China’s Economic Trends Analysis

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Table of Contents

Population
Economic Statistics and Activity
Currency system
Science and Technology
Channels of Distribution
Media
Works Cited

Population

With nearly 1.5 billion people, China has the biggest percentage of the world population based on country terms. The vast majority of the country’s citizens is largely rural as around eight hundred million people reside in rural areas while the rest, roughly 35 percent reside in urban areas.

Since the introduction of new family planning laws took effect, the population growth rate considerably slowed down (Murphey 10). The Chinese population continues to grow disproportionately as the number of girls born is less than the number of boys, for example, in 2000, for every 100 girls born; one hundred nineteen boys were born. The total imbalance stood at 128: 100 (Murphey 10).

China falls in the eastern part of Asia. The country stretches around three thousand four hundred miles from the North to the South while stretching approximately three thousand two hundred miles from the East to West. A bigger percentage of the population resides in the rural areas while few reside in the urban coastal towns of the country (Yu 28).

Economic Statistics and Activity

In the recent past, China has been registering between eight and ten percent GDP growth. The country has managed to maintain GNI and per capita GDP at around one thousand seven hundred from the year 2005. The trade volumes between China and the rest of the world continue to increase.

However, it is notable that trade outflow has increased at a higher rate than the trade inflow. Another notable occurrence in China rests on the notion that inflation is under control. In the recent times, it is only in 2004 that inflation was high, as it stood at seven percent. In 2007 and 2008, China recorded around seven percent inflation. In the latter part of 2008, inflation rose to 8.7 percent (Guo 200-9).

The accession of the Chinese economy into the world stage took an interestingly turn in 2001 when China got admission into the WTO. After this admission, China became more open in terms of trade. As a direct result of the opening up, the trade volumes between countries such as the ASEAN countries and Japan on the one hand and China on the other hand, grew rapidly. At the same time, China lowered its tariffs (Guo 200-9).

According to Ilan and McIntyre (45), the opening up of the Chinese market also allowed for an increase in the levels of Direct Foreign Investments in the country. A year after the accession of the country to WTO, Foreign Direct Investment rose from forty-four to fifty three billion dollars. The Chinese trade volumes in 2010 was roughly 3 trillion Us dollars, making it the second largest trading country after the United States.

Despite the recent successes being witnessed in the Chinese economy, one problem has emerged. The country’s employable work force has declined over the years. This is likely to force the country into further problems based on the notion that pension and associated benefits would put the economy under pressure (Guo 200).

Another problem that affects the country is based on the idea that China solely relies on a fixed exchange rate. The effect of using a fixed exchange rate rests on the belief that the system adversely affects inflation since counter-inflationary policies are comparatively less flexible. This system may benefit if some reforms are carried out.The other aspect that characterizes the Chinese economy is inequality.

The coastal cities of the country keep on registering unprecedented growth levels while the rural areas continue facing various hardships. China is thus among the most unequal societies. In the period between 1980’s and 1996, China registered the highest income inequality. At the same time, per-capita incomes were 2.3 times higher in urban areas in 1990. This rate increased to 2.7 in 1999 before rising to around 2.9 in 2000.

Thus, it is rightly alleged that China is split into two countries, the rich coastal megalopolis and the rest made up of poor interior regions. In the coastal megalopolis, per capita incomes are as high as $1,000 while in the interior regions, per capita incomes are as low as less than $200 per year (Guo 2009).

Table 1 proves that average disposable income and the consumption levels in the Chinese republic are relatively low when compared to other developed nations. Another aspect that springs up centers on the expenditure patterns of the Chinese people. Unlike other people from different parts of the world, the Chinese people prefer saving their money than spending. This is based on the Chinese tradition, which lays emphasis on saving for the future generations.

Table 1: Showing consumption rates in 2007.

	Urban families (Yuan/person)	Rural families (Yuan/person)
Disposable income	3934.94	1280.5
Consumption expenditure	2619.55	1072.2

China’s nominal GDP between 1952 and 2005.

Mainland China GDP distribution in 2007.

The transportation system in China is an important sector in the country’s economy. However, the transport system remains highly unequal (Donnithorne 252). This is coupled with variations in human and natural resources that have affected the development of the country.

The development in infrastructure remains inadequate in China. However, the country is working towards improving this state of affairs as it seeks to link its major economic centers. In order to achieve this goal, the country is reworking its road network. By 2000, the country had planned to have eight hundred thousand miles of roadway, of which, five thousand was to be highways.

In the same vein, the country aspired to put in place about nine hundred thousand miles of roadway, of which twelve thousand was to be highways by 2010. Despite the planned improvements, this would only present around 15 KM highway density. This is way behind the densities of leading countries such as the US and Germany which have 64 and 177 respectively. It is worth to note that road transport account for almost ninety percent of the country’s transportation services (Donnithorne 252).

From 2005, questions regarding labor emerged in China. This was because the country’s demand for labor was becoming stronger. Such a scenario enabled workers to select work that paid well and offered better working conditions. This forced companies to adjust the minimum wage upwards in order to keep hold of their employees. The fall in the number of workers may be connected to the idea that the family planning policy was taking its toll in the country.

