to Inner Mongolia, but also at lower Chang Jiang, on the island of Hainan, in Yunnan and in several other provinces. Although iron ore mining in China is the largest in the world, iron ore is now being imported, especially from Brazil and Australia. In China, several valuable alloys are extracted, mainly tungsten but also vanadium, which are used in the production of high hardness steel, as well as antimony, which is included in semiconductors. Furthermore, tin, zinc, bauxite and phosphates in the inner parts of southern China. China is a very large importer of copper and copper scrap.


Energy supply is a weak link in China’s economy. The country is the second largest producer and consumer of energy in the world and is becoming increasingly dependent on imported energy raw materials. China’s coal assets are estimated to last for 250 years, at the current rate of extraction. They are mainly found in the provinces of Shaanxi, Shanxi and Inner Mongolia in the north, ie. at great distances from population and industrial centers on the east and south coast, where demand is greatest. About 40 percent of rail transport capacity must therefore be used for transport of coal.

Over the past decade, several tens of thousands of small, inefficient mines with life-threatening working conditions have been closed, and the government’s goal is that in 2015 only the very largest coal mines remain. Coal extraction is now greater than ever, but it still does not meet demand and China has started to import coal. A large part of China’s coal has a high content of sulfur, and soot and sulfur compounds cause very large environmental problems.

Domestic oil recovery currently covers just over half the need. Three-quarters of these are extracted in old fields in northeastern China, and in addition, production in the northwest and offshore in Bohai. It is believed that the largest occurrences are found in Xinjiang Province in the northwest. Rapid economic growth and motorization are increasingly demanding oil and gasoline, and the need for such imports is increasing every year. In recent years, China has increasingly participated in oil exploration and new extraction in South America, Africa, Central Asia and Southeast Asia to secure its long-term supply of oil.

The use of natural gas has increased and it is used in households in more and more large cities. The national energy plan states that natural gas will increasingly replace coal. Natural gas is a clean and efficient energy source in comparison to coal, and new gas resources are found when searching for oil in western and northeastern China. However, in order to fulfill the plans, increased gas imports from the Russian Federation are needed.

The electricity comes to 4/5 from coal-fired power plants. Of the remainder, most of it is generated by water energy. China has a very large water-energy potential, but it is mainly found in the hard-to-reach mountain regions in the southwest. The world’s largest hydroelectric power plant began to be built in the 1990s at San Xia (Three Ravines) in Chang Jiang and has gradually been put into operation since 2003. The proportion of clean water energy in electricity thus gradually increases. The lack of electricity is not uncommon, mainly in Guangdong and other economically expansive areas that are far from energy resources. On the south-east coast there are several nuclear power plants, and a further number are being built, but nuclear energy forms a very small part of electricity generation.


Since the beginning of the 1980s, China’s industry has changed to fit what political management calls “a socialist market economy,” with an ever-increasing share of private ownership and market-driven production. Industry growth has been exceptionally fast with an annual production increase of 10-15 percent. In 2017, industry accounted for 40 percent of GDP and 30 percent of employment and industrial goods for a full 95 percent of the value of goods exports.

The oldest industrial industry is the textile industry, which already in the 1930s produced for export. When China, with the assistance of the Soviet Union, was to be industrialized in the 1950s, the heavy industry gained the bulk of its investment and the iron and steel industry became the key industry. The political reforms that began in 1978 meant, among other things, changed priorities in business. Manufacturing of consumer goods was emphasized at the expense of heavy industry. Since then, however, the capacity of the steel industry has constantly increased. China became the world’s largest steel producer in 1995, and in 2008 it accounted for almost half of all steel production in the world. Most important are the steelworks near the major iron ore deposits in the provinces of Liaoning (including Anshan) and Shanxi (Baotou), in the largest cities Shanghai and Beijing, and in the lower part of Chang Jiang’s valley (Maanshan, Wuhan) and in Yunnan. The major problems of the steel industry are the uncertain supply of electricity and raw materials, mainly coal, as well as the requirements to broaden production against special steels, to improve quality and to manage raw materials and electric power.

Similar challenges exist in all industries in China. The heavy chemical industry began to emerge in the 1960s, and the availability of domestic raw materials has made China now the world’s largest producer of artificial fertilizers. China’s cement production is also the largest in the world, and nowhere is such a comprehensive construction business as here. The machine industry has also existed in China since the 1960s, and nowadays there is extensive export of technology and machinery at the intermediate level to third world countries. A major role in the modernization of Chinese agriculture is the production of small tractors and combine harvesters.

The fastest growing industrial industries in recent decades have been the automotive and IT and electronics industries. Chinese car manufacturing began to seriously expand in the 1990s, in collaboration with leading companies in Germany, the United States, France and Japan. In 2002, 1 million cars were manufactured, in 2008 almost 10 million, and in 2009 Japan and China were the largest car manufacturers in the world. At least as spectacular, growth has been in the IT industry, which produces, among other things. cell phones and laptops. These new industries have emerged with the help of extensive investments from abroad, especially from overseas Chinese, and they are found in coastal cities and in neighboring countryside, mainly in the provinces of Guangdong, Fujian, Zhejiang and Jiangxi as well as in Shanghai and Tianjin. Usually, the components are imported to be merged into finished products which are then exported. In China, there is a very large and low-paid workforce that can do this.

Foreign-owned operations have been of great importance to China’s business, not only for capital inflows but also to a great extent for the transfer of technology and for the development of expertise in business management and marketing.

Furthermore, more textile and clothing products are manufactured in China than in any other country. Such goods previously accounted for about 1/4 of export revenue, but the share has decreased as Chinese exports expanded to include many more commodities. The textile industry is mainly located in the largest cities, but it is also very widespread. Most of the exports of clothing products come from companies that have grown up in the countryside since the mid-1980s, both privately and collectively. They have been very important in providing work for many millions of rural residents who are no longer needed as agricultural laborers.

