China as a member of BRICS

7/30/2019 China as a member of BRICS

1/48

1

CHAPTER 1. BRICS- Introduction:

BRICS is the acronym for an association of five major emerging national

economies: Brazil, Russia, India, China and South Africa. The grouping was originally

known as "BRIC" before the inclusion of South Africa in 2010. With the possible

exception of Russia, the BRICS members are all developing or newly industrialized

countries, but they are distinguished by their large, fast-growing economies and significant

influence on regional and global affairs; all five are G-20 members. As of 2013, the five

BRICS countries represent almost 3 billion people, with a combined nominal GDP of

US$14.8 trillion, and an estimated US$4 trillion in combined foreign reserves. Presently,

South Africa holds the chair of the BRICS group. The BRICS have received both praise

and criticism from numerous quarters.

The BRICS countries include more than 40% of the worlds population and occupy over

a quarter of the worlds land area. Brazil, Russia, India, China and South Africa are a

powerful economic force. The acronym was coined by Jim ONeill a Goldman Sachs

employee in a 2001 paper entitled Building Better Global Economic BRICs. The

acronym has come into widespread use as a symbol of the shift in global economic

power away from the developed G7 economies to the developing nations.

Political dialogue between the BRIC countries began in New York in September 2006,

with a meeting of the BRIC foreign ministers. The BRIC countries met for their first

official summit on 16 June 2009, in Russia, with Luiz Incio Lula da Silva, Dmitry

Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia,

India and China, all attending. The core focus of the summit was related to improving


2/48

2

the current global economic situation and discussing how the four countries can better

work together in the future, as well as a more general push to reform financial

institutions. There was also discussion surrounding how emerging markets, such as those

members of BRIC, could be better involved in global affairs in the future.

In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for

a new global reserve currency, which would have to be "diversified, stable and

predictable". Although the statement that was released did not directly criticise the

perceived "dominance" of the US dollarsomething that Russia had criticised in the past

it did spark a fall in the value of the dollar against other major currencies.

South Africa sought membership during 2010 and the process for formal admission

began as early as August 2010. South Africa was admitted as a member nation on

December 24, 2010 after being formally invited by China and the other BRIC countries

to join the group. The group was renamed BRICS to reflect the now-five-nation

membership, with an S for South Africa appended to the acronym. President Jacob

Zuma attended the 2011 BRICS summit in China, in April 2011 as a full member.

The grouping has held annual summits since 2009, with member countries taking turns

to host. Prior to South Africa's admission, two BRIC summits were held, in 2009 and

2010. The first five-member BRICS summit was held in 2011. The most recent BRICS

summit took place in Durban, South Africa, in March 2013.


3/48

3

Member countries:

The Economic data of the member countries is sourced from the most recent IMF

figures and given in US Dollars.

Country Brazil Russia India China South Africa

Population 193,946,886 143,451,702 1,210,193,422 1,354,040,000 51,770,560

GDP

(Nominal)

$2,395.9 bn $2,021.9 bn $1,824.8 bn $8,227.0 bn $384.3 bn

HFCE $1,266.3 bn $671.6 bn $737.9 bn $1,835.3 bn $173.8 bn

Govt.

Spending

$846.6 bn $414.0 bn $281.0 bn $2,031.0 bn $95.27 bn

Exports $256.0 bn $542.5 bn $309.1 bn $2,021.0 bn $101.2 bn

Imports $238.8 bn $358.1 bn $500.3 bn $1,780.0 bn $106.8 bn

GDP per

capita

(PPP)

$11,875 $17,708 $3,829 $9,161 $11,375

HDI 730 (high) 788 (high) 554 (medium) 699 (medium) 629 (medium)


4/48

4

Prospects for the BRICS through Chinas contribution

BRICS and the Durban summit:

China is a founding member with a fully equal institutional place, a rank as the second most

powerful member and an influence that few can match and none can ignore. Indeed, neither body

would exist today if China had not seen them from the start as useful clubs for shaping a new

world order to protect itself and the global community in the intensely interconnected, complex,

uncertain, twenty-first century world.

In the BRICS China is the primus inter pares power. It wields more relative capability in gross

domestic product (GDP), population, territory and foreign exchange reserves than any other

member and does so to a substantial or overwhelming degree. It alone can ensure the success of

the prospective new BRICS development bank. This was an initiative from India at the last

BRICS summit it hosted in Delhi in March 2012, and is the one that will be the centrepiece

achievement of the Durban Summit and determine the success or failure of that summit as a

whole. China alone has the financial capacity in its foreign exchange reserves or elsewhere to

determine if the BRICS bank will be launched with sufficient capital to make a major difference

in a world dominated by the established, western-controlled, now underfunded World Bank in

Washington and many regional development banks around the world. China can thus lead the

BRICS development bank and the BRICS as a whole away from being a closed, inward-looking

club designed to benefit only its members, into an outward-looking one oriented to assisting

developing countries, which have long been China's colleagues in the Group of 77 and other

forums.


5/48

5

China's privileged material position similarly positions it for leadership on the other key issues

the Durban Summit will address. These include moving toward new regimes for currency swaps

and financial safety nets, stock exchange integration and currency clearing in the international

trade among the BRICS countries themselves. It also embraces cooperation among BRICS

countries on customs clearing, to facilitate trade and counter the exchange of drugs and other

harmful things.

China is similarly central to the broader array of social issues the Durban Summit will address.

Among them is developing the institutional capacity of the BRICS to address health issues of

key concern for citizens inside and outside the club. This agenda embraces fostering regimes on

intellectual property tilted more toward protecting poor people and patients than pharmaceutical

firms with established property rights, preventing and controlling chronic non-communicable

diseases, and putting health first as a driver of development.

China further has a critical role in guiding the BRICS approach to the pressing security issues of

the day. In the field of new soft security, China is central is having the BRICS cooperate to

enhance cyber-security and combat cyber-espionage, and to put in place a more broadly shared

regime to govern the internet and information and communications technology in the twenty-first

century world. In the field of traditional hard security, if China can continue to cooperate with

India to lessen tensions over their longstanding border dispute and similarly reassure a Russia

wary of intrusions into its thinly populated, poor regions near China, it would be a big boost for

further BRICS cooperation across the board. Generating a consensus among BRICS countries on

questions of international intervention in countries such as Libya in 2011 and Syria now could

pave the way to a global solution that would save many innocent lives. And China along with


6/48

6

Russia is essential in determining whether India and Brazil secure the enhanced status in the

United Nations Security Council that they badly want.

Most broadly, China will face great expectations from its BRICS colleagues and the broader

world to play a major leadership role. Both will remember the skill with which China hosted the

third BRICS summit, at Sanya in 2011. It was at that summit that President Jacob Zuma of South

Africa, the BRICS newest member and host of the Durban Summit, arrived at a BRICS summit

for the first time. And Durban will be the first major outing on the world stage for China's new

leadership, especially as President Xi Jinping will be the freshest face among the BRICS leaders

there. With this fresh face could come fresh approaches that could well determine the future of

the BRICS institution and the outcome of the key global issues that it will confront. As the other

new arrival at a BRICS summit is Russian president Vladimir Putin, China's neighbour and the

host of the G20's St. Petersburg Summit six month after the BRICS's Durban one, the bonds

forged between the two could set the stage for a new burst of cooperation in global summitry

writ large.

