Economic Overview
China's economy during the last quarter century has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. china has generally implemented reforms in a gradualist or piecemeal fashion, including the sale of minority shares in four of china's largest state banks to foreign investors and refinements in foreign exchange and bond markets in 2005. after keeping its currency tightly linked to the us dollar for years, china in july 2005 revalued its currency by 2.1% against the us dollar and moved to an exchange rate system that references a basket of currencies. cumulative appreciation of the renminbi against the us dollar since the end of the dollar peg reached 15% in january 2008. the restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in gdp since 1978. measured on a purchasing power parity (ppp) basis, china in 2007 stood as the second-largest economy in the world after the us, although in per capita terms the country is still lower middle-income. annual inflows of foreign direct investment in 2007 rose to $75 billion. by the end of 2007, more than 5,000 domestic chinese enterprises had established direct investments in 172 countries and regions around the world. the chinese government faces several economic development challenges: (a) to sustain adequate job growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; (b) to reduce corruption and other economic crimes; and (c) to contain environmental damage and social strife related to the economy's rapid transformation. economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers have relocated to urban areas to find work. one demographic consequence of the "one child" policy is that china is now one of the most rapidly aging countries in the world. deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the north - is another long-term problem. china continues to lose arable land because of erosion and economic development. in 2007 china intensified government efforts to improve environmental conditions, tying the evaluation of local officials to environmental targets, publishing a national climate change policy, and establishing a high level leading group on climate change, headed by premier wen jiabao. the chinese government seeks to add energy production capacity from sources other than coal and oil as its double-digit economic growth increases demand. chinese energy officials in 2007 agreed to purchase five third generation nuclear reactors from western companies. more power generating capacity came on line in 2006 as large scale investments - including the three gorges dam across the yangtze river - were completed.
Environmental Issues
Air pollution (greenhouse gases, sulfur dioxide particulates) from reliance on coal produces acid rain; water shortages, particularly in the north; water pollution from untreated wastes; deforestation; estimated loss of one-fifth of agricultural land since 1949 to soil erosion and economic development; desertification; trade in endangered species
Government Type
Communist state
Population
1,330,044,544 (july 2008 est.)
Location
Eastern asia, bordering the east china sea, korea bay, yellow sea, and south china sea, between north korea and vietnam
Area
Total: 9,596,960 sq km
land: 9,326,410 sq km
water: 270,550 sq km
Slightly smaller than the us
Country Aliases
Conventional long form: people's republic of china
conventional short form: china
local long form: zhonghua renmin gongheguo
local short form: zhongguo
abbreviation: prc
Capital
Name: beijing
geographic coordinates: 39 55 n, 116 23 e
time difference: utc+8 (13 hours ahead of washington, dc during standard time)
note: despite its size, all of china falls within one time zone
Military Service
18-22 years of age for selective compulsory military service, with 24-month service obligation; no minimum age for voluntary service (all officers are volunteers); 18-19 years of age for women high school graduates who meet requirements for specific military jobs (2007)
International Disputes
Continuing talks and confidence-building measures work toward reducing tensions over kashmir that nonetheless remains militarized with portions under the de facto administration of china (aksai chin), india (jammu and kashmir), and pakistan (azad kashmir and northern areas); india does not recognize pakistan's ceding historic kashmir lands to china in 1964; china and india continue their security and foreign policy dialogue started in 2005 related to the dispute over most of their rugged, militarized boundary, regional nuclear proliferation, and other matters; china claims most of india's arunachal pradesh to the base of the himalayas; lacking any treaty describing the boundary, bhutan and china continue negotiations to establish a common boundary alignment to resolve territorial disputes due to cartographic discrepancies; chinese maps show an international boundary symbol off the coasts of the littoral states of the south china seas, where china has interrupted vietnamese hydrocarbon exploration; china asserts sovereignty over the spratly islands together with malaysia, philippines, taiwan, vietnam, and possibly brunei; the 2002 "declaration on the conduct of parties in the south china sea" eased tensions in the spratly's but is not the legally binding "code of conduct" sought by some parties; vietnam and china continue to expand construction of facilities in the spratly's and in march 2005, the national oil companies of china, the philippines, and vietnam signed a joint accord on marine seismic activities in the spratly islands; china occupies some of the paracel islands also claimed by vietnam and taiwan; china and taiwan continue to reject both japan's claims to the uninhabited islands of senkaku-shoto (diaoyu tai) and japan's unilaterally declared equidistance line in the east china sea, the site of intensive hydrocarbon exploration and exploitation; certain islands in the yalu and tumen rivers are in dispute with north korea; north korea and china seek to stem illegal migration to china by north koreans, fleeing privations and oppression, by building a fence along portions of the border and imprisoning north koreans deported by china; china and russia have demarcated the once disputed islands at the amur and ussuri confluence and in the argun river in accordance with their 2004 agreement; china and tajikistan have begun demarcating the revised boundary agreed to in the delimitation of 2002; the decade-long demarcation of the china-vietnam land boundary is expected to be completed by the end of 2008, while the maritime boundary delimitation and fisheries agreements in the gulf of tonkin, ratified in june 2004, have been implemented; citing environmental, cultural, and social concerns, china has reconsidered construction of 13 dams on the salween river, but energy-starved burma, with backing from thailand, remains intent on building five hydro-electric dams downstream despite regional and international protests; chinese and hong kong authorities met in march 2008 to resolve ownership and use of lands recovered in shenzhen river channelization, including 96-hectare lok ma chau loop; hong kong developing plans to reduce 2,000 out of 2,800 hectares of its restricted closed area by 2010
Sources: Central Intelligence Agency (CIA)
