Historical Perspectives on the Economy

Economic Overview:

Beginning in late 1978 the Chinese leadership has been trying to move the economy from the sluggish Soviet-style centrally planned economy to a more productive and flexible economy with market elements, but still within the framework of monolithic Communist control. To this end the authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the foreign economic sector to increased trade and joint ventures. The most gratifying result has been a strong spurt in production, particularly in agriculture in the early 1980s. Industry also has posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment and modern production methods have helped spur production of both domestic and export goods. Aggregate output has more than doubled since 1978.

On the darker side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy, lassitude, corruption) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, re-tightening central controls at intervals and thereby lessening the credibility of the reform process. In 1991 output rose substantially, particularly in the favored coastal areas. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to the nation's long-term economic viability.

• GDP: $3.39 trillion (1996 est.); per capita GDP is $2,800 (1996 est.). This has led to an average economic growth rate of 10% over the last decade. 7.8% in 1998.

• Inflation rate (consumer prices): 2.8% (1997)

• Budget: deficit $13. 7 billion (1994)

• Exports: $151.1 billion (1996)
  -commodities: textiles, garments, telecommunications and recording equipment, petroleum, minerals.
  -Major partners include: Hong Kong (24%), Japan (19%), US (17%), USSR, and Singapore

• Imports: $132.1 billion (1996)
  -commodities: specialized industrial machinery, chemicals, manufactured goods, steel, textile yarn, fertilizer.
  -Major partners include: Hong Kong, Japan, US, Germany, Taiwan

• External debt: $51 billion (1990 est.)

• Industrial production: growth rate 14.0% (1991); accounts for 45% of GNP

• Energy Consumption: world's second largest consumer of primary energy sources

• Defense expenditures: 5.7% of GDP; 2.8 million active troops (1997).

• Industries: iron, steel, coal, machine building, armaments, textiles, petroleum, cement, chemical fertilizers, consumer durables, food processing

• Agriculture: accounts for 26% of GNP; among the world's largest producers of rice, potatoes, sorghum, peanuts, tea, millet, barley, and pork; commercial crops include cotton, other fibers, and oilseeds; produces variety of livestock products; basically self-sufficient in food; fish catch of 14 million metric tons in 1996

• Illicit drugs: transshipment point for heroin produced in the Golden Triangle of Laos, Burma, and Thailand

• Economic aid: donor - to less developed countries (1970-89) $7.0 billion; US commitments, including Ex-Im (FY70-87), $220.7 million; Western (non-US) countries, ODA and OOF bilateral commitments (1970-87), $13.5 billion

• Currency: yuan (plural - yuan); 1 yuan (Y) = 10 jiao

• Exchange rates: US$l.00 = 8.28 yuan (Sept. 1998). Compared to 5.44 in January 1992

 

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