In making the Durban Summit, President Xi has had a strong start. He has just publicly

proclaimed a broad, bold vision of the BRICS as a key forum to generate strong, sustainable and

balanced growth, to strengthen global economic governance and to foster democracy in

international relations as a whole. He views the BRICS as an important force to promote world

peace as well as partnership and development with Africa, including through the BRICS

LeadersAfrica Dialogue Forum that the Durban Summit will pioneer. To back his

proclamations, he is putting in place the high-level diplomatic ground work with his first trip


7/48

7

abroad taking him to Russia, Tanzania and the Republic of Congo as part of his visit to the

BRICS summit itself.

To fully seize such opportunities for global leadership through BRICS, China will need more

than merely mobilizing its formidable material power and the skill and experience in G20

diplomacy it has acquired from the past. It will also need to enrich at home and abroad all three

growth-generating components that the Russians have wisely identified as the St. Petersburg

Summit's theme: quality jobs and investment, effective regulation, and trust and transparency. In

doing so it will do much to assist and assist its still formidable partners in the United States and

Europe that is standing by their side in addressing the great challenges that they face at home and

in the now intensely interconnected world as a whole.


8/48

8

CHAPTER 2: CHINA- Introduction

China, officially known as the Peoples Republic of China (PRC), is a sovereign state

located in East Asia. It is the worlds most populous country with a population of

more than 1.35 billion. The PRC is a single-party state governed by the Communist

Party, with its seat of government in the capital city of Beijing. Covering approximately

9.6 million square kilometers, China is the world's second-largest country by land

area, but only the third or fourth-largest by total area.

Since the introduction of economic reforms in 1978, China has become the

world's fastest-growing major economy. As of 2013, it is the world's second-largest

economy by both nominal total GDP and purchasing power parity (PPP), and is also

the world's largest exporter and importer of goods. China is a recognized nuclear

weapons state and has the world's largest standing army, with the second-largest

defense budget.

The PRC has been a United Nations member since 1971, when it replaced the ROC as

a permanent member of the U.N. Security Council. China is also a member of numerous

formal and informal multilateral organizations, including the WTO, APEC, BRICS, the

Shanghai Cooperation Organization, the BCIM and the G-20. China has been

characterized as a potential superpower by a number of academics, military analysts, and

public policy and economics analysts.

Since the late 1970s China has moved from a closed, centrally planned system to a

more market-oriented one that plays a major global role. In 2010, China became the

worlds largest exporter. Reforms began with the phasing out of collectivized agriculture,


9/48

9

and expanded to include the gradual liberalization of prices, fiscal decentralization,

increased autonomy for state enterprises, creation of a diversified banking system,

development of stock markets, rapid growth of the private sector, and opening to foreign

trade and investment. China has implemented reforms in a gradualist fashion. In recent

years, China has renewed its support for state-owned enterprises in sectors it considers

important to economic security, explicitly looking to foster globally competitive national

champions. After keeping its currency tightly linked to the US dollar for years, in July

2005 China revalued its currency by 2.1% against the US dollar and moved to an

exchange rate system that references a basket of currencies.

From mid 2005 to late 2008 cumulative appreciation of the Renminbi against the US

dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar

from the onset of the global financial crisis until June 2010, when Beijing allowed

resumption of a gradual appreciation. The restructuring of the economy and resulting

efficiency gains have contributed to a more than tenfold increase in GDP since 1978.

Measured on a purchasing power parity (PPP) basis that adjusts for price differences,

China in 2010 stood as the second-largest economy in the world after the US, having

surpassed Japan in 2001. The dollar values of Chinas agricultural and industrial output

each exceed those of the US; China is second to the US in the value of services it

produces. Still, per capita income Is below the world average. The Chinese government

faces numerous economic challenges, including: (a)reducing its high domestic savings rate

and correspondingly low domestic demand; (b)sustaining adequate job growth for tens of

millions of migrants and new entrants to the workforce; (c) reducing corruption and

other economic crimes; and (d) containing environmental damage and social strife related


10/48

10

to the economys rapid transformation. Economic development has progressed further in

coastal provinces than in the interior, and by 2011 more than 250 million migrant

workers and their dependents had relocated to urban areas to find work. One

consequence of population control policy is that China is now one of the most rapidly

aging countries in the world. Deterioration in the environment notably air pollution,

soil erosion, and the steady fall of the water table, especially in the north is another

long- term problem. China continues to lose arable land because of erosion and

economic development.

The Chinese government is seeking to add energy production capacity from sources other

than coal and oil, focusing on nuclear and alternative energy development. In 2010-11,

China faced high inflation resulting largely from its credit-fueled stimulus program. Some

tightening measures appear to have controlled inflation, but GDP growth consequently

slowed to near 9% for 2011. An economic slowdown in Europe is expected to further

drag Chinese growth moving into 2012. Debt overhang from the stimulus program,

particularly among local governments, and a property price bubble challenge policymakers

currently. The governments 12th Five-Year Plan, adopted in March 2011, emphasizes

continued economic reforms and the need to increase domestic consumption in order to

make the economy less dependent on exports in the future. However, China has made

only marginal progress toward these rebalancing goals.


11/48

11

China- Aviation & Aerospace:

Chinas aerospace industry has advanced at an impressive rate over the past decade but

where it goes from here could have significant implications for the global industry.

A report from the Rand Corporation, entitled Ready for Takeoff: Chinas Advancing

Aerospace Industry, explores the phenomenon and the possible implications for the US.

The highlights of the report include: While some of this progress can be attributed to

rapidly growing governmental support for Chinas aerospace sector, Chinas aerospace

capabilities have also benefited from the increasing participation of its aerospace industry

in the global commercial aerospace market and the supply chains of the worlds leading

aerospace firms. Chinese airlines, which today operate about 1400 large commercial

aircraft and regional jets, are projected to purchase roughly 4000 new jetliners over the

next 20 years. Actual purchases could be more or less than this projection, depending on

whether Chinas economy grows at the expected rate and on the availability of

alternative forms of transportation such as high-speed rail.

Chinese air freight companies will likely purchase another 100 to 200 cargo aircraft, but

many of them may be converted aging passenger planes. In September 2009, there were

about 200 civil helicopters in China, and approximately 1,200 additional civil helicopters

are expected to be purchased by 2018. Chinas general aviation market may be set for

an explosion of growth. As of late 2009, the nations severely restrictive airspace

management regime had limited the number of fixed-wing general aviation aircraft in

China to about 800 (compared with 230,000 in the United States). Reforms are under

way, however, and the number of fixed-wing general aviation aircraft in China is


12/48

12

expected to increase by 30 percent per year over the next five to 10 years, resulting in

more than 10,000 new aircraft by 2020. Except possibly in the case of helicopters,

Chinas current ability to meet demand with indigenous aircraft is limited. Chinas

indigenous large commercial aircraft , the C919, will not begin deliveries until the middle

of the decade, at the earliest, and it will be a narrow-body aircraft that competes

only with the Boeing 737 series and Airbus A320 series. All wide-body aircraft will be

imported at least through 2020.

Although Chinese airlines will apparently be required to buy at least some C919s, their

preference, and that of their customers, will continue to be for Boeing and Airbus

aircraft with proven safety and reliability records. If the C919 can establish a comparable

safety and reliability record, however, and can offer improved comfort and fuel

efficiency, it is possible that, over time, it will begin to take market

share away from Boeing and Airbus (provided, of course, that Boeing and Airbus do

not bring to market even better aircraft in the meantime).

