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China: An Overview

y CAPITAL-BEIJING

y China had a population of 1.26bn in 2000

with estimated growth rate of 12.5mn

per Year has reached 1.33bn in 2008 butannual population growth rate has

dropped by nearly 44%.

y Its the Largest Economy of the World

and 3RD Largest Country by Area.

yOnly 1/10 of the land is cultivatedleaving 90% People Living On 16% Of

the Land

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Factors Effected Growth

Economic Growth was Hindered due to the following reasons:yWar and Inflation

yPoor Planning and natural disasters

yTermination of the collaboration with the Soviet Union

y15 to 30 Million dead due to Famine

Concentration of 1st 5 year plan only on rapid build up of heavy

industry mainly Defense

Effects of Cultural Revolution (1966 76)

Great leap forward experiment led to depression

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Pre crisis (1949-1958)

yChina followed on the footsteps of Soviets Union andconcentrated on heavy industry development strategy.

y Primary Focus on Heavy Industry mainly Defense and Reduced

Consumption.

y The government stepped in and took control of a large part ofthe economy and redirected resources into building

new factories

y After the Sino-Soviet Dispute the Govt. Invested heavily on

Agricultural Sector.y The First Five year plan implemented(1953-57)

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During Crisis

Factors prevented Economic Growth

y Political Turmoil.

y Poor Planning.

y Natural Disaster.

Experiments of Great Leap Forward (1958-60)

y Rural collectivization.

y Elimination of wage incentive.

y Backyard steel plants.

y Great leeway for local initiatives.

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Effects

y Death of around 30 million people because of Famine.

y Decline in Economic Growth.

y China went into Depression in early 1960s.

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Post crisisPost crisis-- Economic ReformsEconomic Reforms(1978 onwards)(1978 onwards)

` In late 1970 and early 1980 Trade with other countries were

allowed.

` Economic zones created for attracting the Foreign Direct

Investment (FDI).

` Privilege to farmers for selling out their surplus crop in the open

market was allowed.

` TownshipVillage Enterprises (TVE) were established.

` Creation of Special Economic Zones

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Late 1980 and 1990Late 1980 and 1990

` Creating a pricing system and decreasing the role of state in resource

allocations

` Administratively driven command economy transformed to a price driven

market economy

` Closing of unprofitable enterprises

` Dealing with insolvency in the banking system.

` Constraints on foreign trade were relaxed, and joint ventures with foreign

firms were officially encouraged as sources of modern technology and scarce

foreign exchange

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Economic Reforms AchievementEconomic Reforms Achievement

` The real GDP on average grows to 9% a year.

` People below poverty line (BPL) has reduced to a large extent.

` Increase in foreign exchange reserves.

` China has became the largest economy in the world.

` Between 1996-2000 China cumulatively approved 104,621

foreign invested enterprises, with a commitments of US 279.984

billion

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y Political and social stability, economic productivity,and public and consumer welfare were considered foremost.

y The government also had focused on foreign trade as a major

vehicle for economic growth and permitted foreign directinvestment in several small special economic zones.

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Economic Performance:Economic Performance:

PrePre-- and Postand Post--ReformReform

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Composition ofForeign InvestmentComposition ofForeign Investment

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Present Scenario

China is one of the fastest growing economies in the world

,at the same time , the country faces complex economic,

political , social and environmental challenges China's economy grew at an average rate of 10% per year

during the period 19902004

China have formed different planning forums to look after

the dynamic and critical issues facing a region or a country

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Challenges lying ahead

` China has been called as People Bomb due to increase in

population.

` Growth rate of population estimated at 14mn per year.

` Unemployment is about 20 percent.

` HIV/AIDS is spreading .

`

Corruption` Fear of global pandemic Bird Flu because of worlds biggest

poultry population.

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