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CHINESE ECONOMY
RIDDHI DESAI (3)
NADEEM SHAIKH(10)
RUQAIYA VASI(17)
IAN FERNANDIS(20)

2. LAND : 9.6 million square kms,
China is the world's second-
largest country by land area
having communist economy .CAPITAL: Beijing
POPULATION:
1,353,821,000
{1ST
AS 2012 ESTIMATES}
CURRENCY:
Renminbi

3. WHERE IS CHINA RANKED IN WORLDS ECONOMY???

4. China's 2012 nominal GDP per capita of US$6,075 puts it behind
around ninety countries (out of 183 countries on the IMF list) in
global GDP per capita rankings.
As of 2013, it is the world's second-largest economy by both
nominal total GDP and purchasing power parity (PPP).
It is also the world's largest exporter and importer of goods.
The nominal GDP, totaling approximately US$8.227 trillion
according to the International Monetary Fund(IMF).

5. HISTORY OF CHINESE
ECONOMY
• China’s Economy Prior to Reforms.
• The Introduction Of Economic Reforms.
• China’s Economic Growth and Reforms 1979-2012.
• Causes of China’s Economic Growth.

6. China’s Economy Prior
to Reforms.
•Prior to 1979, China, maintained a centrally planned, or
command, economy.
•A large share of the country’s economic output was
directed and controlled by the state.
•Private enterprises and foreign-invested firms were
generally barred.
•Government policies kept the Chinese economy
relatively stagnant and inefficient
•The Chinese government in 1978 decided to break with
its economic policies by gradually reforming the economy
according to free market principles.

7. The Introduction Of
Economic Reforms
Beginning in 1979, China launched several economic
reforms.
The central government initiated price and ownership
incentives for farmers, which enabled them to sell a portion
of their crops on the free market.
Citizens were encouraged to start their own businesses.
State price controls on a wide range of products were
gradually eliminated.
Trade liberalization was also a major key to China’s
economic success.

8. China’s Economic Growth
and Reforms 1979-2012.
•Since the introduction of economic reforms, China’s
economy has grown substantially faster than during the
pre-reform period.
•According to the Chinese government, from 1953 to
1978, real annual GDP growth was estimated at 6.7%.
•During the reform period (1979-2011), China’s average
annual real GDP grew by 9.9%.
•China’s real GDP growth fell from 14.2% in 2007 to
9.6% in 2008 to 9.2% in 2009.

9. • In 2010, China’s real GDP grew by 10.4%, and in 2011 it
rose by 9.2%.
• In 2012, China’s real GDP growth slowed to 7.8%.
• The International Monetary Fund (IMF) in April 2013
projected that China’s real GDP would grow 8.0% in
2013 and 8.2% in 2014.

10. Causes of China’s
Economic Growth.
Introduction of market system, first in the rural
areas & then in urban areas.
Other 3 important reasons:
1st
Openness: China welcomed international
trade.
2nd
Pragmatism: Willing to try almost
everything.
3rd
Pareto improving: Almost everyone is made
better off.

11. China as the World’s
Largest Manufacturer
•China has emerged as the world’s largest
manufacturer according to the United Nations.
•China overtook Japan as the world’s second-
largest manufacturer on a gross value added
basis in 2006 and the United States in 2010.
•In its 2013 Global Manufacturing
Competitiveness Index, ranked China first in
manufacturing in 2013 and projected it would
remain so in five years.
•The United States ranked third in 2013 and
was projected to rank fifth in 2018.

12. Top 15 Largest Countries in
the World for Manufacturing
Value-Added.

13. Changes in China’s Wage
Advantage
China’s huge population and relatively low wage rates gave
it a significant competitive advantage when economic
reforms and trade liberalization were first begun by the
government in the late 1970s.
From 2000 to 2012, Chinese average real wages grew at
an average annual rate of 11.8%.
China’s average monthly wages in 2000 were 30.2% the
size of Mexican wages. However in 2012, China’s average
monthly wages were 32.6% higher than those in Mexico.
China’s average wages were 92% higher than those than
Vietnam, but by 2012, they were 434% higher.

