The People's Republic of China's development from one of the poorest countries to one of the largest economies was the quickest of any country.[84]: 11 From 1949 until the Chinese economic reform in 1978, the economy was state-led with market activity remaining underground.[85] Economic reforms began under Deng Xiaoping.[85] China subsequently became the world's fastest-growing major economy, with growth rates averaging 10% over 30 years.[86][87] Many scholars consider the Chinese economic model as an example of authoritarian capitalism,[88][89] state capitalism[90] or party-state capitalism.[91][92]
China has sustained growth due to export relations, its manufacturing sector, and low-wage workers.[8] China's was the only major world economy to experience GDP growth in 2020, when its GDP increased by 2.3%.[93]
China has had the world's largest middle class population since 2015,[95] and the middle class grew to a size of 400 million by 2018[citation needed] and is projected to reach 1.2 billion by 2027, making up one fourth of the world total.[96] As of 2018, China was first in the world in total number of billionaires and second in millionaires – there were 658 Chinese billionaires[97] and 3.5 million millionaires.[98] In 2019, China overtook the US as the home to the highest number of rich people in the world, according to the global wealth report by Credit Suisse.[99][100] In other words, as of 2019, a hundred million Chinese are in the top ten percent of the wealthiest individuals in the world – those who have a net personal wealth of at least $110,000.[101] In 2020, China has the world's highest number of billionaires, which is more than the US and India combined,[102] and as of March 2021, the number of billionaires in China reach 1,058 with the combined wealth of US$4.5 trillion.[103] According to the Hurun Global Rich List 2021, China is home to six of the world's top ten cities (Beijing, Shanghai, Shenzhen, Hong Kong, Hangzhou and Guangzhou in the 1st, 2nd, 4th, 5th, 8th and 9th spots, respectively) by the highest number of billionaires, which is more than any other country.[103] As of January 2021, China had 85 female billionaires, two-thirds of the global total.[104]
According to the IMF, on a per capita income basis, China ranked 59th by GDP (nominal) and 73rd by GDP (PPP) in 2020.[105][106] China ranked 3rd by GDP per capita (nominal) and 5th by GDP per capita (PPP) among countries with a population of over 100 million.
China has an upper middle income, developing, mixed, socialist market economy, that incorporates industrial policies and strategic five-year plans.[36] It is the world's second largest economy by nominal GDP, behind the United States, and the world's largest economy since 2016 when measured by purchasing power parity (PPP)
The economy consists of public sector enterprise, state-owned enterprises (SOEs) and mixed-ownership enterprises, as well as a large domestic private sector and openness to foreign businesses in a system. Private investment and exports are the main drivers of economic growth in China; but the Chinese government has also emphasized domestic consumption.[43]
China is the world's largest manufacturing economy and exporter of goods.[44] It is also the world's fastest-growing consumer market and second-largest importer of goods.[45] China is also the world's largest consumer of numerous commodities, and accounts for about half of global consumption of metals.[46] China is a net importer of services products.[47] It is the largest trading nation in the world and plays a prominent role in international trade.[48][49] China is the largest recipient of foreign direct investment in the world as of 2020, receiving inflows of $163 billion.[50] It has the second largest outward foreign direct investment, at US$136.91 billion for 2019 alone, following Japan at US$226.65 billion for the same period.[51] As of 2022, China was second in the world in total number of billionaires.[52] In 2018, it was second in millionaires with 3.5 million.[53] According to the 2019 Global Wealth Report by Credit Suisse Group, China surpassed the US in the wealth of the top ten percent of the world's population.[54][note 5] China has the world's largest foreign-exchange reserves worth $3.1 trillion,[55] but if the foreign assets of China's state-owned commercial banks are included, the value of China's reserves rises to nearly $4 trillion.[56] China faced a mild economic slowdown during the 2007–2008 financial crisis and initiated a massive stimulus package, which helped to regain its economic growth.
