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China Economy

Last updated by david at 2014/10/18

Table of Contents

TOPGeneral Information

Since the founding of new China in 1949, the economy of China has seen fairly rapid development. Especially since China initiated the reform and opening to the outside world, China's economy advances healthily and has achieved a sustained annual growth of around 9 percent. In 2005, the GDP of China is more than US$ 2200 billion and the average per-capita GDP is US$ 1703. At present, China's GDP comes fourth in the world. Its share of the world economy is 5 percent and it is only next to America, Japan, and Germany. The average per-capita GDP only comes one hundred and tenth in the world.

After more than twenty years of reform, opening up and modernization, China has basically accomplished the change from planned economy to socialist market economy. A socialist market economic structure is established and improved step by step. Adapting to this, China's laws and regulations has been improved constantly, its market is opened wider constantly, its investment environment has been improved constantly, and reform of the financial system has been progressed steadily. All of these improvements have furnished a reliable guarantee to the continuous development of China's economy.

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TOPOpening to the Outside World

Since the adoption of the policy of reform and opening-up in 1979, China has taken a series of important measures in opening up to the outside world. After more than ten years of efforts, the domain and scale of opening up to the outside world has been growing continuously, and a multitiered and all-dimensional opening pattern is being formed.

TOPSpecial Economic Zones

In July, 1979, China decides to set Shenzhen, Zhuhai, Shantou and Xiamen as special economic zones as an experiment. It is taken as a special form of absorbing foreign investment. In April, 1988, the seventh NPC approved to establish Hainan province and set Hainan Island as Hainan special economic zone. So far, China has opened up five special economic zones successively, and the total area reaches 34713 sq.km.

China's special economic zone is different from exporting and processing area of foreign country. It is a comprehensive special economic zone focusing around industry, combining industry and trade and promoting all walks of life, and a zone implements special economic policy and system of economic operations. "The particularities"  of special zone are manifested in the following four ways. First, the economic development of special zone mainly depends on absorbing and utilizing foreign funds, and its products are mainly available for export. Its economy is basically export-oriented. Second, the economic activities of the special zone is regulated by the market under the government's macro-control. Third, the special zone adopts management system of economy that is different from that of the interior of the country and enjoys more and larger decisionmaking power in economic activities. Fourth, the special zone provides foreign businessmen coming to invest with special favor and convenience in aspects such as tax, the right to use land, the management of land and sea ports, etc.

TOPCoastal and Port Cities Opening to the Outside World

In April, 1984, China decides to open another fourteen coastal and port cities, Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Zhanjiang, and Beihai. This is the second level of China's opening up to the outside world and another significant step in adopting the policy of opening up to the outside world. In order to open more coastal and port cities, the state has adopted the following open policies. First, the state expands these cities' jurisdiction in engaging in foreign economic activities and enhances their capability of carrying out international economic and technological cooperation. Second, the state gives foreign businessmen coming here to invest preferential treatment which is only next to that of the special economic zone and enhances their ability of attracting foreign businessmen to invest. Third, in order to make use of foreign capital, introduce technology better, and create a microclimate that is benificial to investment, it is approved to set up economic and technical development zone in these cities. We implement policies similar to that of special economic zone in economic and technical development zone. Let a microclimate of better investing environment be formed first.

TOPCoastal Economic Open Regions and Zones

In Feb., 1985, China decides to set the following regions as coastal open regions, the Yangtze delta, the Canton River delta, and Xiamen-Zhangzhou-Quanzhou triangle of the south of Fujian province. This is another major step of China's reform and opening up to the outside world and is the third level of opening up to the outside world. In Mar., 1988, the State Council further extends the scope of these economic open zones, the Yangtze delta, the Canton River delta, and triangle area of the south of Fujian province, and lists the following areas as coastal economic open zones, some cities and counties of Liaodong Peninsula, Shandong Peninsula and area encircling Bohai Sea and counties under the jurisdiction of coastal open cities. The coastal open regions of the whole country go across six major economic circles, Liaodong Peninsula, gulf of Bohai Sea, Shandong Peninsula, the Yangtze River delta, coastal area of the south of Fujian province, and the Canton River delta. Thus, a vast, long and narrow opening up position zone of about 10000 miles that is connected from north to south in the east of china.