14. Exchange rates

15. • 1 United States Dollar = 6.12036 Chinese Yuan
• 1 Chinese Yuan= 16.22 Japanese Yen
•1 Chinese Yuan=10.33 Indian Rupee
1 United States Dollar = 6.12036 Chinese Yuan

16.  FDI in China, also known as RFDI (renminbi
foreign direct investment), has increased
considerably in the last decade.
 It has reached $59.1 billion in the first six months
of 2012, making China the largest recipient of
foreign direct investment and topping the United
States which had $57.4 billion of FDI.
Foreign direct investment
(FDI) of China

17. Foreign direct investment (FDI)
used in China from year 1986 -
2011:

18. • Foreign Direct Investment in China increased to 713.92 USD Hundred
Million in July of 2013 from 619.84 USD Hundred Million in June of
2013

19. China’s FDI outflows and
inflows
• China has become a significant source of global FDI
outflows, which rose from $2.7 billion in 2002 to
$84.2 billion in 2012
• In 2012, 44% of global FDI inflows were hosted by
only five countries. China attracted the lion’s share
by USD 253 billion (or 18% of total) followed by the
United States (USD 175 billion), Brazil (USD 65
billion), the United Kingdom (USD 63 billion) and
France (USD 62 billion).

20. Major Trading Partners

21. Major Trading Partners
 China has passed the US as the world’s biggest
trading nation as measured by the sum of exports
and imports in 2012.
 China’s top 5 trading partners are :-
1. China’s top trading partner is the European Union
constituting to 14.1% share of China total imports
and exports in 2012, this amounted to 546 USD
billion in value
2. USA
3. ASEAN
4. Hong Kong
5. Japan

22. Top trading partners

23. Import and Export

24. • China has increased its imports and exports
over the years due to several factors, i.e
competitiveness that led to an expansion of
their shares in the international market to
liberalize trade in China.
• The Chinese government reduced
administrative obstacles to improve its
attractiveness to the foreign investors.
• Increased import and export of goods over the
years. Its total value of import and export in
2012 reached USD 3.867 trillion and this raised
China to become the world's largest nation and
surpassed U.S. in 2012 which was $3.82 trillion.

26. Import
• To liberalize trade in China, the government
continued to reduce administrative obstacles to
trade by adjusting the tariffs and exchange rates.
• The import of goods and services in % of GDP
was last reported at 26.05% in 2011

27. Import
commodities
Machinery
and
transport
equipment
Textile
Non
edible
raw
materials
Mineral
and raw
materials
Chemical
substanc
es

28. Import Commodities chart

29. Exports

30. •Exports consists of 30% GDP
•China exports averaged 439.60 USD
hundred million from 1983 until 2013 reaching
an all time hugh of 1992.30 hundred million in
december 2012

31. Export
commodities
Machinery
and
transport
equipment
Rubber
Textile
Metallurgic
al products
& chemical
products
Food and
machinery
Fuel
materials

32. Export Commodities chart

33. AGRICULTURE

34. PRESENT SCENERIO
15% of its total
land area-
cultivated.
Supports
20% of
world
population
• China – one of the largest producers and consumers
of agricultural products.
• Today agriculture contributes 10.1 % of CHINA’S
GDP.
• China’s development of farming over the course of
its history has played a key role in supporting the
growth of what is now the largest population in the
world.
• Although china’s agricultural output is the largest in
the world,