Chinese manufacturers already produce light utility helicopters and medium transport

helicopters, and a medium utility helicopter and possibly a heavy transport helicopter are

in development. Given Chinas limited civil helicopter market, its domestic

manufacturing capabilities may be sufficient to satisfy demand, although specialized types

of helicopters may be imported. If the fixed-wing general aviation market in China

grows as rapidly as projected, much of the demand will be filled by imported aircraft,

as the variety of domestic offerings is extremely limited. The Chinese government has

attempted to leverage airliner purchases in exchange for arrangements that it hopes will

lead to technology transfers into Chinas aviation manufacturing industry. In the ARJ21


13/48

13

regional jet and C919 airliner projects in particular, a condition for foreign aerospace

firms to be selected as suppliers has often been that a local production facility be

established.

Partly as a result of these policies, US and other foreign aerospace manufacturers

are engaged in numerous joint ventures and other technology transfers with Chinas

aviation industry. In many cases, however, foreign aerospace manufacturers have

established joint ventures in China not to sell products there but to acquire access to

Chinas low-cost, high-quality labor for manufacturing products that are sold throughout

the world. As of today, only about one per cent of US aerospace imports come

from ChinaThere is no question that Chinas growing civilian aerospace capabilities are

contributing to the development of its military aerospace capabilities.


14/48

14

China- Oil, Power & Gas:

Chinas petroleum resources are a key to its industrial development. Crude oil

production increased from 102,000 barrels per day in 1960 to 3.3 million per day as of

2002. In 1998 China had proven reserves of 24 billion barrels. The major producing

centers are the Daqing field in Heilongjiang, which came into production in 1965 and

accounts for nearly one-third of national production, and the Liaohe field, located in

northeastern China. In addition to numerous other mainland finds, China has potential

offshore reserves in the Bo Hai area (thought to have reserves of over 1.5 billion

barrels) and the South China Sea, especially in the vicinity of Hainan Island.

By the mid-1970s, China no longer had to rely on oil imports; petroleum exports had, in

fact, emerged as a major source of foreign exchange earnings. More than 9,740 km

(6,050 mi) of long-distance pipelines transport the oil from fields to refineries and other

points of consumption and export. China, however, became a importer of oil in 1996,

because rapid increases in oil demand from high economic growth rates outpaced the

slower increases in oil production.

After rising dramatically in the early 1980s, owing largely to the discovery and

exploitation of vast deposits in Sichuan Province during the late 1950s and early 1960s,

natural gas output stagnated somewhat in the late 1980s. As of 2002 natural gas supplied

only 3% of the countrys energy. However, with proven reserves totaling over 1.4 trillion

cu m (48 trillion cu ft), it was expected that consumption would triple by 2010. In

2000, total national production reached 27.2 billion cu m (960 billion cu ft). A pipeline


15/48

15

to transport natural gas from the Xinjiang province in the west to Shanghai in the east

was planned, with Shell chosen to lead a consortium of development companies.

Although Chinas rivers provide a vast hydroelectric potential (an estimated 378 million

kW), only a small part has been developed. In the late 1990s, after economic growth

slowed due to the Asian economic crisis, the government declared a two- to three- year

moratorium on construction of new power plants due to an oversupply problem. The

main hydroelectric projects include Ertan in Sichuan Province, Yantan in Guangsxi

Zhuang Autonomous Region, Manwan in Yunan Province, Geheyan in Hubei Province,

Wuqiangxi in Hunan Province, Yamzho Yumco in Xizang Autonomous Region, and Lijia

Xia in Qinghai Province. In April 1992, the government approved the construction of the

largest hydropower project in Chinathe Three Gorges Project on the middle reaches of

the Chang Jiang. Construction, begun in 1996, was still underway in 2002, with

completion of the 26 hydropower generating units slated for 2009. The Three Gorges

Project has a designed capacity of 17,680 MW and will require the relocation of

millions of people just in Sichuan Province alone. A second major hydroelectric project,

consisting of a series of dams on the Yellow River, was also underway in 2002.

In 2001, Chinas net installed electrical generating capacity was 318.3 million kW, up

from 115.5 million kW in 1988. Total output of electricity increased during the 198898

period from 545 billion to 1,098 billion kWh. Net generation in 2000 was 1,288 billion

kWh, of which 81.8% was from fossil fuels, 16.8% from hydropower, and 1.2% from

nuclear power. Electricity consumption in 2000 was 1,206 trillion kWh.


16/48

16

Traditionally, coal has been the major primary-energy source, with auxiliary biomass

fuels provided by brushwood, rice husks, dung, and other noncommercial materials. The

abundance of coal continues to provide cheap thermal power for electric plants. In 2000

China was both the worlds largest coal producer, at 1,270 million tons, and its leading

consumer of coal, at 1,310 million tons. Coal comes from over two dozen sites in the

north, northeast, and southwest; Shanxi Province is the leading producer. Recoverable

reserves as of 2000 were estimated at over 126.2 billion tons. As of 1996, China

accounted for 11.1% of the worlds proven reserves of coal. Large thermal power plants

are situated in the northeast and along the east coast of China, where industry is

concentrated, as well as in new inland industrial centers, such as Chongqing, Taiyuan,

Xian, and Lanzhou. In 2000, coal accounted for 63% of primary energy consumption.

By that year, some of the countrys large coal-producing companies had returned to

profitability following a period of oversupply in the late 1990s that led to the closure of

many small mines.

The 279 MW Qinshan nuclear power plant near Shanghai began commercial operation in

1994. That same year, two 944-MW reactors at the Guangdong facility at Daya Bay also

started commercial service. In 1995, Chinese authorities approved the construction of four

more reactors. Net capacity for Chinas three nuclear reactors was estimated at 2,167,000

kW in 1996. As of 2002 construction of several nuclear power projects was underway.

The first unit of the Lingao nuclear power plant came online in May 2002; a second

unit was scheduled to begin operating in May 2003. Nuclear generation was planned to

play a secondary but important role, especially in areas that lack both hydropower

potential and major coal resources.


17/48

17

China- Infrastructure:

China currently has the most cell phone users of any country in the world, with over

800 million users as of July 2010. It also has the worlds largest number

of internet and broadband users. By December 2010, China had around 457 million

internet users, an increase of 19% over the previous year, and by the end of 2011 the

number of internet users had exceeded 500 million. According to the China Internet

Network Information Center (CNNIC), Chinas average internet connection speed is 100.9

kbit/s, less than half of the global average of 212.5 Kbit/s.

China Telecom and China Unicom, the countrys two largest broadband providers,

accounted for 20% of global broadband subscribers, whereas the worlds ten largest

broadband service providers combined accounted for 39% of the worlds broadband

customers. China Telecom is the most popular and used widely and is known to alone

provide its services to around 55 million broadband subscribers, while China Unicom

serves more than 40 million. The massive rise in internet use in China continues to fuel

rapid broadband growth, whereas the worlds other major broadband ISPs operate in the

mature markets of the developed world, with high levels of broadband penetration and

rapidly slowing subscriber growth.

