CHINA'S ECONOMY: CHINA'S THE WORLD'S TOP EXPORTER, THE NEW SECTORS
TO DRIVE CHINA'S ECONOMIC GROWTH, CHINA'S REAL ECONOMY HAS ALSO
DECREASED WITH $19 TRILLION IN STATE ASSETS,HERE IS HOW CHINA COULD
DIFFUSE IT'S MASSIVE DEBT.
China is the largest export economy in the world.China
has 1.37 billion people, more than any other country in the world.
China is still a relatively poor country in terms of its standard of
living. Its economy only produces $15,400 per person, compared to the
U.S. GDP per capita of $57,300.The low standard of living allows
companies in China to pay their workers less than American workers. That
makes products cheaper, which lures overseas manufacturers to outsource
jobs to China.
China’s
emergence as a great economic power has induced an epochal shift in
patterns of world trade. Simultaneously, it has challenged much of the
received empirical wisdom about how labor markets adjust to trade
shocks. Alongside the heralded consumer benefits
of expanded trade are substantial adjustment costs and distributional
consequences. These impacts are most visible in the local labor markets
in which the industries exposed to foreign competition are concentrated.
Adjustment in local labor markets is remarkably slow, with wages and
labor-force participation rates remaining depressed and unemployment
rates remaining elevated for at least a full decade after the China
trade shock commences. Exposed workers experience greater job churning
and reduced lifetime income. At the national level, employment has
fallen in U.S. industries more exposed to import competition, as
expected, but offsetting employment gains in other industries have yet
to materialize. Better understanding when and where trade is costly, and
how and why it may be beneficial, are key items on the research agenda
for trade and labor economists.China
built its economic growth on low-cost exports of machinery and
equipment. Massive government spending went into state-owned companies
to fuel those exports. These companies dominate their industries. They
include the big three energy companies: PetroChina, Sinopec and China
National Offshore Oil Corporation. These state-owned companies are less
profitable than private firms. They return only 4.9 percent on assets
compared to 13.2 percent for private companies.China
developed cities around these factories to attract workers. As a
result, one-fourth of China's economy is in real estate. The government
also funded construction of railways and other infrastructure to support
growth.China
is the largest export economy in the world. In 2016, China exported
$2.06T and imported $1.32T, resulting in a positive trade balance of
$736B. In 2016 the GDP of China was $11.2T and its GDP per capita was
$15.5k.The top exports of China are Computers ($136B), Broadcasting
Equipment ($115B), Telephones ($84.3B), Integrated Circuits ($54.8B) and
Light Fixtures ($29.7B), using the 1992 revision of the HS (Harmonized
System) classification. Its top imports are Integrated Circuits ($128B),
Crude Petroleum ($116B), Gold ($62.6B), Iron Ore ($58B) and Cars
($44B).The
Industry is 72.8% of China’s gross domestic product (GDP) . Industry
(including mining, manufacturing, construction, and power) contributed
46.8 percent of GDP and occupied 27 percent of the workforce . As of
2015, the manufacturing industrial sectors contribute 40% of China's
GDP. The manufacturing sector produced 44.1 percent of GDP and accounted
for 11.3 percent of total employment . China is the world’s leading
manufacturer of chemical fertilizers, cement, and steel.Chinese
industrial companies, most of which are medium to large cap. Top
holdings including: Weichai Power, Anhui Conch Cement Company, and China
National Building Material. CHII's sector breakdown includes: 63%
industrial materials, 25% business services, and 12% consumer goods.
Over the past decade Chinese industry and manufacturing sectors have
seen unpredicented growth. As China positions itself as the world's
manufacturing center, and with still more room to grow.
China export to various
foreign countries across the world as it rank top in global exports. China is a
global hub for manufacturing. It is the largest manufacturing economy in the
world and largest exporter of goods around the globe. United States of America
and Hong Kong are the main markets for China Export Industry. United States
received shipment of USD 385 billion from China in 2016 and it represents 18.4%
of the total value of China exports. Do you know ‘what does the US import from
China’? Let’s check the list of China exports to USA as mentioned below.
China’s
economy has always depended heavily on investment into fixed assets
such as roads, railways and apartment complexes. But over the past
decade, as cheap exports’ share of the economy has collapsed and as
household consumption has continued to slide,
this investment has become one of the primary drivers of economic
growth and employment in China and, by extension, a cornerstone of its
stability.That much of China’s fixed asset
investment comes from the country’s biggest state-owned banks (including
the “Big Four,” which answer directly to Beijing) not only highlights
its importance as a policy tool but also explains why Chinese leaders
have wielded it so liberally to offset weaknesses in other areas of the
economy.Of course, the funds for such ample
investment have to come from somewhere, and over the years Beijing has
gotten them through many different means. From slashing benchmark
interest rates and bank reserve requirements to boosting domestic equity
markets and direct spending, the Chinese government has paid for its
purchases in several ways.