35. .
MAJOR AGRICULTURAL
PRODUCTS
RICE
OIL
SEE
D
COTTO
N MILLET
POTAT
O
TEA BARLE
Y

36. GROWTH
Crop[22]
1949 Output (tons) 1978 Output (tons) 1999 Output (tons)
1.Grain 113,180,000 304,770,000 508,390,000
2.Cotton 444,000 2,167,000 3,831,000
3.Oil-bearing crops 2,564,000 5,218,000 26,012,000
4.Sugarcane 2,642,000 21,116,000 74,700,000
5.Sugarbeet 191,000 2,702,000 8,640,000
6.Flue-cured tobacco 43,000 1,052,000 2,185,000
7.Tea 41,000 268,000 676,000
8.Fruit 1,200,000 6,570,000 62,376,000
9.Meat 2,200,000 8,563,000 59,609,000
10.Aquatic products 450,000 4,660,000 41,220,000
SR NO Crop[22] 1949 Output
(tons)
1978 Output
(tons)
1999 Output
(tons)
1. Grain 113,180,000 304,770,000 508,390,000
2. Cotton 444,000 2,167,000 3,831,000
3. Oil-bearing crops 2,564,000 5,218,000 26,012,000
4. Sugarcane 2,642,000 21,116,000 74,700,000
5. Sugarbeet 191,000 2,702,000 8,640,000
6.
Flue-cured
tobacco
43,000 1,052,000 2,185,000
7. Tea 41,000 268,000 676,000
8. Fruit 1,200,000 6,570,000 62,376,000
9. Meat 2,200,000 8,563,000 59,609,000
10. Aquatic products 450,000 4,660,000 41,220,000
GROWTH
Increase in the agricultural output over a
period of time:

37. Major agriculture products
In its first fifty years, the People's Republic of China greatly increased agricultural production through organizational and technological improvements.
Rice
wheat
potatoes
sorghum
peanuts
tea
millet
barley
cotton
oilseed
pork
fish

38. INEFFICIENCES IN THE
AGRICULTURAL MARKET
LACK OF INFORMATION TO FARMERS.
FLUCTUATIONS IN THE SUPPLY OF FRESH
PRODUCTS
PROBLEMS IN TRANSPORTATION OF
AGRICULTURAL PRODUCTS FROM FARMS TO
MARKET.

39. Industry and construction account for 48% in china’s
gdp.
Around 8% of total manufacturing output in the world
comes from china itself.
Among the various branches of industry, the machine
building and mettalurgical industries have received
the highest priority.
These two areas alone account for 20-30% of total
gross value of industrial output.
INDUSTRY

40. INDUSTRY
China is world’s leading manufacturer of
chemical fertilizers ,cement and steel.
China’s cotton textile industry is the
largest in the world,producing
yarn,cloth,wollen piece goods,silk,jute bag
and synthetic fibres.

41. BANKING SECTOR

42. The Banking Sector
• History of banking sector in china can be subdivided
into 2 main periods:
• 1.)MAO ERA[1949-1978]
• 2)POST MAO ERA[1978 ONWARDS]

43. The Mao Era
functions of central bank
(regulation and monetary policy)
functions of commercial bank
(control on all banking business)

44. The Post-Mao Era
In 1983 the control on banking
business has been took over
by the “Big Four”
namely
 Bank of China (BOC)
 Industrial & Commercial
Bank of China (ICBC)
 China Construction Bank
(CCB)
 Agricultural Bank of China
(ABC)

46. ALL TIME HIGH

47. FUNNY ON GOINGS IN
BANKING SECTOR.

48. NPL RATIO

50. TOURISM IN CHINA

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CHINESE
ECONOMIC

52. The Impact of
Global Financial
Crisis on the
Chinese Economy.

53. Introduction
The United States subprime crisis and the
consequent dramatic global slowdown hit after
Lehman Brother Fiasco hit the Chinese Economy
very badly.
This lead to growth of chinese economy fell to 6.8%
in fourth quater of 2008 from 13 % in 2007

54. channel via which the
global financial crisis
impacted on Chinese
economy : Direct Loses in American Capital market
Change in Cross-Border Capital Flow
Reduction in Growth of Export
Safety of Foreign Exchange Reserve
@