TOPTax-protected Zone

Setting up tax-protected zone is another major measure taken by Chinese government to further open up to the outside world and absorb foreign investment. China's tax-protected zone is a small area with isolating facilities, a special area that is similar to the function of free port and free trade zone in foreign countries, and is Custom-supervised area that has comprehensive functions of both processing export goods and foreign trade, and adopts special custom policies and managing means.

Since 1990, Chinese government has approved to set up 15 tax-protected zones successively.

Gaoqiao Tax-protected Zone, Shanghai It is located on the southern edge of the mouth of the Yangtze River. It covers 5.5 sq.km., and is the most open free trade zone in China at present.

Jingang Tax-protected Zone It is located in the land area of Tianjin Port. It covers 5 sq.km., and is the biggest tax-protected zone in northern China.

Dalian Tax-protected Zone It is located in the eastern part of economic and technical development zone, Dalian. It covers 1.25 sq.km., and is an important window of opening up to the outside world in region of the northeast China.

Shatoujiao Tax-protected Zone, Shenzhen It is located in Shatoujiao, Shenzhen, and covers 0.2 sq.km.

Futian Tax-protected Zone, Shenzhen It is located in Huanggang port area joining Xianggang, south central Shenzhen, and covers 1.35 sq.km.

Guangzhou Tax-protected Zone It is located in northeast part of economic and technical development zone, Guangzhou City, and covers 1.4 sq.km.

Zhangjiagang Tax-protected Zone It is on the eastern side of Zhangjiagang District that lies in the lower reaches of the Yangtze River. Its demonstration zone covers 2 sq.km., and is the only inland river port tax-protected zone in China at present.

Haikou Tax-protected Zone It is located in Jinpan processing area, Haikou, and covers 1.93 sq.km.

Qingdao Tax-protected Zone It is located on the western bank of Jiaozhou Gulf near to Qiangdao, and its planned area is 2.5 sq.km.

Ningbo Tax-protected Zone It is to the north of Beilun Port, Ningbo, and covers 2.3 sq.km.

11 Fuzhou Tax-protected Zone It is in Mawei economic and technical development area , Fuzhou, and covers 1.8 sq.km.

12 Xiangyu Tax-protected Zone, Xiamen It is in Xiamen special economic zone, and its demonstration area is 0.6 sq.km.

13 Shantou Tax-protected Zone It is in Shantou special economic zone, and covers 2.3 sq.km.

14 Zhuhai Tax-protected Zone It is in Hongwan industry zone, Zhuhai, and covers 3 sq.km.

15 Yantian Port Tax-protected Zone, Shenzhen It is in Dapeng Gulf, Shenzhen, and covers 0.85 sq.km.

TOPChina's Foreign Economic Cooperation

China's business of overseas investment and cooperation has been extended to 160 countries and regions worldwide. The focal point of investment and cooperation has been gradually shifted from Hong Kong, Macao and areas of North America to most developing countries in Asia Pacific Region, Africa, Latin America, etc. Business of foreign project-contracting and labor cooperation extends all over more than 180 countries and regions worldwide. A multitiered, wide-ranging and all-dimensional multi-market pattern which focuses on Asia is formed.

In terms of the area of investment and cooperation, through foreign economic cooperation in many forms, such as investing to run a factory (agricultural cooperation is included), processing, resources development, foreign project-contracting, foreign labor cooperation, etc., its field of business has already covered every field of national economy, such as architecture, petrochemical, electric power, communication, telecommunication, water conservancy, metallurgy, nonferrous, railway, coal, forestry and aerospace etc. A pattern of diversified investment and cooperation area is formed.

In terms of management body structure, there is not only national large production enterprises, but also hi-tech enterprises; not only state-owned enterprises, but also private enterprises; not only joint-stock companies listed shares abroad, but also enterprise groups organized by profession dominance; not only enterprises specialized in foreign project-contracting and labor cooperation business, but also dominant enterprises that implements strategy of overseas investment and initially forms the germ of transnational corporation. A pattern of diversified operators of overseas investment and cooperation.