Transportation in mainland China has been prioritized by the government in recent

decades, and has undergone intense state-led development since the late 1990s. The

national road network has been massively expanded through the creation of a network

of expressways, known as the National Trunk Highway System (NTHS). By the end of
http://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_usehttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_Internet_usershttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_broadband_Internet_usershttp://en.wikipedia.org/wiki/Kbithttp://en.wikipedia.org/wiki/China_Telecomhttp://en.wikipedia.org/wiki/China_Unicomhttp://en.wikipedia.org/wiki/Expressways_of_Chinahttp://en.wikipedia.org/wiki/Expressways_of_Chinahttp://en.wikipedia.org/wiki/China_Unicomhttp://en.wikipedia.org/wiki/China_Telecomhttp://en.wikipedia.org/wiki/Kbithttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_broadband_Internet_usershttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_Internet_usershttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_use


18/48

18

2011, Chinas expressways had reached a total length of 85,000 km (53,000 mi), second

only to the network of the United States.

China also possesses the worlds longest high-speed rail network, with over 9,676 km

(6,012 mi) of service routes. Of these, 3,515 km (2,184 mi) serve trains with top speeds

of 300 km/h (190 mph). In 2011, China unveiled a prototype train capable of reaching

speeds of 310 mph (500 km/h), the first ultra-high-speed train developed solely by its

domestic railway industry.

Private car ownership is growing rapidly, with China surpassing the United States as the

largest automobile market in the world in 2009, with total car sales of over

13.6 million.

Domestic air travel has also increased significantly, but remains too expensive for most.

Long- distance transportation is dominated by railways and charter bus systems. Railways

are the vital carrier in China; they are monopolized by the state, divided into various

railway bureau in different regions. Due to huge demand, the system is regularly subject

to overcrowding, particularly during holiday seasons, such as Chunyun during the Chinese

New Year.

Rapid transit systems are also rapidly developing in Chinas major cities, in the form of

networks of underground or light rail systems. Hong Kong has one of the most

developed transport systems in the world, while Shanghai has a high-speed maglev rail

line connecting the city to its main international airport, Pudong International Airport.
http://en.wikipedia.org/wiki/High-speed_rail_in_Chinahttp://en.wikipedia.org/wiki/Chunyunhttp://en.wikipedia.org/wiki/Chunyunhttp://en.wikipedia.org/wiki/Chinese_New_Yearhttp://en.wikipedia.org/wiki/Chinese_New_Yearhttp://en.wikipedia.org/wiki/Rapid_transithttp://en.wikipedia.org/wiki/Light_railhttp://en.wikipedia.org/wiki/Transport_in_Hong_Konghttp://en.wikipedia.org/wiki/Transport_in_Hong_Konghttp://en.wikipedia.org/wiki/Shanghai_Maglev_Trainhttp://en.wikipedia.org/wiki/Shanghai_Maglev_Trainhttp://en.wikipedia.org/wiki/Shanghai_Pudong_International_Airporthttp://en.wikipedia.org/wiki/Shanghai_Pudong_International_Airporthttp://en.wikipedia.org/wiki/Shanghai_Maglev_Trainhttp://en.wikipedia.org/wiki/Transport_in_Hong_Konghttp://en.wikipedia.org/wiki/Light_railhttp://en.wikipedia.org/wiki/Rapid_transithttp://en.wikipedia.org/wiki/Chinese_New_Yearhttp://en.wikipedia.org/wiki/Chinese_New_Yearhttp://en.wikipedia.org/wiki/Chunyunhttp://en.wikipedia.org/wiki/High-speed_rail_in_China


19/48

19

China- Automotive:

The automotive industry in the Peoples Republic of China has been the largest in the

world measured by automobile unit production since 2008. In 2009, China produced

13.79 million automobiles, of which 8 million were passenger cars and 3.41 million

were commercial vehicles. Of the automobiles produced, 44.3 per cent were local brands

(including BYD, Lifan ,Changan (Chana), Geely, Chery, Hafei, Jianghuai (JAC), Great

Wall and Roewe), and the rest were produced by joint ventures with foreign car makers

such as Volkswagen, Mitsubishi, General Motors, Hyundai,Nissan, Honda, Toyota etc.

While most of the cars manufactured in China are sold within China, exports reached

814,300 units in 2011.

Chinas automobile industry has been in rapid development since the early 1990s.

Chinas annual automobile production capacity first exceeded one million in 1992. By

2000, China was producing over two million vehicles. After Chinas entry into

the World Trade Organization (WTO) in 2001, the development of the automobile market further

accelerated. Between 2002 and 2007, Chinas national automobile market grew by an

average 21 percent, or one million vehicles year-on-year. In 2006, Chinas vehicle

production capacity successively exceeded six, then seven million, and in 2007, China

produced over eight million automobiles. In 2009, China surpassed the United States as

the worlds largest automobile producer by volume. In 2010, both sales and production

topped 18 million units, with 13.76 million passenger cars delivered, in each case the

largest by any nation in history.
http://en.wikipedia.org/wiki/Sedan_(automobile)http://en.wikipedia.org/wiki/Commercial_vehiclehttp://en.wikipedia.org/wiki/BYD_Autohttp://en.wikipedia.org/wiki/Lifan_Grouphttp://en.wikipedia.org/wiki/Lifan_Grouphttp://en.wikipedia.org/wiki/Chang'an_Motorshttp://en.wikipedia.org/wiki/Chang'an_Motorshttp://en.wikipedia.org/wiki/Chang'an_Motorshttp://en.wikipedia.org/wiki/Geely_Automobilehttp://en.wikipedia.org/wiki/Chery_Automobilehttp://en.wikipedia.org/wiki/Hafeihttp://en.wikipedia.org/wiki/Anhui_Jianghuai_Automobilehttp://en.wikipedia.org/wiki/Great_Wall_Motorhttp://en.wikipedia.org/wiki/Great_Wall_Motorhttp://en.wikipedia.org/wiki/Roewehttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Mitsubishihttp://en.wikipedia.org/wiki/General_Motorshttp://en.wikipedia.org/wiki/Hyundai_Motor_Companyhttp://en.wikipedia.org/wiki/Nissanhttp://en.wikipedia.org/wiki/Hondahttp://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Hondahttp://en.wikipedia.org/wiki/Nissanhttp://en.wikipedia.org/wiki/Hyundai_Motor_Companyhttp://en.wikipedia.org/wiki/General_Motorshttp://en.wikipedia.org/wiki/Mitsubishihttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Roewehttp://en.wikipedia.org/wiki/Great_Wall_Motorhttp://en.wikipedia.org/wiki/Great_Wall_Motorhttp://en.wikipedia.org/wiki/Anhui_Jianghuai_Automobilehttp://en.wikipedia.org/wiki/Hafeihttp://en.wikipedia.org/wiki/Chery_Automobilehttp://en.wikipedia.org/wiki/Geely_Automobilehttp://en.wikipedia.org/wiki/Chang'an_Motorshttp://en.wikipedia.org/wiki/Lifan_Grouphttp://en.wikipedia.org/wiki/BYD_Autohttp://en.wikipedia.org/wiki/Commercial_vehiclehttp://en.wikipedia.org/wiki/Sedan_(automobile)


20/48

20

The number of registered cars, buses, vans, and trucks on the road in China reached 62

million in 2009, and is expected to exceed 2 00 million by 2020. The consultancy McKinsey

& Company estimates that Chinas car market will grow tenfold between 2005 and 2030.