55. The total direct loss suffered by China’s four most important
banks due to moderate amount of Mortgage-backed
securities (MBS) and Collateralized debt obligation (CDO)
amounted to $ 20 billion.
In August 2008 , China was on edge when Fannnie Mae and
Freddie Mae were on brink of collapse . If these two US
mortgage company could have collapsed the China would
have suffered $400 billion in official foreign exchange
reserve but was saved by USA .
Direct Loses in American Capital market

56. Change in Cross-Border Capital Flow
Soon after the outbreak of US subprime crisis , Chinese economist began to
debate that international capital would flow in or out of China .
As it turned out , since early 2008 , capital seem to have been flowing out of
China.
For example , China FDI inflow decline to some $ 20 billion in 2008 from $50
billion in 2007

58. Reduction in Growth of Export
China fast growth came to sudden halt in third quater of
2008 . In the third quater China annual GDP growth
dropped to 9% from 13% in 2007 ; the growth rate of
industrial production 8,2% about half of the previous year .
Major effect was seen in Steel output , which fell from 20%
previous year to 2.2% in 2008 .

60. Beside this Government also consider possible tax reduction
, VAT , Purchasing Tax cut and raising the threshold of
individual income taxes.
Plans anncounced by Chinese
Government to Reform and
Restructure the Economy
Expansing Fiscal Policy
In November 2008 , government introduced a 4 Trillion yuan
($580 billion)stimulus package for 2009 and 2010
In 2008 China GDP was 29 Trillion Yaun .The package thus
amounted 14% of total GDP
Stimulus Package
Cut in Tax.

61. Structure of China Stimulus Package

62. Central
Government 5
Year Plans
20%
40%
80%
100%
120%
140%
160%
2011 2012
2013 2014 2015 2016
How toHow to
increaseincrease
export andexport and
trade ?trade ?
How toHow to
increaseincrease
falling GDP ?falling GDP ?
6.6% GDP fall
25% increase in
Trade
GDP
Trade
How 5 Year
Plan made in
China ?

63. Flow Chart showing formulation of Plan

64. Flow Chart of Plan
Formulation in China

65. Major Objective of FYP’s
Research and Development
section at Coastal region.
Research and Development
section at Coastal region.
Lengthening high speed railway
and highway.
Lengthening high speed railway
and highway.
Increase in expenditure in RND to
raise GDP by 2.2%.
Increase in expenditure in RND to
raise GDP by 2.2%.
Acheiving average GDP rate 7% and ensuring
income raise fast as GDP.
Acheiving average GDP rate 7% and ensuring
income raise fast as GDP.

66. Welcoming foreign investment in agriculture ,
high technology and environment protection
Welcoming foreign investment in agriculture ,
high technology and environment protection
Promoting Energy Saving and new Energy
industry.
Promoting Energy Saving and new Energy
industry.
Consolidating inefficient sectors and
promoting the services industry.
Consolidating inefficient sectors and
promoting the services industry.
Expanding non-fossil fuel account for
11.4% energy consumption.
Expanding non-fossil fuel account for
11.4% energy consumption.

67. China rapid growth and emergence as a major
economic power has given China a leadership ,
increased confidence in its economic model .
Many economist
belive that the key
challenge for US
convince China that
Many economist
belive that the key
challenge for US
convince China that
China
should take
leadership
in trade to
improve
world
economy.
Lowering of
trade barrier
to boost the
economy .
This would
make China
at number

68. Current account
balance as per GDPfor
China and US :2000-
2012

69. Conculsion
China is becoming a dominant force in the world economy.
China 's purchasing power is on the rise, compared to that of
the United States and other countries. China is not only
exporting more goods and services; increasingly, it is exporting
high-tech goods like computer chips.
Also, China is becoming a more consumer-oriented society.
Chinese incomes are on the rise. The Chinese people are
purchasing more cars, and there now are several Wal-Mart
stores in China. China's growth is unprecedented in the history
of economics. With children in China learning English, and
China competing with the United States for production
resources, China is no longer a poor communist country trying
to survive. China is emerging as an economic superpower,
ready to compete in the world economy.

70. Thank You !