This revision presentation provides an overview of some of the key features of China's economy. It looks at China's economic growth; the impact of urbanisation and investment in infrastructure; China's record on poverty and the creation and use of China's substantial foreign currency reserves. It also looks at rising wage costs in China and the need for China to rebalance its economy reducing reliance on investment and increasing the role of consumption in economic activity.

1. Some Key Features of
China’s Economy
AQA BUSS4 Research Theme 2014

2. Two centuries ago, China was by some distance
the world’s largest economy!

3. China’s global economic influence and power
has returned and is unmistakeable!

4. China remains a Communist state dominated by the
Chinese Communist Party but it is also an increasingly
open economy where trade accounts for over 70% of GDP

5. China has achieved a consistently high rate
of economic growth in recent decades

6. In 2010 China overtook Japan to become the 2nd largest
economy and sustained the global economy during the
financial crisis
BRICS: China’s economy is now bigger than
Brazil, Russia and India combined!

7. China has added the equivalent of an economy
the size of Portugal every years since 1979

8. In 2011 China overtook he US to become the
world’s producer of manufactured goods

9. Made in China – the Factory of the World –
but for how much longer?

10. Much of China’s economic growth has been
driven by massive investment in infrastructure

11. For example, China plans to build 56 new
airports & relocate/expand 91 others by 2015

12. China is investing over $300bn in building high
speed rail to connect all of its major cities

13. As a result of rapid economic growth, significant
progress has been made in reducing poverty in China

14. Levels of extreme poverty have fallen
dramatically in China in the last 30 years

15. However, economic growth is now slowing down:
a lower target rate of growth of 7% has been set

16. Since 1978 China has experienced the
largest migration in human history

17. Between 2001 and 2010 migration contributed
nearly 20% of China's economic growth

18. China's intense programme of urbanisation has pushed
up consumption and increased income per person

19. However mass internal migration has
created significant social problems

20. Approximately 1 in 10 people in the world
now live in a Chinese city
Cities with more than a million people in 2011
USA (9)
European Union (18)
China (93)
New York: 8.2
Los Angeles: 2.8
Chicago: 2.7
Houston: 2.1
Philadelphia: 1.5
Phoenix: 1.4
San Antonio: 1.3
San Diego: 1.3
Dallas: 1.2
London: 7.8
Berlin: 3.5
Madrid: 3.3
Rome: 2.5
Paris: 2.2
Hamburg: 1.8
Budapest: 1.7
Vienna: 1.7
Warsaw: 1.7
Shanghai: 19.5
Beijing: 15.0
Guangzhou: 10.4
Shenzhen: 10.2
Chongqing: 9.7
Wuhan: 8.9
Tianjin: 8.5
Dongguan: 7.1
Chengdu: 6.3
Bucharest: 1.7
Barcelona: 1.6
Munich: 1.3
Milan: 1.3
Prague: 1.2
Sofia: 1.2
Brussels: 1.0
Birmingham: 1.0
Cologne: 1.0
Foshan: 6.2
Nanjing: 5.6
Haerbin: 5.4
Shenyang: 5.4
Hangzhou: 5.1
Xi’an: 4.8
Shantou: 4.0
Zhengzhou: 3.7
Qingdao: 3.6

21. China’s economic growth provides the tantalising
prospect of demand from 1 billion consumers

22. The growth of the consumer “middle class” in
China is driving phenomenal purchasing power

23. …although it depends on how you define
“middle class”

24. In many market sectors, China is now an
emerged rather than emerging market

25. China has invested an average of 8.5% of GDP in
infrastructure investment in the last two decades

26. …and it plans to continue massive
investment in key infrastructure projects

27. China is now looking to rebalance its economy
away from investment and towards consumption

28. Despite rapid economic growth, price inflation
has remained quite low in recent years

29. However, as the Chinese economy matures,
wages have started to rise significantly

30. Chinese labour force is forecast to decline
after 2015

31. The shift in China to a higher-wage economy will put
pressure on existing business models there

32. As China grows old, dependency ratios will rise; an aging
workforce will be less mobile & probably demand higher
wages

33. China’s rapid growth has helped it develop
massive reserves of foreign currency

34. China’s persistent current account surplus
has filled the reserves!

35. China now has over $3.6 trillion of foreign
exchange (forex) reserves

36. China’s reserves have grown tenfold in the past decade
due to a large trade surplus and strong capital inflows

37. China is investing its reserves in assets outside
China through sovereign wealth funds

38. China also uses massive foreign exchange
purchases to hold down the value of its currency

39. A weaker Chinese currency (Yuan) helps keep
Chinese exports cheap in overseas markets

40. China continues to attract high levels of FDI
(foreign direct investment)