Currency System

Exchange rates (Chinese yuan per US$1)

July 31, 2008 – RMB 6.846
Mid 2007 – RMB 7.45
Early 2006 – RMB 8.07
January 2000 – RMB 8.2793
1999 – RMB 8.2783
1998 – RMB 8.2790
1997 – RMB 8.2898
1996 – RMB 8.3142
1995 – RMB 8.3514

Oil and natural gas are the major minerals available in the Chinese republic. In 2005 the production levels of oil stand at 47.87 km³, consumption was at 44.92 km³, imports were 0 m³, exports were 2.943 km³ while proved reserves were 1,448k m³ in 2006. Regarding oil, the following statistics were available:

Production levels: 3,631,001 bbl/d (600, 000 m³/d) in 2005
Consumption levels: 6,535,000 bbl/d (1,000,800 m³/d) in 2005
Export levels: 444,300 bbl/d (70,470 m³/d) in 2005
Import levels: 3,182,000 bbl/d (505,676 m³/d) in 2005
Net import levels: 2,750,000 barrels @ day (435,000 m³/d) in 2005
Reserves: 16.4 Gbbl (2.589×10^⁹ m³) in 2006

Science and Technology

China is among the top countries in the world on the technological advancement front. China has made much progress in the area of technology. The most recent case is the breakthrough made in fuel reprocessing technology. However, China is accused by other countries as abusing patent and copyright rules because of non-adherence.

Spending on research and development in China has doubled over the last 15 years. In 1995, China spent roughly 0.6 percent of GDP ON research and development while the country used 1.2 percent in 2005.

Using the current exchange rates, this represents an increase from seventeen billion to ninety four billion US dollars. Surprisingly, investment in research and development is growing at a faster rate than that of the economy. Despite these developments, the percentage of the Chinese labor force posses technological skills remain relatively small.

Channels of Distribution

The supply and retail industries play a valuable role in the Chinese republic. However, a number of restrictions that limit the extent to which foreigners participate in the industries. The following table clearly illustrates ownership in both supply and retail outlets. In reference to channels of distribution, the Chinese republic also has two faces.

Most Chinese are small-scale distributors while a minority group operates as large-scale distributors. Due to the high number of restrictions, only five percent of retailers are foreigners. This accounts for two thousand four hundred foreign retailers who have invested around five billion US dollars in the business (Gattorna 575).

Table 2: China’s Retail Market Structure, 2008.

Sector	Enterprises (10,000)	Employees (10,000)	Revenue (¥ billion)
Total	54.9	836.9	4,335.3
Autos, motorcycles, fuel, and auto parts	8.0	122.9	1,693.3
Integrated retail	6.4	285.9	1,141.6
Household electric appliances and electronics	9.1	97.3	475.6
Textiles, garments, and daily consumer products	6.0	74.9	219.0
Medicine and medical devices	4.9	62.5	199.9
Hardware, furniture, and decoration materials	7.2	56.9	182.9

Source: Communiqué on Major Data of the Second National Economic Census (No. 3), PRC National Bureau of Statistics (NBS)

Sales plus Operating Revenues: 2000-2009

China, Glassware, Crockery and Pottery Wholesaler-Distributors. — China, Glassware, Crockery and Pottery Wholesaler-Distributors (NAICS 41431).

Source: Statistics Canada, special tabulation, unpublished data, Annual Wholesale Trade Survey.

Net Revenues: 2000-2009

Source: Statistics Canada, special tabulation, unpublished data, Annual Wholesale Trade Survey.

Media

Primarily, the Chinese media is made up of magazines, newspapers, radio and television. However, in the recent times, the emergence of the internet has brought a new dimension to the media as it continues to gain prominence.

Access to the media has remained limited since the State controlled the communication channels. However, access has improved especially after the introduction of the economic reforms. Nevertheless, State run media agencies such as People’s Daily, Xinhua and CCTV continue to hold considerable market share in the country (Shirk 1-23).

Shirk (1-23) observes that television revenues have been on the rise in the recent times. As an illustration, in 1995, the earnings totaled two billion US dollars, by 2005, the income was expected to rise to around six billion US dollars. At the same time, television advertising generated one fifty million US dollars.

The income covered roughly ninety percent of the television revenues. In contrast, radio advertising ranks way behind television in terms of earnings. However, print media earnings continue to rise at very high rates. The developments being made in the print media poses serious concerns to the other forms of communication.

Print media on a bus station in China. — An issue in Renmin Ribao in Hangzhou.

Based on a World Bank report there were about thirty-five TV sets per hundred people in China. It was also indicated that on average each household had access to radios since the report established that eight out of ten people had radio access. The report also indicated that China has over one thousand radio stations.

Although radio has the largest coverage in terms of the ability to reach the biggest number of people, the other forms of communication are also progressing. Television continues to advance although not at the same pace with the print media. The resurgence in the use of print media is mostly attributable to the developments in the internet (Shirk 1-23).

Works Cited

Donnithorne, Audrey. China’s Economic System. London: Routledge, 2008.

Gattorna, John. Gower handbook of supply chain management. Farnham: Gower Publishing, Ltd., 2003

Guo, Rongxing. An Introduction to the Chinese Economy: The Driving Forces Behind Modern Day China. New York: John Wiley and Sons, 2011.

Ilan, Alon and McIntyre, John. The Globalization of Chinese Enterprises. New York: Palgrave McMillan, 2008.

Murphey, Robert. East Asia: A New History. Michigan: University of Michigan Press, 1996.

Shirk, Susan. Changing media, changing China. London: Oxford University Press, 2011.

Yu, Keping Globalization and changes in China’s governance. Boston: BRILL, 2008.

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