China

China is one of the most dynamic and interesting countries today; it’s emerging power will shape the 21st century. Here are some facts about the country that I find useful to understand it better.

Population

China is the largest country in the world with 1,349,585,838 people, (July 2013 estimate), or roughly 1.35 billion people. By comparison, India has 1.22 billion people, but is slowly overtaking China, because of a higher birth rate. The whole continent of Africa has 1.11 billion people in 2013, but China has a population density that is almost 4 times as high as Africa. Life expectancy is 75 years, (for men 73 and women 77.3 years), and the median age is 36.3 years. Roughly half of the total population lives in urban areas, and the percent of population working in agriculture is still 36.7%. The population continues to increase slightly, by a growth rate of 0.46%. Agriculture produces only about 10% of GDP, 45.3% of GDP come from industrial production, and the service sector generates 44.6%. These numbers indicate the fundamental trend in the population dynamics: People move from rural areas to the places of industrial production, because they can’t find enough well-paying jobs in agriculture, but they can find them in the cities. At the end of 2012, there were more then 260 million migrant workers in China, with average monthly earnings of $374, according to a report by the National Bureau of Statistics of China.

Economy

Beginning in 1979, under the leadership of Deng Xiaoping, China moved from a closed, centrally planned system to a market-oriented economy. These reforms continued; and in 2010, China became the world’s largest exporter. Reforms began with the phasing out of collectivized agriculture, and continued by gradual liberalization of prices, fiscal decentralization, and increased autonomy for state enterprises. The Government initiated the creation of a diversified banking system, the development of stock markets, and the rapid growth of the private sector. They opened the economy  to foreign trade and investment, but they made all these changes gradually, and continue to be very cautious with implementing reforms. The restructuring of the economy led to enormous efficiency gains, and all this contributed  to  a Chinese economic miracle, with a more than tenfold GDP increase since 1978.

The total GDP of China in terms of purchasing power parity is $12.61 trillion (2012 est.). It is currently the second largest economy behind the US with almost 16 trillion dollars. (Or the third-largest, if you include Europe as one block, which is slightly larger than the US.) This means that there is still a way to go for China to catch up with the US or Europe, but since China has a much higher growth rate compared to Europe or the US, (on average 8%, while the US struggles to reach 3%) it will surpass the rest of the world sometime in the early 2020s, with GDP’s about 24 trillion US Dollars. 1

Even when China reaches the size of the US economy, it will still be much poorer than the US, because it has almost a billion more people. GDP per capita is $9,300 (2012 est.), which ranks China as #124 in the world comparison. In 2011, the GDP per capita was $8,700 and in 2000 it was $8,000. On average, Chinese people feel an improvement in terms of purchasing power year over year, which helps the Government to stay in power. Chinese people earn more, and they also save a lot: The gross national savings rate in 2012 was 50.4%, which is one of the highest rates in the world. If the Government wanted to create an economic boom, all they need to do is to entice their citizens to consume a little more, and a huge stimulus would be created. When it comes to savings, the Government is also in very good shape: The revenues for 2012 were $1.857 trillion, the expenditures $1.992 trillion which means there was a slight deficit of 1.6%. Total public debt is 31.7% of GDP, which is really small compared to Western industrialized countries. China ranks in the world comparison on place 113.

Politics

The Chinese Imperial system always absorbed outside invaders and survived. It also withstood attempts by Western powers to colonize them, but finally the Imperial system came to an end in 1912, when the Qing Dynasty fell in a revolution initiated by a younger generation of Chinese that wanted change.Then came the Civil War, Mao, Japanese occupation, and a World War. Mao emerged victorious in 1949 and created the “People’s Republic of China” (PRC) was created. The “Republic of China” (ROC), which was founded after the fall of the Qing Dnasty in 1912, and had Sun Yat-sen briefly as its first President, emigrated to Taiwan and remained a separate Chinese political system. Under Mao, Mainland China underwent socialist experiments with economic self-sufficiency, a cultural revolution, many internal power struggles, until Mao’s death in 1976. After his death, Deng could finally open the country to foreign investments, loosen the restrictions of collectivized agriculture, and allow the emergence of private companies. Because China has so many people, but not enough natural resources, it could become the factory of the world, and the biggest World exporter.

The country is roughly the size of the US, but it has a billion more citizens. This leads to all kinds of superlatives for China, and to the impression that the country is the next superpower. But China’s internal challenges are enormous. It has no democracy, but a fragile combination of authoritarian one-party government with market systems. The “Chinese Way”  – State capitalism combined with the rule of a small elite – functions as long as the economy grows, and it can only be considered as a transitional system. All 1.3 billion people want better lives, and the government is under constant pressure to deliver. It needs resources and trade, and cannot tolerate economic or political turmoil. The economy grew at an average rate of 10% per year during the period from 1990 to 2005, and still grows about 8% a year today. This is an economic miracle, and represents the highest sustained economic growth a country has ever achieved. The by-product of it, however, is vast environmental destruction.

Geography

China was always an agricultural country, with three main rivers flowing from West to East: The Yellow River flows in the North, the Yangtse in the middle connects Chongqing to Shanghai, and the shorter Xi river cuts through Southern China. Most of China lies in the floodplains of these rivers, which creates flat agricultural landscapes, shaped by water and seasonal flooding.

Notes:

  1. The Director of the China Center for Economic Reform at Peking University Yao Yang in 2011 stated that “Assuming that the Chinese and U.S. economies grow, respectively, by 8% and 3% in real terms, that China’s inflation rate is 3.6% and America’s is 2% (the averages of the last decade), and that the renminbi appreciates against the dollar by 3% per year (the average of the last six years), China would become the world’s largest economy by 2021. By that time, both countries’ GDP will be about $24 trillion.” in: When will China become a global superpower?” June 10, 2011. By Thair Shaikh, CNN, http://edition.cnn.com/2011/WORLD/asiapcf/06/10/china.military.superpower/index.html

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