The main industry group for the Chinese automotive industry is the China Association of

Automobile Manufacturers.
http://en.wikipedia.org/wiki/Consultancyhttp://en.wikipedia.org/wiki/McKinsey_&_Companyhttp://en.wikipedia.org/wiki/McKinsey_&_Companyhttp://en.wikipedia.org/wiki/McKinsey_&_Companyhttp://en.wikipedia.org/wiki/McKinsey_&_Companyhttp://en.wikipedia.org/wiki/Consultancy


21/48

21

China- Defense:

Active military forces include some 2,270,000 personnel and another 500600,000 reserves.

China has been modernizing the military at a rapid pace even as it reduces personnel. The army

consists of 1,600,000 in seven military regions. The Chinese navy consists of 250,000 personnel,

including 10,000 marines. The air force has 420,000 personnel including strategic forces.

Chinese military strength includes an enormous amount of equipment including nuclear

capability. It is suspected that China possesses 410 strategic and non-strategic nuclear weapons.

There are more than 100,000 offensive missile forces including ICBMs and IRBMs. The Chinese

have over 7,000 tanks, 69 submarines, 21 destroyers, and more than 2,000 combat aircraft. The

paramilitary in China includes about 1,500,000 members of the peoples armed police. The

Chinese are involved in UN and Peacekeeping missions in 6 regions around the world.

Chinese defense spending for 2002 was reported to be $20 billion, but a more accurate estimate

is $45$65 billion. This amounts to 1.6% of GDP, or 3.55% of GDP.


22/48

22

China- Science & Technology:

Modern China is the heir to a remarkably inventive civilization that pioneered in the

development of the abacus (the first mechanical calculating device), paper (and paper money),

printing by movable type, gunpowder, the magnetic compass, and the rocket. Contact with the

West during the 19th century revealed how technologically backward China had become, and it

is only in recent decades that the nation has begun to catch up.

China detonated its first fission device in 1964 and its first hydrogen bomb in 1967; the nation

now possesses a variety of nuclear weapons mounted on missiles, bombers, submarines, and

other delivery systems. Its first satellite was launched in 1970. By 1992, the PRC had launched

an INTELSAT satellite on a Chinese launch vehicle. Other priorities have been the development

of high-energy physics, laser research, powerful computer memory chips, color television

broadcasting technology, and laser infrared devices, although the PRC still relies heavily on

outside investment and technology transfer. Major advances have also been claimed in rice

hybridization, insecticides, fertilizers, biogas digesters for rural electrification, and pollution

control technology.

Two scientific exchange agreements between the US and China were signed in January 1984

during Premier Zhao Ziyangs visit to Washington, D.C. China has proposed to several Western

nations that it provide long-term storage facilities in remote provinces for radioactive wastea

proposal that Western observers believed would provide China not only with hard currency but

also with nuclear materials for possible reprocessing.


23/48

23

Chinas principal technological handicap is lack of skilled personnel. Only 1% of the PRCs 127

million 22-year-olds receive a university degree. However, 37% of all Chinese degrees are in

engineering, the highest ratio in Asia. Part of Chinas response to this shortage has been to send

tens of thousands of students overseas for advanced study, especially in the US. In 198797,

science and engineering students accounted for 43% of college and university enrollments. China

had 454 scientists and engineers and 200 technicians per million people engaged in research and

development during the same period. Scientific research is coordinated by the prestigious

Chinese Academy of Sciences, founded in 1949 and headquartered in Beijing. China in 1996 had

90 specialized learned societies in the fields of agriculture, medicine, science, and technology.

Most are affiliated members of the China Association for Science and Technology, founded in

1958.International science and technology cooperation is also increasing. In 1998, high-

technology exports were valued at $23.3 billion and accounted for 15% of manufactured exports.

However, concerns over human rights issues have had the effect of cooling US-PRC science and

technology exchanges. In 1996, China had 105 universities and colleges offering courses in basic

and applied science.


24/48

24

CHAPTER 3. ECONOMY OF CHINA

Economic Policy:

After 30 years with average annual GDP growth rates of around 10%, China has

become the second-biggest economy in the world (following the United States), the

biggest global exporter, the second-biggest importer and the number two destination

for foreign direct investment (FDI). According to the OECD, GDP per capita stood at

$7,519 (on a purchasing power parity (PPP) basis) in 2010, up from $3,217 in 2003.

The inflation rate that same year was 3.3%, but rates have since been on the rise,

driven by a surge in food and commodity prices. China is ranked 26th in the World

Economic Forums Global Competitiveness Index.

This has been accomplished through unconventional, oftentimes transitional and even

second-best policies and institutions, as for instance a strong reliance on national

economic planning combined with experiments with implementation styles at the local

level. Most of these policies deviate substantially from the Western marketization-cum-

privatization paradigm.

Attracted by the size and dynamism of Chinas economy, domestic and foreign investors

and entrepreneurs have regarded policies and conditions as sufficiently reliable to justify

expanding their economic undertakings, even though Chinas economy continues to suffer

from substantial institutional deficits (e.g., fuzzy property rights, dysfunctional law

system) and from pervasive administrative interference in the economy. As a case in

point, China halted its exports of rare earth materials, essential for most high-technology


25/48

25

and IT products, as a consequence of diplomatic tensions with Japan. Raw material

exports continue to be politically controlled.

Public procurements generally favor domestic bidders. Foreign automotive companies

assembling their products in China have to adhere to strict joint-venture and patenting

regulations that continue to raise fears of a massive outflow of intellectual property.

With regard to growth dynamism, China has so far weathered the post-2008 global

financial crisis better than any other large economy. This was due to a massive stimulus

plan of CNY 4 trillion ($586 billion at that time) that jumpstarted the Chinese economy

and boosted growth primarily through the implementation of massive infrastructure

investments. However, the huge stimulus deepened a core structural distortion of the

Chinese economy, in so far as it is widely seen as relying too heavily on fixed-asset

investment and exports, while domestic consumption has lagged.

Chinese authorities face the challenge of maintaining annual growth rates of at least 8%

in order to guarantee employment and thus avoid social unrest while at the same time

rebalancing the economy toward a more sustainable consumer-driven development path.

Key strategic documents are published every five years (five-year plans) and provide a

guideline for Chinas midterm development goals and related policy initiatives.


26/48

26

Labor Market Policy

Unemployment in China is defined by the national bureau of statistics as covering only the

registered urban jobless population, with the official unemployment rate standing at about 4%.

This definition of unemployment is not consistent with international standards and makes it

difficult to grasp the true unemployment situation. Beyond the urban economy, considerable

underemployment and at least temporary unemployment exists among the rural population;

however, this is mitigated through massive (in part seasonal) labor migration to industrial

centers. The system of household registration (Hukou) has not significantly hampered these

flows of labor migration.

There is no uniform picture of youth unemployment: On the one hand the labor market has

shown great difficulty in absorbing the growing numbers of college graduates by enabling them

to find adequate positions. On the other hand, demand for workers in the manufacturing industry

remains high. The second generation of migrant workers can only partially fill this employment

gap, or in some cases is not willing due to heightened expectations in the areas of pay and

working conditions. While there is no youth unemployment problem in general figures, a

structural mismatch exists between the nature of available jobs and the younger generations

skills and expectations.

Immediately after the outbreak of the global financial crisis in 2008, millions of Chinese

workers, primarily in the export businesses of South China, lost their jobs. With additional mass

layoffs in the making, the government managed to stabilize employment through a massive

stimulus or loan package that beginning in November 2008 emphasized labor-intensive, shovel-

ready infrastructure projects as well as a series of informal and unconventional measures (e.g.,


27/48

27

preventing mass layoffs through a combination of pressure, persuasion and incentives directed

toward state-owned and private companies).

