In late 1978 the Chinese leadership began moving the economy from a sluggish Soviet-style centrally planned economy to a more market-oriented system. Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state managers and enterprises has been steadily increasing. The authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the economy to increased foreign trade and investment.

The result has been a quadrupling of GDP since 1978. In 2000, with its 1.26 billion people but a GDP of just $3,600 per capita, China stood as the second largest economy in the world after the US (measured on a purchasing power parity basis). Agricultural output doubled in the 1980s, and industry also posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment helped spur output of both domestic and export goods. On the darker side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy and lassitude) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, retightening central controls at intervals.

The government has struggled to (a) collect revenues due from provinces, businesses, and individuals; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises many of which had been shielded from competition by subsides and had been losing the ability to pay full wages and pensions. From 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table especially in the north.

China continues to lose arable land because of erosion and economic development. Weakness in the global economy in 2001 could hamper growth in exports. Beijing will intensify efforts to stimulate growth through spending on infrastructure--such as water control and power grids--and poverty relief and through rural tax reform aimed at eliminating arbitrary local levies on farmers.

GDP: purchasing power parity - $4.5 trillion (2000 est.)

GDP - real growth rate: 8% (2000 est.)

GDP - per capita: purchasing power parity - $3,600 (2000 est.)

GDP - composition by sector: agriculture: 15%

industry: 50%

services: 35% (2000 est.)

Population below poverty line: 10% (1999 est.)

Household income or consumption by percentage share: lowest 10%: 2.4%

highest 10%: 30.4% (1998)

Inflation rate (consumer prices): 0.4% (2000 est.)

Labor force: 700 million (1998 est.)

Labor force - by occupation: agriculture 50%, industry 24%, services 26% (1998)

Unemployment rate: urban unemployment roughly 10%; substantial unemployment and underemployment in rural areas (2000 est.)

Budget: revenues: $NA

expenditures: $NA, including capital expenditures of $NA

Industries: iron and steel, coal, machine building, armaments, textiles and apparel, petroleum, cement, chemical fertilizers, footwear, toys, food processing, automobiles, consumer electronics, telecommunications

Industrial production growth rate: 10% (2000 est.)

Electricity - production: 1.173 trillion kWh (1999)

Electricity - production by source: fossil fuel: 79.82%

hydro: 18.98%

nuclear: 1.2%

other: 0.01% (1999)

Electricity - consumption: 1.084 trillion kWh (1999)

Electricity - exports: 7.2 billion kWh (1999)

Electricity - imports: 90 million kWh (1999)

Agriculture - products: rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed; pork; fish

Exports: $232 billion (f.o.b., 2000)

Exports - commodities: machinery and equipment; textiles and clothing, footwear, toys and sporting goods; mineral fuels

Exports - partners: US 21%, Hong Kong 18%, Japan 17%, South Korea, Germany, Netherlands, UK, Singapore, Taiwan (2000)

Imports: $197 billion (f.o.b., 2000)

Imports - commodities: machinery and equipment, mineral fuels, plastics, iron and steel, chemicals

Imports - partners: Japan 18%, Taiwan 11%, US 10%, South Korea 10%, Germany, Hong Kong, Russia, Malaysia (2000)

Debt - external: $162 billion (2000 est.)

Economic aid - recipient: $NA

Currency: yuan (CNY)

Currency code: CNY

Exchange rates: yuan per US dollar - 8.2776 (January 2001), 8.2785 (2000), 8.2783 (1999), 8.2790 (1998), 8.2898 (1997), 8.3142 (1996)

note: beginning 1 January 1994, the People's Bank of China quotes the midpoint rate against the US dollar based on the previous day's prevailing rate in the interbank foreign exchange market

Fiscal year: calendar year