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ECONOMIC INDICATORS

After more than two centuries marked by internal turmoil, invasion, coerced political, legal and territorial concessions to foreign powers and economic stagnation, China is emerging as one of the world's most powerful states and most dynamic markets. No country compares with China in terms of its potential as a consumer of U.S. goods and services and as a generator of return on capital investment. In this respect, a few raw figures speak volumes:

Over the past two decades, since Deng Xiaoping’s rapid transition to a stable post-Mao political and economic order, China has the globe's fastest growing economy, growing at a rate of 9.5 percent per year between 1979 and 1999. At this rate, even a fall to 8 percent growth will quadruple the size of China’s already enormous economy in less than twenty years.

  • China is expected to double its 2000 GDP (over US $1 trillion in 2000) by 2010.
  • China ranks second in the world in hard currency reserves with approximately $110 billion.
  • With roughly $135 billion of foreign investment in its stock market, in this respect also it ranks second in the world.
  • At $140 billion, it ranks second worldwide as a recipient of direct foreign investment over the past four years.

Statistics from "China Country Briefing;” Bank One, NA; Beijing Branch;

Sasha Chang, Country Manager; April, 2001.

Having almost gained membership in the World Trade Organization, China is slowly lowering tariff and non-tariff barriers to trade in goods and services. Its highest officials have committed themselves to reduced state participation in the economy and the rationalization of the state-owned sector. At least in the longer term, rationalization will sharply reduce strains on the banking system. The government is also laboring to strengthen the rule of law. As it rebuilds a legal system, never strong and virtually demolished during the era of Mao Zedong, it draws on American experience. The American Bar Association is already cooperating in this enterprise. In most respects China is, in short, moving rapidly to consolidate the conditions necessary for sustained high growth and full participation in the global economy.

With all its promise, however, China also faces tremendous difficulties. In a matter of decades, it is undergoing the kind of extraordinary changes in government, society and economy that the West absorbed gradually over more than two hundred years. All at once this vast country has been shifting from a command economy virtually without markets to a mixed one in which markets play a powerful role. Politically, it has moved in a few years from totalitarian centralization to an authoritarian system with considerable reallocation of effective power from Beijing to provincial, county and city-level elites. Demographically, it is experiencing urbanization at a pace unknown in the West. People are pouring into the cities from the overpopulated countryside. Averaging one percent a year for at least the past two decades, the shift from rural to urban life is almost certain to accelerate as mass media illuminate and possibly exaggerate urban affluence.

Law and administrative institutions are changing in rough correspondence to the stunning changes in the economy and society. Almost overnight the Chinese government has been attempting to establish the legal infrastructure of a modern market-driven society. Executive organs at all levels emit a flood of decrees in a furious effort to fill lacunae in the basic legal structure and to advance social and economic objectives in a setting of ceaseless and accelerating change. Systems for ordering, harmonizing, and monitoring the exercise of administrative power are only beginning to develop.

For more information on China’s economy, see the links above, as well as the report from the Center’s 2001 conference, “China’s Entry into the WTO: Winners, Losers, Implications,” listed under the “Conferences” page of this website.