The labor market in China is regulated much more lightly than is the case in the developed

world. This has significantly promoted employment growth. Although the low fertility rate has

ensured that the size of the labor pool is small relative to the total population, there still exists a

huge pool of rural migrant workers who often live illegally in the cities (due to the Mao-era

Hukou household registration system that discriminates between the urban and rural

populations).

The most important recent labor-market policy feature was the introduction of (or increase in)

minimum wages for all sectors in 2011. These are determined by local governments according to

the specific economic conditions in their jurisdictions. This was widely seen as a response to

worker unrest in industrial centers, yet was justified by the government as a measure to boost

social equity along with domestic consumption.


28/48

28

Enterprise Policy

In China, the lines of distinction between different forms of ownership (state, collective, private)

are often blurred (private enterprises sometimes register as collective, state-owned enterprises

have gone public, etc.).

Private enterprises have increasingly formed the backbone of Chinas economy. In 2011 they

accounted for about one-third of total exports, generated more than half of GDP, contributed

roughly 58% of total investments, supplied two-thirds of industrial output and generated about

two-thirds of Chinas industrialprofits and sales. Yet they still face discrimination as compared

to state-owned enterprises (SOEs), especially in terms of access to official banking loans and the

necessity of dealing with regulatory impediments. As a consequence of post-2008 stimulus

measures, SOEs have been flush with cash and been able to push aside or take over private

competitors.

To date, the states preferential treatment of government-linked companies (e.g., through low

interest rates, debt forgiveness, tax breaks and preferences in land allocations) has not been

detrimental to international competitiveness. From 2000 on, the state has selected certain SOEs

to become national champions in order to go global and expand in overseas markets. The

12th five-year plan, proclaimed in 2011, confirmed this strategy of picking winners. This

globalization push has been supported through the state-controlled banking system by costly

preferential loans.

The global presence of Chinese corporations has become much more visible in recent years.

However, the risk remains that the promotion of national champions will lead to severe market

distortions by creating de facto monopolies for certain SOEs and by restricting market access for

all other competitors, including foreign enterprises. One notable example is the wind energy


29/48

29

sector, where since 2005 foreign companies have failed to secure any large project funded by the

central government, being consistently outbid by Chinese manufacturers as part of a drive to

strengthen domestic wind energy capabilities.

Government interference in microeconomic affairs and the sidelining of the private sector further

bears the risk of detachment from the market and ultimately market failure. This in effect may

put an even larger financial burden on households and private enterprises than what is directly

imposed by granting preferential treatment (e.g., generous public funding, fiscal privileges, land

allocation, etc.) to certain enterprises.

Summing up, SGI background data indicates that the conditions for corporate investment in

China are still very good, drawing a score of 10, while real interest rates receive a positive score

of 9.86. With a score of 4.1, enterprise regulation by Chinese authorities is deemed neither good

nor bad, but is rated slightly better than in India (2.17) or Brazil (1).


30/48

30

Tax Policy

Judging from the perspective of foreign entrepreneurs, the tax payment system for entrepreneurs

in China is easy and the complexity and total business tax burden are quite low in comparative

terms. Indeed, the payment system is significantly less complex and tax levels markedly lower

than in Brazil or India, for example (see World Bank data on tax system complexity)

In sharp contrast, Chinas system of public finance, especially of taxation allocation and

distribution, is extremely complex and opaque. In principle we find a weakly institutionalized

variant of fiscal federalism in which the center has the sole power for tax legislation, whereas tax

administration is run by both the center and the regions. In addition to tax revenues that are

divided between central and regional coffers, fiscal redistribution is undertaken through a

continual process of multilevel bargaining, with ensuing central-regional transfers.

Tax evasion remains a problem in China. Moreover, the taxation system shows a regressive

tendency that favors urban areas over rural areas.

An important deficit of Chinas fiscal system is the lack of constant and reliable revenues for

cities, counties, townships and villages. These jurisdictions cannot count on substantial fiscal

support from higher levels of government, and instead are supposed to be by and large self-

reliant. They rely predominantly on auctions and leases of public land to generate income.

Chinas total tax rate (derived from ratio of general government revenue to GDP) is

comparatively low, especially at the lower levels of administration. This is further exacerbated

by structural problems such as local cronyism as well as systemic weaknesses such as local

governments blatant lack of transparency and accountability with respect to taxes, revenue and

expenditure.


31/48

31

Since local governments approach to land management and income generation is extremely

prone to official corruption and even the influence of organized crime, this has arguably become

the single most destabilizing factor in Chinas local governance. Violent protests by land tenants

against major local property deals lacking adequate compensation are frequent. In September

2011, protests erupted in the village of Wukan, Guangdong province, against local authorities

illegal confiscation of land for real estate development without proper compensation to villagers.

All state representatives were ultimately forced to flee the village. This incident was but one of

many protests related to land disputes that collectively pose a serious threat to social stability in

rural areas.

The central government has repeatedly urged local governments to put an end to land grabs for

revenue generation and to eradicate all local regulations that run counter to national legislation.

Local revenue generation from land sales due to the lack of reliable and sufficient income

sources for local governments thus generates a plethora of social problems and inequities of

wealth distribution.

In addition, localities can officially raise charges on services and public utilities or demand

surcharges on taxes, so-called extra-budgetary funds (EBF) that are managed and controlled by

local governments without higher-level interference, providing essential funds solely for local

purposes. As a result of both practices described above land auctions or leases and the

extraction of EBFs huge fiscal inequalities have developed on the local level of the Chinese

state. These lead to strong variations in public goods and services provision that severely

threaten the principle of equity in taxation as well as the ability to generate sufficient revenues.

Since the central government has retained control over the policy agenda, it sets policy tasks that

must be implemented and funded by local governments. Local governments must then derive


32/48

32

revenue from highly variant funding sources and, as explained, often resort to problematic

practices of revenue generation. The central government has burdened local governments with

unfunded mandates in areas such as public health care, and has thus exacerbated regional

inequalities with respect to goods provision.


33/48

33

Budgetary Policy

During the global financial crisis China was able to afford a drastic rise in public expenditure in

combination with quasi-fiscal loan programs through the state commercial banking system due to

official budget deficits (less than 3% of GDP) and gross national debt levels (about 25% of GDP)

that appear remarkably low in international comparison. Indeed, the relation of gross national

debt to GDP appears quite balanced when compared to developing country peers India and

Brazil, receiving a respectable SGI score of 7.43.

Since 2010, however, academic research has estimated that Chinas real national debt might be

closer to 80% of GDP if the debts of localities are included. Localities are today prohibited from

incurring debt on their own, and have relied on local financial vehicles to borrow from public

banks (pilot projects such as that in Shanghai have only recently begun to allow localities to

issue bonds in their own name). Thus, the financial risks in China rest with the localities and the

state commercial banking system, though the total amount and severity of those risks is the

subject of intense debate, among Chinese policymakers and their advisors as well as outside the

country.

The SGI score data on the soundness of banks suggests that Chinese banks fall just short of being

generally healthy. Chinas local public debt is special in one very important regard: Both

creditors and debtors tend to be state entities that share a strong interest in avoiding shocks to the

agreed status quo. Thus, there are many incentives for and means of colluding in hiding or

transferring old nominal debts to newly created, non-transparent balance sheets (e.g., of newly

created investment vehicles).