Improved economic conditions in China have enabled an increase in investment in high technology, which in turn has been driven by government ambitions to strengthen China’s international role and influence in research and development. As a result, in 1993 the China National Space Administration was formed to be responsible for the Chinese satellite and space program, which also includes manned space missions (see also CNSA).

Environmental Situation

China’s huge population affects the country’s nature most significantly, especially in eastern China’s cultivation areas, where very little of the original fauna and flora remains. However, in a world perspective, the individual Chinese consume a small amount of natural resources, which has allowed China to avoid extreme environmental degradation. The total energy consumption per capita is only one third of the world average for countries. However, this energy comes largely from coal, often of low quality and with high sulfur content. This causes significant acidification as well as severe air pollution problems, not least in the wintertime cities.

Much of the waste in China, including human faeces, is returned to the cultivation lands and supplemented with large quantities of artificial fertilizers. The extensive fertilization of eastern China’s fields means that large amounts of nutrients reach the river systems, which become heavily over-fertilized. In northern China, extensive desertification is underway, caused by overgrazing and incorrect farming practices. In addition, the Chinese timber output is significantly larger than forest growth. China’s vast rice cultivation areas contribute to the greenhouse effect by emitting methane and nitrous oxide, the latter of which also adversely affects the ozone layer.

Foreign trade

China’s economic transformation is reflected in extremely rapid growth in foreign trade. Until the end of the 1970s, the state had a monopoly on all trade, and China exported only to be able to import the capital goods that could not be manufactured. It was a protection against foreign competition but also an obstacle to innovation. In 1978, China ranked 32nd among the world’s trading nations. The open door policy meant that China took on a whole new role in the international business world. Deng Xiaoping raised many ideas from the export-led model of growth that has given South Korea and other countries in East and Southeast Asia a thriving economy. Most radical was the encouragement of foreign investment in China. It had a very strong effect on industrialization and foreign trade. At the end of the 1990s, China was at 10: e place among the trading nations and had already become a driving force in the Asian economy. Between 2000 and 2007, the value of foreign trade increased by close to 25 percent per year, slightly more for exports, slightly less for imports.

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China now has a large trade balance surplus. Since the mid-1980s, the composition of foreign trade has changed completely, from the export of oil and other natural resources to the export of goods from labor-intensive industries, such as textiles, shoes, toys and simpler electronic products. In 2007, industrial goods accounted for 95% of total goods exports. However, China’s textile exports are increasingly becoming aware of competition from countries with even lower wages.

Exports of technological products have shown the fastest increase, and already in 2007, machinery, transport and telecommunications equipment accounted for almost half of export earnings. Most of it comes from wholly or partly foreign-owned companies in the coastal areas. Imports of mineral and energy raw materials are also extensive and are increasing every year. About half of China’s exports go to Asian countries and 2/3 of the imports come from there. The United States and the EU are China’s two largest single trading partners. In 2007, percent of China’s exports went to the EU. China is the world’s largest trading nation in 2009 and its foreign trade accounted for two-thirds of GDP.

Tourism and gastronomy

China has great potential for tourism, but the industry did not play a major role in economic planning until 1997, when it was given a priority. In 2015, the country was visited by about 58 million tourists, making China the world’s third largest tourist country after France and the United States. In 1997-2012, the number of visitors increased by 34 million. Most visitors come from Japan, South Korea, the United States and the Russian Federation.

Among the major attractions are the Beijing, the Great Wall of China, the Xi’an Terracotta Army, the Buddhist Monastery and the Huang Hes Valley. Even Hong Kong, which traditionally had a large tourist flow, still plays an important gateway to China.

Note: the capital city of China is Beijing with a population of 15,600,000 (UN estimate 2011). Other major cities include Shanghai with a population of 20.2 million, Guangzhou with a population of 10.8 million, Shenzhen with a population of 10.6 million, Chongqing with a population of 9.9 million (UN estimate 2011).

The French and Chinese kitchens are the kitchens that have most influenced their respective cultural spheres worldwide. However, Chinese ancestry is considerably older than French; The basic principles of nutrition, composition and ritual have religious roots from the time of the founding of Daoism and Confucianism, some 500 years BC. Texture, taste, scent and color must harmonize in a Chinese meal; brittle ingredients are combined with for example meat or fish, colorful with transparent, sweet with sour, salty or bitter. The order of the courts is also strictly regulated.

There are several regional kitchens. You usually talk about four different Chinese cuisines: Beijing cuisine in the north (steamed bread, noodles, onions, garlic, lamb meat, peking anchor), Shanghai cuisine in the east (often oily and sweet dishes, fish, seafood, pork, red roast in soy), Sichuanku western (heavily seasoned with chili pepper, rice and mushrooms, often several cooking methods in the same dish) and Guangzhou cuisine in the south (what we commonly call “Chinese food”, wide variety of chicken, fish, fruit, usually deep-fried). The basis of a Chinese meal consists of rice (or noodles/bread in the north), fuck. To hell, cai is served, the accessories consisting of several dishes. The food is often shredded into very small pieces (which makes it easier to eat with chopsticks) and is then quickly milled in a wok pan. Other common cooking methods are steam cooking and deep frying. The meal is often started with a variety of cold dishes, so they follow hot and finally a hot soup, on festive occasions followed by a fish or seafood dish. Hot rice wine is a traditional drink, beer now very common, tea is usually served after meals. Pork, chicken and duck are the most common types of meat. In addition to rice and other cereals, beans and bean products are common. They replace dairy products in the form of bean cheese or bean paste. See also Chinese food.

China Economics and Business

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