ECONOMY OF CHINA

AKHILESH AGARWAL JATIN RASTOGI ARAVIND V.N ANIL KOLISETTI MUDIT CHOPRA

China: An Overview
y CAPITAL-BEIJING y China had a population of 1.26bn in 2000

with estimated growth rate of 12.5mn per Year has reached 1.33bn in 2008 but annual population growth rate has dropped by nearly 44%. y Its the Largest Economy of the World and 3RD Largest Country by Area. y Only 1/10 of the land is cultivated leaving 90% People Living On 16% Of the Land

Factors Effected Growth

Economic Growth was Hindered due to the following reasons:
yWar and Inflation yPoor Planning and natural disasters yTermination of the collaboration with the Soviet Union y15 to 30 Million dead due to Famine

Concentration of 1st 5 year plan only on rapid build up of heavy industry mainly Defense Effects of Cultural Revolution (1966 76) Great leap forward experiment led to depression

Pre crisis (1949-1958)

y China followed on the footsteps of Soviets Union and y y

y y

concentrated on heavy industry development strategy. Primary Focus on Heavy Industry mainly Defense and Reduced Consumption. The government stepped in and took control of a large part of the economy and redirected resources into building new factories After the Sino-Soviet Dispute the Govt. Invested heavily on Agricultural Sector. The First Five year plan implemented(1953-57)

During Crisis
Factors prevented Economic Growth y Political Turmoil. y Poor Planning. y Natural Disaster. Experiments of Great Leap Forward (1958-60) y Rural collectivization. y Elimination of wage incentive. y Backyard steel plants. y Great leeway for local initiatives.

Effects
y Death of around 30 million people because of Famine. y Decline in Economic Growth. y China went into Depression in early 1960s.

Post crisiscrisis- Economic Reforms

(1978 onwards)
` In late 1970 and early 1980 Trade with other countries were

allowed.
` Economic zones created for attracting the Foreign Direct

Investment (FDI).
` Privilege to farmers for selling out their surplus crop in the open

market was allowed.

` TownshipVillage Enterprises (TVE) were established. ` Creation of Special Economic Zones

Late 1980 and 1990

` Creating a pricing system and decreasing the role of state in resource

allocations
` Administratively driven command economy transformed to a price driven

market economy
` Closing of unprofitable enterprises ` Dealing with insolvency in the banking system. ` Constraints on foreign trade were relaxed, and joint ventures with foreign

firms were officially encouraged as sources of modern technology and scarce foreign exchange

Economic Reforms Achievement

` The real GDP on average grows to 9% a year. ` People below poverty line (BPL) has reduced to a large extent. ` Increase in foreign exchange reserves. ` China has became the largest economy in the world. ` Between 1996-2000 China cumulatively approved 104,621

foreign invested enterprises, with a commitments of US 279.984 billion

y Political and social stability, economic productivity,

and public and consumer welfare were considered foremost.

y The government also had focused on foreign trade as a major

vehicle for economic growth and permitted foreign direct investment in several small special economic zones.

Economic Performance: Prere- and Postost-Reform

Composition of Foreign Investment

Present Scenario
China is one of the fastest growing economies in the world

,at the same time , the country faces complex economic, political , social and environmental challenges China's economy grew at an average rate of 10% per year during the period 19902004 China have formed different planning forums to look after the dynamic and critical issues facing a region or a country

Challenges lying ahead

` China has been called as People Bomb due to increase in

population.
` Growth rate of population estimated at 14mn per year. ` Unemployment is about 20 percent. ` HIV/AIDS is spreading . ` Corruption ` Fear of global pandemic Bird Flu because of worlds biggest

poultry population.