Chinese banks have been practicing aggressive loan issuance and risky off-balance-sheet

lending. At the same time, local governments have in many cases established highly non-


34/48

34

transparent special-purpose companies as funding vehicles to arrange bank loans and circumvent

regulations. Exacerbated by the 2008 stimulus package, local governments debt has in effect

soared. An official national audit of regional finances in 2011 publicized this fact, confirming an

explosion in local governments borrowing. At least on a local level, the sustainability of public

budgets has to be seriously doubted.


35/48

35

CHAPTER 4. CHINAS GDP

The Gross Domestic Product (GDP) in China was worth 8230 billion US dollars in 2012. The

GDP value of China represents 13.27 percent of the world economy. GDP in China is reported

by The World Bank Group. China GDP averaged 1102.08 USD Billion from 1960 until 2012,

reaching an all time high of 8230.00 USD Billion in December of 2012 and a record low of

46.50 USD Billion in December of 1962. The gross domestic product (GDP) measures of

national income and output for a given country's economy. The gross domestic product (GDP) is

equal to the total expenditures for all final goods and services produced within the country in a

stipulated period of time.

The Gross Domestic Product per capita in China was last recorded at 3348.01 US dollars in

2012. The GDP per Capita in China is equivalent to 27 percent of the world's average. GDP per

capita in China is reported by the World Bank. China GDP per capita averaged 761.32 USD

from 1960 until 2012, reaching an all time high of 3348.01 USD in December of 2012 and a

record low of 85.52 USD in December of 1962. The GDP per capita is obtained by dividing the

countrys gross domestic product, adjusted by inflation, by the total population.

The Gross Domestic Product per capita in China was last recorded at 7957.62 US dollars in

2012, when adjusted by purchasing power parity (PPP). The GDP per Capita, in China, when

adjusted by Purchasing Power Parity is equivalent to 36 percent of the world's average. GDP per

capita PPP in China is reported by the World Bank. China GDP per capita PPP averaged 2705.77

USD from 1980 until 2012, reaching an all time high of 7957.62 USD in December of 2012 and

a record low of 523.95 USD in December of 1980. The GDP per capita PPP is obtained by


36/48

36

dividing the countrys gross domestic product, adjusted by purchasing power parity, by the total

population.

The Gross Domestic Product (GDP) in China expanded 7.50 percent in the second quarter of

2013 over the same quarter of the previous year. GDP Annual Growth Rate in China is

reported by the National Bureau of Statistics of China. China GDP Annual Growth Rate

averaged 9.20 Percent from 1989 until 2013, reaching an all time high of 14.20 Percent in

December of 1992 and a record low of 3.80 Percent in December of 1990. In China, Gross

Domestic Product is divided by three sectors: Primary, Secondary and Tertiary. The Primary

Industry includes Farming, Forestry, Animal Husbandry, and Fishery and accounts for around 9

percent of GDP. The Secondary sector, which includes Industry (40 percent of GDP) and

Construction (9 percent of GDP), is the most important. The Tertiary sector accounts for the

remaining 44 percent of total output and consist of Wholesale and Retail Trades; Transport,

Storage, and Post; Financial Intermediation; Real Estate; Hotel and Catering Services and

Others.

Gross Fixed Capital Formation in China increased to 243151.90 CNY HML in 2012 from

215682 CNY HML in 2011. Gross Fixed Capital Formation in China is reported by the National

Bureau of Statistics, China. China Gross Fixed Capital Formation averaged 30484.34 CNY HML

from 1952 until 2012, reaching an all time high of 243151.90 CNY HML in June of 2012 and a

record low of 80.70 CNY HML in June of 1952.

Gross National Product in China increased to 516662 CNY HML in 2012 from 468562.40

CNY HML in 2011. Gross National Product in China is reported by the National Bureau of

Statistics, China. China Gross National Product averaged 72948.11 CNY HML from 1952 until


37/48

37

2012, reaching an all time high of 516662 CNY HML in June of 2012 and a record low of 679

CNY HML in June of 1952.

Figure 1. CHINA GDP


38/48

38

CHAPTER 5. CHINAS TRADE

China- Exports:

Exports in China increased to 1859.91 USD Hundred Million in July of 2013 from 1743.16 USD

Hundred Million in June of 2013. Exports in China, is reported by the General Administration of

Customs. China Exports averaged 439.28 USD Hundred Million from 1983 until 2013, reaching

an all time high of 1992.30 USD Hundred Million in December of 2012 and a record low of 13

USD Hundred Million in January, 1984. Export growth has been a major component supporting

China's rapid economic expansion. Exports of goods and services constitute 30% of GDP.

China major exports are: electromechanical products (57 percent of total exports) and data

processing equipments, steel, optical and medical equipments as well as labor-intensive products

like clothing, textiles, footwear, furniture, plastic products, bags and toys (20 percent). In recent

years, the exports of high tech products have been also growing and in 2012 accounted for 29

percent of total exports.

Chinas main export partners are the United States (17%), Hong Kong (14%), European Union

(16%), ASEAN (10%), Japan (7%) and South Korea (4%).


39/48

39

Figure 2. CHINA EXPORTS TREND

Export Prices in China increased to 99.30 Index Points in June of 2013 from 99.10 Index Points

in May of 2013. Export Prices in China is reported by the National Bureau of Statistics, China.

China Export Prices averaged 103.28 Index Points from 2005 until 2013, reaching an all time

high of 111.90 Index Points in February of 2008 and a record low of 90.70 Index Points in

August of 2009. In China, Export Prices correspond to the rate of change in the prices of goods

and services sold by residents of that country to foreign buyers. Export Prices are heavily

affected by exchange rates.


40/48

40

China- Imports:

Imports in China increased to 1681.73 USD Hundred Million in July of 2013 from 1471.91 USD

Hundred Million in June of 2013. Imports in China, is reported by the General Administration of

Customs. China Imports averaged 384.48 USD Hundred Million from 1983 until 2013, reaching

an all time high of 1830.13 USD Hundred Million in March of 2013 and a record low of 16.60

USD Hundred Million in July of 1983.

Chinas main imports are electromechanical products (43 percent of total imports). The country

is also one of the biggest consumers of commodities in the world. Among commodities the

biggest demand is for crude oil (12 percent of total imports), iron ore (5 percent), copper,

aluminum and plastic, organic chemicals, machinery, soybeans, etc.

Chinas main import partners are: European Union, ASEAN, Japan, South Korea and Taiwan.

Others include: Australia, South Africa and Brazil.

Figure 3. CHINA IMPORTS TREND


41/48

41

Import Prices in China increased to 98.20 Index Points in June of 2013 from 95.50 Index Points

in May of 2013. Import Prices in China is reported by the National Bureau of Statistics, China.

China Import Prices averaged 104.73 Index Points from 2005 until 2013, reaching an all time

high of 122.70 Index Points in August of 2008 and a record low of 79.60 Index Points in May of

2009. In China, Import Prices correspond to the rate of change in the prices of goods and

services purchased by residents of that country from, and supplied by, foreign sellers. Import

Prices are heavily affected by exchange rates.


42/48

42

China- Foreign Direct Investment:

Foreign direct investment are the net inflows of investment to acquire a lasting management

interest (10 percent or more of voting stock) in an enterprise operating in an economy other than

that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term

capital, and short-term capital as shown in the balance of payments.

