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China - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Beijing
Area:: 9.600.000 km2
Total Population:: 1.331.460
Annual growth rate:: 1.00%
Density:: 143.00/km2
Urban population:: 44%
Population of Shanghai (17.900), Guangzhou (Canton) (15.300), Beijing (13.200), Shenzhen (9.400), Wuhan (9.000), Tianjin (8.200)
Official language: In China, the national language is Mandarin. However, it is to be noted that there are many different dialects and variants of it.
Other languages spoken: There are more than a hundred dialects. You can differentiate Mandarin in the north and Cantonese in the south of the country. The official language coexists with the other languages of the autonomous regions (Mongolian, Uyghur, Korean, Tibetan...).
Business language: When the foreigners do not speak Chinese, business discussions are generally held in English. The Chinese do not speak English as well as they read or write it.
Ethnic Origins:: Chinese: 91.9%; Zhuang, Ouïghour,  Hui, Yi, Tibetan, Miao, Mandchous, Mongol, Buyi, Korean and other nationalities: 8.1%.
Beliefs: The Chinese are generally atheists. However, Buddhism, Taoism and Confucianism are relatively widespread amongst senior citizens and attracts a part of the well-to-do class today. There are also Christian and Muslim minorities.
Telephone codes:
To make a call from: 00
To make a call to: +86
Internet suffix:: .cn
Type of State::
The People's Republic of China is a communist state. Deng Xiao Ping had suggested the phrase "market socialism" to qualify the evolution of the PRC. China corresponds to a centralised unitary state completely managed by the Chinese Communist party with a great national administration, authoritative in its structure as well as its ideology.
Type of economy::
Second richest country in the world (GDP), emerging financial market.
Largest population in the world; highest GDP growth rate in the world over the last 10 years.

Economic overview

The global recession interrupted China’s dynamic of continuous growth. Chinese economy however showed itself very resilient to the crisis and its economic recovery surprised the observers by both its rapidity and its vigor. After the euphoria of the recovery, the GDP growth slowed down during the first two quarters of 2010, especially as an effect of the austerity measures adopted by the government in the field of bank lending, real estate and currency exchange. Since then, there has nonetheless been a resumption of more dynamic growth which should continue in 2011. For 2010, economic growth is estimated at 10.5%.

Chinese economy is driven by investment and domestic consumption, which is itself boosted by the increase in salaries and the new housing policy. In order to avoid the overheating of the economy, the government has announced new measures to fight inflation and to stabilize prices of basic agricultural commodities. Among Beijing’s priorities are also: infrastructure, industry modernization, opening the country to new technologies, healthcare, education and support for the countryside.

A large gap remains between the living standard of the cities and the countryside, between urban zones on the Chinese coast and the interior and western parts of the country, as well as between the urban middle classes and those who have not been able to profit from the growth. These inequalities are becoming increasingly worrisome for both the Chinese authorities and the investors. Although poverty has largely decreased in China, almost 10% of the population, i.e. more than 120 million people, continue to live on less than 1 USD a day.

Main industries

China has a highly diversified economy, dominated by the manufacturing and agricultural sectors.

The agricultural sector employs almost 40% of the active population and contributes up to about 10% to the GDP, although only 15% of the Chinese soil (about 1.2 M km ²) is arable. China is the most populated country in the world and one of the largest producers and consumers of agricultural produce. China is the leading global producer of cereals, rice, cotton, potatoes and tea. In terms of livestock, it also dominates sheep and pork livestock farming and the world’s production of fish products.

The mining sector occupies an important place in the Chinese economy, since the country’s subsoil is rich in energetic resources. China has significant coal reserves (the country's primary energy source), which account for two-thirds of the total primary energy consumption. It is the world leader in the production of certain ores (phosphate and titanium) and also has significant petrol and natural gas reserves. It is the world’s fifth biggest oil producer with 3.8 million barrels a year.

The industry and the construction sectors contribute approximately half of China's GDP. China has become one of the preferred destinations for the relocation of global manufacturing units because of a cheap labor market, even though the cost of labor has been increasing. China’s economic development has coincided primarily with the development of a competitive and outward-oriented manufacturing sector. More than half of the Chinese exports are made by companies with foreign capital. Their share in the sector's added-value varies according to the sector: more than 60% for electronics and less than 20% for the majority of producer goods. The Government sector still contributes approximately 40% to the GDP.

The services sector has not progressed, encumbered by public monopolies and restrictive regulations. The tertiary sector's share has remained at nearly a third of the GDP in the last 15 years.

Foreign trade overview

Trade represents almost a half of the Chinese GDP. After having achieved a record trade surplus in 2006, China has become the world's primary exporter and ranks second among world’s largest importers. Chinese exports were increasing until a decrease due to the international financial crisis. For the first time in six years, China experienced a large trade deficit in March 2010, imports soaring due to a strong domestic demand, while exports were lagging behind due to the slowness of the global economic recovery. This phenomenon proved to be only temporary, the country again achieving a surplus the following month. This trend should continue in mid-term.
China's main trade partners are the countries of South East Asia, the United States and the European Union.

FDI

The absorption of FDI flow is part of China's opening up to the outside world. After reaching a peak in 2008 and subsequently falling under the effects of the global economic crisis, FDI flows have recovered and the trend should continue in the future.
China is an unexploited market and a potential for considerable growth due to several reasons:
- It's the biggest internal market in the world with 1.3 billion potential customers;
- it's a rapidly growing market (minimum 8% growth per year); and
- the labor costs are low even if this situation is changing in certain areas;
- with the development of the Western provinces, China offers new opportunities, particularly in the Sichuan province.

Nevertheless, certain factors can hinder investments, such as China’s lack of transparence, legal uncertainty, low level of protection of intellectual property rights, corruption or protectionist measures which privilege local businesses.

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