Moreover, China is already a country widely regarded as having the best public infrastructure, rivaling the Netherlands and Singapore. With 778 million workers, the Chinese labor force was the world's largest as of 2020. It ranks 28th on the Global Competitiveness Report.[57] Per the Global Innovation Index in 2022, China was ranked 11th in the world, 3rd in Asia & Oceania region and 2nd for countries with a population of over 100 million. It is the only middle-income economy and the only newly industrialized economy in the top 30.[58][59] It is often ranked among the world's most innovative countries, leading several measures of global patent filings.[60][61] China has the second-largest financial assets in the world, valued at $17.9 trillion as of 2021.[62] It also has two (Shenzhen-Hong Kong-Guangzhou and Beijing in the 2nd and 3rd spots respectively) of the global top 5 science and technology clusters, which is more than any other country.[58][63] As of March 2022, China has over 500 million 5G users and 1.45 million base stations installed.[64][65] Almost 493 million Chinese people are categorized as middle class, and 242 million are upper middle class, according to a 2021 Pew Research Center survey.[66] In 2022, mainland China's ten largest trading partners were European Union, United States, South Korea, Japan, Taiwan, Hong Kong, Vietnam, Australia, Malaysia, and Russia.[67]
China has free trade agreements with many nations, some of which are already in force (such as RCEP, the largest trade bloc in history) or are still in the negotiation phase.[68] Although widely regarded as the "powerhouse of manufacturing" or "the factory of the world",[69] exports contribute only a comparatively small proportion of the Chinese economy, at just 18.5% in 2020. Of the world's 500 largest companies, 142 are headquartered in China.[70] It has four of the world's top ten most competitive financial centers[71] and three of the world's ten largest stock exchanges (both by market capitalization and by trade volume).[72]
The economic reforms implemented in 1978 helped to propel China into the ranks of the world's major economic powers. The economic development of Shenzhen has caused the city to be referred to as the world's next Silicon Valley.[112][113] The provinces in the coastal regions of China, including Zhejiang, Jiangsu, Fujian and Guangdong, tend to be more industrialized while regions in the hinterland are less developed.
To guide economic development, the Chinese central government adopts "five-year plans" that detail its economic priorities and essential policies. The Fourteenth Five-Year Plan (2021–2025) is currently being implemented, placing an emphasis on consumption-driven growth and technological self-sufficiency while China transitions from being an upper middle-income economy to a high-income economy.[115]
The public sector plays a central role in China's economy.[116] This development is also in line with the planning goals of the Chinese central government to achieve the "Two Centenaries", namely the material goal of China becoming a "moderately prosperous society in all respects" by 2021 and the modernization goal of China becoming a "strong, democratic, civilized, harmonious and modern socialist country" by 2049, the 100th anniversary of the founding of the People's Republic.[117] China retains state control over the commanding heights of the economy in key industries like infrastructure, telecommunications, and finance despite significant marketization of the economy since reform and opening up.[118]: 20 Specific mechanisms implementing its control of the commanding heights in these areas include public property rights, pervasive administrative involvement, and Communist Party supervision of senior managers.[118]: 20
Like Japan and South Korea before it, China's economy has grown rapidly, raising the income levels and living standards of its citizens while producing goods that are consumed globally. China brought more people out of extreme poverty than any other country in history[119][120]—between 1978 and 2018, China reduced extreme poverty by 800 million.[121] Between 1981 and 2019, the percentage of the population living in extreme poverty decreased from 88.1% to 0.2%.[7] Its current account surplus increased by a factor of 53 between 1982 and 2021, from $5.67 billion to $317 billion.[122] During this time, China also became an industrial powerhouse, moving beyond initial successes in low-wage sectors like clothing and footwear to the increasingly sophisticated production of computers, pharmaceuticals, and automobiles. China's factories generated $3.7 trillion real manufacturing value added, more than the US, South Korea, Germany and the UK combined. China's manufacturing sector benefits from the world's largest domestic market, immense manufacturing scale, and highly developed manufacturing supply chains.[123]
In mid-2014 China announced it was taking steps to boost the economy, which at the time was running at a rate 7.4% per annum, but was slowing. The measures included plans to build a multi-tier transport network, comprising railways, roads and airports, to create a new economic belt alongside the Yangtze River.[124]
In terms of domestic saving, defined as combined saving of households, businesses, and governments, China is the world's largest saving country as of at least 2022.[125]: 27
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