As of 2013, China has the world’s second-largest economy in terms of nominal GDP, totalling approximately US$8.227 trillion according to the International Monetary Fund (IMF). If purchasing power parity (PPP) is taken into account (US$12.405 trillion in 2012), China’s economy is again second only to the United States. In 2012, its PPP GDP per capita was US$9,161, while nominal GDP per capita was US$6,075. Both cases put China behind around ninety countries (out of 183 countries on the IMF list) in global GDP per capita rankings.
Economic history and growth
From its founding in 1949 until late 1978, the People’s Republic of China was a Soviet-style centrally planned economy. Following Mao’s death in 1976 and the consequent end of the Cultural Revolution, Deng Xiaoping and the new Chinese leadership began to reform the economy and move towards a more market-oriented mixed economy under one-party rule. Agricultural collectivization was dismantled and farmlands privatized, while foreign trade became a major new focus, leading to the creation of Special Economic Zones (SEZs). Inefficient state-owned enterprises (SOEs) were restructured and unprofitable ones were closed outright, resulting in massive job losses. Modern-day China is mainly characterized as having a market economy based on private property ownership, and is one of the leading examples of state capitalism. The state still dominates in strategic “pillar” sectors such as energy production and heavy industries, but private enterprise has expanded enormously, with around 30 million private businesses recorded in 2008.
Since economic liberalization began in 1978, China has been among the world’s fastest-growing economies, relying largely on investment- and export-led growth. According to the IMF, China’s annual average GDP growth between 2001 and 2010 was 10.5%. Between 2007 and 2011, China’s economic growth rate was equivalent to all of the G7 countries’ growth combined. According to the Global Growth Generators index announced by Citigroup in February 2011, China has a very high 3G growth rating. Its high productivity, low labor costs and relatively good infrastructure have made it a global leader in manufacturing. However, the Chinese economy is highly energy-intensive and inefficient; China became the world’s largest energy consumer in 2010, relies on coal to supply over 70% of its energy needs, and surpassed the US to become the world’s largest oil importer in September 2013. China’s economic growth and industrialization has damaged its environment. In the early 2010s, China’s economic growth rate began to slow amid domestic credit troubles, weakening international demand for Chinese exports, and global economic turmoil.
China in the global economy
China is a member of the WTO and is the world’s largest trading power, with a total international trade value of US$3.87 trillion in 2012. Its foreign exchange reserves reached US$2.85 trillion by the end of 2010, an increase of 18.7% over the previous year, making its reserves by far the world’s largest. As of 2009, China owns an estimated $1.6 trillion of US securities. China, holding over US$1.16 trillion in US Treasury bonds, is the largest foreign holder of US public debt.In 2012, China was the world’s largest recipient of inward foreign direct investment (FDI), attracting $253 billion. China also invests abroad, with a total outward FDI of $62.4 billion in 2012, and a number of major takeovers of foreign firms by Chinese companies. China’s undervalued exchange rate has caused friction with other major economies, and it has also been widely criticized for manufacturing large quantities of counterfeit goods.
China ranked 29th in the Global Competitiveness Index in 2009, although it is only ranked 136th among the 179 countries measured in the 2011 Index of Economic Freedom. In 2011, 61 Chinese companies were listed in the Fortune Global 500. Measured by total revenues, three of the world’s top ten most valuable companies in 2011 were Chinese, including fifth-ranked Sinopec Group, sixth-ranked China National Petroleum and seventh-ranked State Grid (the world’s largest electric utilities company)