TOP Agriculture

In 1978, China began to carry out rural household contract responsibility system, cancel the people's commune system that combines the organs of political power and economy, and implement the policy of seperation of politics and commune. The government farmed out collective land to farmer family, changed distribution method, and stimulated the enthusiasm of the peasants for production. In 1985, China made the second reform. The government canceled the system of purchasing and marketing agricultural products in a unified way that had existed for many years and changed it into system of purchase contract. The market played fundamental role in regulating the supply and demand of agricultural products and the distribution of resources, and stimulated the creativity of peasants and their enthusiasm for production. The activities of rural commodity-production and commodity-circulation had advanced with an unprecedented scale and speed.

TOPIndustry

Since the founding of New China in 1949, the Chinese government begins to carry out economic construction on a large scale programmatically. The industrial base has been enhanced, and the production level has been improved rapidly. Some manufacturing industries such as metallurgy, mine, electric power, airplane, automobile etc. and newer industries such as petrochemical, computers, communication equipment, instrument and meter, aerospace etc. have been formed and are constantly growing. Sice 1978, reform and opening has advanced China's industry to a stage of large-scale reform and development. From 1978 to 1999,industry has achieved successes that have attracted worldwide attention by its average annual growth of 11.1 percent. The comprehensive industrial strength has been enhanced.

The reform of the industrial sector, firstly by enlarging the decision-making power of enterprises and practicing enterprise contract responsibility system through the relaxing of control and the making of concession by administrative authorities, has fully mobilized the enthusiasm for production and creativeness of enterprises and their employees, and created a sound environment for enterprises to exercise independent operation and complete their operational mechanisms. The introduction of foreign capital and the practice of opening have quickened the process of China's industrialization. The establishment of large numbers of joint ventures and exclusively foreign-funded erterprises has brought in capital, advanced equipment and modern management expertise, enhancing the technological and management level of China's enterprises. The 21-year reform has enabled the Chinese industry to get rid of the backward status characterized by a unitary variety of products and low technological level. The output of industrial products has increased by leaps and bounds.

TOPDevelopment of the West Regions

In China, the historical existence and excessive enlargement of the gap of development between eastern and western China is an issue of overall importance that distracts the healthy development of China's economy and society over a long period of time. To support the construction in the west and achieve coordinated development of eastern and western China is an important principle the Chinese Communist Party adopts to lead economic work and an important strategic task of China's modernization.

In the past 50 years since the founding of New China, particularly in the recent two decades following the implementation of reform and opening policies, China's overall national strength has increased notably; our people approaches a relatively comfortable life; and the state increases support to the central and western regions. Especially, the currently implemented proactive financial policies of enlarging domestic demand can directly support the development of the west regions with more financial resources. Now China has basically solved the problem of feeding its people. The periodic oversupply of grain provides invaluable opportunity for converting arable land to forestry ( pasture ) and improving ecological environment in a planned and systematic way in ecologically fragile areas. As the speeding up of the process of China's entry into the World Trade Organization, the opening enters a new stage. The central and west regions will be more open as eastern coastal areas. It is qualified and time to quicken the development of the central and west regions.

TOPGuangzhou Fair

Guangzhou Fair, China Export Commodities Fair, is initially established in the spring of 1957. Since then, it is held in Guangzhou City, Guangdong province every spring and fall. Up to now, it has a history of 44 years. Presently, it is a comprehensive occasion for international trade with the largest scale, most various types of merchandise, and highest quality in China.

Statistics shows that the merchants participating in China Export Commodities Fair every year are made up of 47 trading delegations. Several thousand of powerful foreign trade companies, manufacturing enterprises, scientific research institutes, exclusively foreign-owned enterprises or enterprises with foreign investment, and private enterprises with good credit home and abroad gather here to participate in the Fair.

The types of trade on China Export Commodities Fair are flexible and diversified. Except the traditional way of concluding a deal on seeing the sample, the Fair particularly holds online fair with the rapid global development of the internet. The Fair mainly conducts export trade, and it also conducts import business. It may also carry out economic and technological cooperation and exchange in various forms and business-related activities such as the inspection of commodity, insurance, transportation, advertisement and consultation. Merchants from the whole world gather in Guangzhou, exchange business information, and promote friendship.

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