The largest trading nation and the most popular destination of foreign
direct investment in th e world. Many economists are optimistic about
China’s growth potential China is set to surpass the U.S. as the
leading economy in a decade. The Chinese growth miracle started with
agriculture in the late 1970s. The essence of the reform was
collectivization of agricultural production and land user rights . The
most important part of the reform was officially called the household
responsibility system (HRS). HRS granted farmers land cultivation rights
and empower them to make their own production decisions. With better
aligned incentives, agricultural production and rural incomes witnessed a
dramatic increase in the ensuing years. During the first period of HRS
implementation between 1978 and 1984, output in the Chinese agricultural
sector increased by more than 61% and HRS accounted for 49% of the
output growth . In a few years, hundreds of millions of farmers were
released from their land, providing the nonfarm sector with a seemingly
unlimited l abor supply.Economic
relations between China and Africa, one part of more general
Africa–China relations, began centuries ago and continue through the
present day. Nowadays, China seeks resources for its growing population,
and African countries seek funds to develop their infrastructures.China
has become Africa’s largest trade partner and has greatly expanded its
economic ties to the continent, but its growing activities there have
raised questions about its noninterference policy. Over the past few
decades, China’s rapid economic growth and expanding middle class have
fueled an unprecedented need for resources. The economic powerhouse has
focused on securing the long-term energy supplies needed to sustain its
industrialization, searching for secure access to oil supplies and other
raw materials around the globe. As part of this effort, China has
turned to Africa.
How do Africans view China's economic presence on the continent? The
latest Afrobarometer survey reports that on average, 63% of Africans
surveyed believed China to be a "somewhat" or "very positive" influence
in their countries while "only 15% see it as somewhat/very negative.
CHINA
IN AFRICA : Chinese migrants have changed the face of South Africa. Now
they’re leaving.Zhu Jianying, the owner of a home goods shop in
southwest Johannesburg, plans to leave South Africa as soon as she can.
Her store is making less than half of what it was two years ago when it
first opened. She worries about security Chinese traders like herself
are often targeted. She and her family hardly ever leave the mall that
houses her store and their apartment on an upper floor.Ethiopia
Draws Asia Manufacturing Interest .For a long time, economists have
discussed East Africa's chances to "get a foot in the door" of global
manufacturing. China, as the world's leading hub for mass production,
has become expensive due to rising labor and energy costs. Meanwhile,
East Africa offers a large young and cheap labor force. Until recently
though, delays at ports, bad roads, power outages and political
instability have prevented a shift from happening. But now, the
Ethiopian government is building new industrial mega-zones that have
successfully attracted some foreign investors who are moving
manufacturing from China.China’s
economic growth was not even across space. In order to better utilize
China’s comparative advantage of cheap labor in the international
market, China adopted an export - oriented development strategy. It set
up numerous special zones in the coastal
provinces to attract foreign direct investment (FDI). From 1978 to the
mid - 2000s, the coastal areas attracted most of FDIs and created
millions of jobs. China’s entry to the World Trade Organization (WTO)
further increased the trend to global integration. As the coastal
provinces became a growth pole, workers from interior regions migrated
there to seek better - paid jobs. The total number of migrants increa
sed by nearly fivefold from merely 25 million in 1990 to 145 million in
2009.However,
the progress against poverty has been uneven over time and across
space. Most of the drop in poverty happened in the early 1980s when the
HRS reform took place. Consequently, the rural poverty rate dropped
sharply from 76% in 1980 to 24% in 1986
b ased on the international poverty line of 1$ per day (Ravallion and
Chen, 2007) . In other words, more than 400 million people moved out of
poverty in a short, six - year spell. Agricultural growth played a key
role in China’s massive poverty reduction. After wards, however, the
pace of poverty reduction stalled in the 1990s and early 2000s during
the period of SOE reform. Urban poverty emerged as a problem . In the
past decade, thanks to rising wages and the introduction of social
safety net programs, poverty rate showed a steady decline . Yet, there
are still pockets of poverty, mainly concentrated in the western region.Previously,
debt and investment fueled China's expanding economy. Chinese leaders
know that future growth cannot rely on debt and investment alone, and
spending measures will not be a part of the plan to fuel the economy.
Tampering with the country’s interest
rate could harm the economy further. Measures to decrease the housing
supply could negatively impact China's financial market and industry
sector. High levels of debt have harmed economic output.With
$19 trillion in state assets; here is how China could defuse its
massive debt bomb.China’s state researchers say government debt isn’t as
risky as it might look. Scholars at the Chinese Academy of Social
Sciences, a government think tank in Beijing, analyzed several years
worth of government balance sheets and concluded that the state’s
massive assets can offset the debt threat. CASS calculates in a new
report that government assets stood at about 125.4 trillion yuan ($19
trillion) in 2015, or about 1.8 times GDP. Holdings include fixed assets
such as buildings and cars, resources like land and oilfields, and cold
hard cash in government deposits, the social security fund, and
financial institutions.Still,
those aren’t easily liquidated in a crisis, and the researchers also
warn of hidden dangers. They cite so-called implicit debt, or
obligations that have an implicit state guarantee. That includes bond
issuance by quasi-governmental organizations like policy banks, state
railway debt, contingent local government liabilities, non-performing
loans by state-owned financial institutions, hidden foreign debt, and a
potential shortfall in the country’s pension fund. “China’s government
sits on many resources available for use, and has great resilience and
flexibility to fend off risks,” researchers wrote. They estimate that
the ratio of government net assets to gross domestic product is greater
than 80 percent, offering a generous cushion against financial
instability.