Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s. In large part as a result of economic liberalization policies, the GDP quadrupled between 1978 and 1998, and foreign investment soared during the 1990s. China's challenge in the early 21st cent. will be to balance its highly centralized political system with an increasingly decentralized economic system.
Agriculture is by far the leading occupation, involving over 50% of the population, although extensive rough, high terrain and large arid areas—especially in the west and north—limit cultivation to only about 10% of the land surface. Since the late 1970s, China has decollectivized agriculture, yielding tremendous gains in production. Even with these improvements, agriculture accounts for only 20% of the nation's gross national product. Despite initial gains in farmers' incomes in the early 1980s, taxes and fees have increasingly made farming an unprofitable occupation, and because the state owns all land farmers have at times been easily evicted when croplands are sought by developers.
Except for the oasis farming in Xinjiang and Qinghai, some irrigated areas in Inner Mongolia and Gansu, and sheltered valleys in Tibet, agricultural production is restricted to the east. China is the world's largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes. In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets.
Livestock raising on a large scale is confined to the border regions and provinces in the north and west; it is mainly of the nomadic pastoral type. China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork). Sheep, cattle, and goats are the most common types of livestock. Horses, donkeys, and mules are work animals in the north, while oxen and water buffalo are used for plowing chiefly in the south. Hogs and poultry are widely raised in China, furnishing important export staples, such as hog bristles and egg products. Fish and pork supply most of the animal protein in the Chinese diet. Due to improved technology, the fishing industry has grown considerably since the late 1970s.
China is one of the world's major mineral-producing countries. Coal is the most abundant mineral (China ranks first in coal production); high-quality, easily mined coal is found throughout the country, but especially in the north and northeast. There are also extensive iron-ore deposits; the largest mines are at Anshan and Benxi, in Liaoning province. Oil fields discovered in the 1960s and after made China a net exporter, and by the early 1990s, China was the world's fifth-ranked oil producer. Growing domestic demand beginning in the mid-1990s, however, has forced the nation to import increasing quantities of petroleum. Offshore exploration has become important to meeting domestic needs; massive deposits off the coasts are believed to exceed all the world's known oil reserves.
China's leading export minerals are tungsten, antimony, tin, magnesium, molybdenum, mercury, manganese, barite, and salt. China is among the world's four top producers of antimony, magnesium, tin, tungsten, and zinc, and ranks second (after the United States) in the production of salt, sixth in gold, and eighth in lead ore. There are large deposits of uranium in the northwest, especially in Xinjiang; there are also mines in Jiangxi and Guangdong provs. Alumina is found in many parts of the country; China is one of world's largest producers of aluminum. There are also deposits of vanadium, magnetite, copper, fluorite, nickel, asbestos, phosphate rock, pyrite, and sulfur.
Coal is the single most important energy source; coal-fired thermal electric generators provide over 70% of the country's electric power. China's exploitation of its high-sulfur coal resources has resulted in massive pollution. China also has extensive hydroelectric energy potential, notably in Yunnan, W Sichuan, and E Tibet, although hydroelectric power accounts for only 5% of the country's total energy production. Hydroelectric projects exist in provinces served by major rivers where near-surface coal is not abundant. The largest completed project, Gezhouba Dam, on the Chang (Yangtze) River, opened in 1981; the Three Gorges Dam, the world's largest engineering project, on the lower Chang, is scheduled for completion in 2009.
Beginning in the late 1970s, changes in economic policy, including decentralization of control and the creation of “special economic zones” to attract foreign investment, led to considerable industrial growth, especially in light industries that produce consumer goods. In the 1990s a program of share-holding and greater market orientation went into effect; however, state enterprises continue to dominate many key industries in China's “socialist market economy.” In addition, implementation of some reforms was stalled by fears of social dislocation and by political opposition, but by 2007 economic changes had become so great that the Communist party added legal protection for private property rights (while preserving state ownership of all land). Major industrial products are textiles, chemicals, fertilizers, machinery (especially for agriculture), processed foods, iron and steel, building materials, plastics, toys, and electronics.