Foreign Direct Investment in China increased to 619.84 USD Hundred Million in June of 2013

from 475.95 USD Hundred Million in May of 2013. Foreign Direct Investment in China is

reported by the National Bureau of Statistics, China. China Foreign Direct Investment averaged

357.88 USD Hundred Million from 1997 until 2013, reaching an all time high of 1160.11 USD

Hundred Million in December of 2011 and a record low of 18.32 USD Hundred Million in

January of 2000.

According to the statistics, from January to February 2013, Newly Approved Foreign-invested

Enterprises amounted to 2,915, down by 3% year on year; and the actual use of foreign

investment reached US$ 17.484 billion, down by 1.35% year on year. In February 2013, Newly

Approved Foreign-invested Enterprises amounted to 1,032, down by 35.62% year on year; and

the actual use of foreign investment reached US$ 8.214 billion, up by 6.32% year on year.

In January-February, 2013, the number of newly established enterprises funded by ten Asian

countries/regions (Hong Kong, Macao, Taiwan, Japan, the Philippines, Thailand, Malaysia,

Singapore, Indonesia, ROK) was 2,295, down by 1.21% year on year, and the actual input were

US$ 15.178 billion, down by 1.31% year on year. The number of newly established enterprises

funded by US was 142, down by 19.77% year on year, and the actual input were US$ 0.497


43/48

43

billion, down by 5.37% year on year. Number of enterprises funded by EU was 211, down by

12.45% year on year, and the actual input was US$ 1.214 billion, up by 34.01% year on year.

Figure 4. CHINA FDI FORECAST


44/48

44

Figure 5. CHINA FDI TREND

From January to February this year, the top ten by actual input are as follows: Hong Kong (US$

11.319 billion), Japan (US$ 1.269 billion), Singapore (US$ 1.071 billion), Taiwan Province

(US$ 1.027 billion), U.S.A. (US$ 0.497 billion), France (US$ 0.363 billion), R.O.K. (US$ 0.258

billion), Germany (US$ 0.247 billion), U.K. (US$ 0.129 billion), and Swiss Confederation (US$

0.117 billion), and their total input account for 93.21% of total actual use of foreign investment

in China.


45/48

45

China- Balance of Trade:

The balance of trade is the difference between the monetary value of exports and imports in an

economy over a certain period of time. A positive balance of trade is known as a trade surplus

and occurs when value of exports is higher than that of imports: a negative balance of trade is

known as a trade deficit or a trade gap.

China recorded a trade surplus of 178.18 USD Hundred Million in July of 2013. Balance of

Trade in China is reported by the General Administration of Customs. China Balance of Trade

averaged 54.54 USD Hundred Million from 1983 until 2013, reaching an all time high of 404

USD Hundred Million in November of 2008 and a record low of -319.81 USD Hundred Million

in February of 2012. Since 1995 China has been recording consistent trade surpluses. From 2004

to 2009 Chinas annual trade surplus has increased 10 times. Yet, as the global demand is

slowing down and import of commodities for vast infrastructure projects and consumer goods is

growing, there has been a significant decline in trade surplus. In the last few years, the biggest

trade surpluses were recorded with the United States, Netherlands, United Kingdom, Vietnam

and Singapore. The biggest trade deficits were recorded with Taiwan, South Korea, Australia,

Germany, South Africa, Japan and Brazil.


46/48

46

CONCLUSION

Since 1978, China has experienced a period of continuously high economic growth. Per capita

GDP has grown significantly since 1980, and about 400 million Chinese have escaped absolute

poverty. Large investments are made pragmatically, and the infrastructure is improving rapidly.

In addition, other indicators such as the number of patent applications, the countrys Human

Development Index (HDI) ranking and the economys share in world trade volumes also testify

to the success of Chinas development efforts.

Forecasts of the point at which China will overtake the United States as the worlds strongest

economic power have repeatedly been revised closer toward the present. Optimistic assessments

of Chinas prospects for sustainable future development frequentlypoint out that inefficiencies in

China are not so serious as to threaten these positive developments, since unutilized capacity

remains more substantial than inefficiencies. The often-made forecasts that the Peoples

Republic is in a state of near economic collapse are thus overly pessimistic, or in some cases

even wishful thinking.

The Chinese economy has succeeded in controlling the effects of the post-2008 global financial

and economic crisis, showing double-digit growth rates attributable in part to a comprehensive

economic stimulus package of about CNY 4 trillion. Throughout 2011, China continued to lead

the world economy, generating a growth rate of 9.2%. Though waning demand and investment

from European countries and the United States have slightly weakened the export-driven Chinese

economy, simultaneous increases in domestic spending have cushioned the overall detrimental

effect on the worlds second-biggest economy.


47/48

47

Ahead of the planned leadership change at the 18th CCP party congress due in fall 2012, no

major political reforms were underway. In the run-up to the party congress the political

atmosphere clearly hardened, and repressive measures were tightened. A series of local peoples

congress elections in 2011 saw a number of independent candidates competing and receiving

substantial international media attention; however, these candidates were largely unsuccessful at

the polls. Civil and human rights enshrined in the constitution and international treaties are still

largely denied in practice. Rights activists and lawyers were subject to increasing repression in

2011.

Official policies of increased political transparency and corruption prevention have not delivered

meaningful results in terms of improving the quality of governance. Due to their links with the

local party-controlled state bodies, courts are not reliable venues for the rectification of major

grievances. Extrajudicial treatment by executive organs has become pervasive. Popular unrest

has been triggered by social inequality, deepening regional developmental disparities,

insufficient social security systems, corruption and environmental degradation, illegal land sales

and in Chinas western provinces of Tibet and Xinjiang ethnic exclusion. These issues

remain unresolved and pose an ongoing threat to regime stability.

Despite the liberalization and commercialization of the Chinese media that has taken place since

the 1990s, the countrys main TV, radio and print outlets are still under official control. Social

media such as micro blogging service Sina Weibo have gained importance as a result, as they

provide an increasingly important forum for liberal thought and news circulation, mostly outside

the reach of official censorship.


48/48

With regard to social services, major reforms are being undertaken in the health care sector. To

date this has presented no unified picture, as many reform initiatives remain in experimental

form. Social services continue to suffer from sharp differences in terms of provision in rural and

urban areas, exacerbating the growing urban-rural income inequality, and complicating life for

individuals who do not live at their place of registration. According to the results of the 2010

census, the number of migrant workers has climbed above 200 million. These individuals are

effectively excluded from social services and health care at their place of residence. Reform of

Chinas residence system, while seemingly inevitable, has not yet been enacted.

Chinas military budget further expanded in 2011, to an annual expenditure of more than $100

billion. The country has in many cases been unwilling to compromise on its territorial claims,

especially in the South China Sea, leading to a string of clashes between China and its neighbors.

Funding for domestic security has also increased, which points to a more assertive stance vis--

vis ethnic or social problems and tensions.

Pollution problems continue to severely affect the ecosphere and the populations quality of life.

Urban air pollution has drawn increasing attention in 2011. Ambitious environmental and

climate policies have been promulgated, with renewable energies receiving active support.

However, implementation of environmental policies overall has lagged. In general, the constant

demand for growth, changing consumptionpatterns and above all Chinas coal-based energy mix

have continued to hamper major advances in this area.

China as a member of BRICS

Documents