Before 1945, heavy industry was concentrated in the northeast (Manchuria), but important centers were subsequently established in other parts of the country, notably in Shanghai and Wuhan. After the 1960s, the emphasis was on regional self-sufficiency, and many factories sprang up in rural areas. The iron and steel industry is organized around several major centers (including Anshan, one of the world's largest), but thousands of small iron and steel plants have also been established throughout the country. Brick, tile, cement, and food-processing plants are found in almost every province. Shanghai and Guangzhou are the traditionally great textile centers, but many new mills have been built, concentrated mostly in the cotton-growing provinces of N China and along the Chang (Yangtze) River.
Coastal cities, especially in the southeast, have benefited greatly from China's increasingly open trade policies. Most of China's large cities, e.g. Shanghai, Tianjin, and Guangzhou, are also the country's main ports. Other leading ports are rail termini, such as Lüshun (formerly Port Arthur, the port of Dalian), on the South Manchuria RR; and Qingdao, on the line from Jinan. In the northeast (Manchuria) are large cities and rail centers, notably Shenyang (Mukden), Harbin, and Changchun. Great inland cities include Beijing and the river ports of Nanjing, Chongqing, and Wuhan. Taiyuan and Xi'an are important centers in the less populated interior, and Lanzhou is the key communications junction of the vast northwest. Although a British crown colony until its return to Chinese control in 1997, Hong Kong has long been a major maritime outlet of S China.
Rivers and canals (notably the Grand Canal, which connects the Huang He and the Chang [Yangtze] rivers) remain important transportation arteries. The east and northeast are well served by railroads and highways, and there are now major rail and road links with the interior. There are railroads to North Korea, Russia, Mongolia, and Vietnam, and road connections to Pakistan, India, Nepal, and Myanmar. Since the 1980s China has undertaken a major highway construction program. As part of its continuing effort to become competitive in the global marketplace, China joined the World Trade Organization in 2001; its major trade partners are the United States, Japan, South Korea, Taiwan, and Germany. China's economy, though strengthened by the more liberal economic policies of the 1980s and 90s, continues to suffer from inadequate transportation, communication, and energy resources.
Economy & Personal Finance
World Stock Markets Follow China’s Lead
February 27, 2007, was the worst day in trading since 9/11. The Dow Jones took a 400-point plunge, closing with losses equaling approximately $632 billion.
Elsewhere, Asian and European countries reported falls at an average of 3%. China was the hardest hit—with its market dropping 9%—and was a main cause of worldwide stock market instability.
In the Chinese markets, rising consumer prices and rumors of a 20% capital gains tax on Chinese stock investments caused fears among Shanghai investors, which spread around the globe.
Stock markets have been rising to all-time highs over recent months, leading many analysts to say the market was moving too high too fast.
Market Woes Across the World
The charts below illustrate the financial shock wave that affected markets in Asia, Europe and the U.S.
This is usually followed by a gradual “correction” in which quick gains even out to more realistic returns.
Ed Peters, chief investment officer at PanAgora Asset Management, said this about the event: “Corrections usually happen because of a catalyst, and this may be it. The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop” (AP).
Others blamed part of America’s stock market dive on a terrorist attack on a U.S. air base in Afghanistan during a visit by Vice President Richard Cheney.
Another reason for the heavy blow to the American Stock Exchange was the Dow’s computer system becoming overwhelmed with orders, causing it to be sluggish. When the problem was identified, the Dow was switched to a backup system. The point totals quickly caught up and a 178-point drop was registered within one minute.
China’s government refuted the rumor of increased taxes, and by February 28, Wall Street recovered slightly from the heavy blow of the previous day. The Dow Jones recovered 10% of its loss the next day of trading. A day after panicking investors around the world, China’s market recovered almost a third of its losses.
Regardless of whether the world’s stock markets rebound quickly from this fall, this event reveals China’s growing importance to the global economy. Instability in China can spell trouble for investors around the world.
The United States’ fragile economy is becoming more uncertain and is increasingly linked to other countries’ economies—especially China, which owns much of America’s debt.
In the past, when America caught a chill, the rest of the world caught pneumonia. How long will it be before “when China catches a chill…” becomes the new catchphrase?
When China experiences economic setbacks in the future, how will the rest of the world fare?