China has experienced rapid economic growth averaging 9.4% annually over the past 30 years, increasing its GDP from $3.42 trillion in 2007. However, this growth has exacerbated income inequality and caused environmental issues like pollution. Key challenges China faces include a shortage of power infrastructure to support continued growth, a growing wealth gap between urban and rural areas, potential problems in its property market, inefficiencies in state-owned banks, and unemployment despite strong GDP expansion.

1. CHINA

2. History and trivias:Official Name: People’s Republic of ChinaTotal Area: 9,596,960 sq. km. (approximately 3.7 million sq. mi.)Capital: BeijingPopulation: 1.3 Billion (About 22% of the total population in the world)Date of establishment of the People’s Republic of China: October 1, 1949China, one of the four oldest civilizations in the world, has a written history of 4,000 years and boasts rich cultural relics and historical sites. It is the inventor of compass, paper-making, gunpowder and printing. The Great Wall, Grand Canal and Karez irrigation system are three great ancient engineering projects built 2,000 years ago. Now they are the symbols of the rich culture of the Chinese nation.

3. Terrain: Plains, deltas, and hills in east; mountains, high plateaus, deserts in west.GovernmentType: Communist party-led state.Constitution: December 4, 1982.Independence: Unification under the Qin (Ch'in) Dynasty 221 BC; Qing (Ch'ing or Manchu) Dynasty replaced by a republic on February 12, 1912; People's Republic established October 1, 1949.Branches: Executive--president, vice president, State Council, premier. Legislative--unicameral National People's Congress. Judicial--Supreme People's Court.Administrative divisions: 23 provinces (the PRC considers Taiwan to be its 23rd province); 5 autonomous regions, including Tibet; 4 municipalities directly under the State Council.Suffrage: Universal at 18.

4. Economy...

5. Market liberalization in the Chinese Economy has brought its huge economy forward by leaps and bounds - but rural China still remains poor, even as its cities increase in affluence.In the last 30 years the rate of Chinese economic growth has been almost miraculous, averaging 8% growth in Gross Domestic Product (GDP) per annum.The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars by 2007.In Purchasing Power Parity GDP, China already has the biggest economy after the United States.However, there are still inequalities in the income of the Chinese people, and this income disparity has increased in the recent times, in part due to a liberalization of markets within the country. The per capita income of China is only about 2,000 US dollars, which is fairly poor when judged against global standards. In per capita income terms, China stands at a lowly 107th out of 179 countries. The Purchasing Power Parity figure for China is only slightly better at 7,800 US dollars, ranking China 82nd out of 179 countries.

6. Economic reforms started in China in the 70s and 80s. The initial focus of these reforms was on collectivizing the agricultural activities of the country.The leaders of the Chinese economy, at that point in time, were trying to change the center of agriculture from farming to household activities. At later stages the reforms extended to the liberalization of prices, in a gradual manner. The process of fiscal decentralization soon followed.As part of the reforms, more independence was granted to the business enterprises that were owned by the state government. This meant that government officials at the local levels and the managers of various plants had more authority than before.The economic reforms made in China in the 70s and 80s had other far reaching effects as well. The sectors outside the control of the state government of China grew at a rapid pace as a result of these reforms. China also opened its economy to the world for the purposes of trade and direct foreign investment.

7. Gross domestic productThe Gross Domestic Product (GDP) in China expanded 9.80 percent in the fourth quarter of 2010 over the same quarter last year. From 1989 until 2010, China's average quarterly GDP Growth was 9.31 percent reaching an historical high of 14.20 percent in December of 1992 and a record low of 3.80 percent in December of 1990. China's economy is the second largest in the world after that of the United States. During the past 30 years China's economy has changed from a centrally planned system that was largely closed to international trade to a more market-oriented that has a rapidly growing private sector. A major component supporting China's rapid economic growth has been exports growth.

9. Inflation rateThe inflation rate in China was last reported at 4.9 percent in January of 2011. From 1994 until 2010, the average inflation rate in China was 4.25 percent reaching an historical high of 27.70 percent in October of 1994 and a record low of -2.20 percent in March of 1999. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.

11. Unemployment rateThe urban unemployment rate in China was last reported at 4.10 percent in the fourth quarter of 2010. From 2002 until 2010, China's Unemployment Rate averaged 4.15 percent reaching an historical high of 4.30 percent in December of 2003 and a record low of 3.90 percent in September of 2002. The labour force is defined as the number of people employed plus the number unemployed but seeking work. The nonlabour force includes those who are not looking for work, those who are institutionalised and those serving in the military.

13. Balance of tradeChina reported a trade surplus equivalent to 6.45 Billion USD in January of 2011. Export growth has continued to be a major component supporting China's rapid economic growth. Exports of goods and services constitute 39.7% of GDP. China major exports are: office machines & data processing equipment, telecommunications equipment, electrical machinery and apparel & clothing. China imports mainly commodities: iron and steel, oil and mineral fuels; machinery and equipment, plastics, optical and medical equipment and organic chemicals. Its main trading partners are: European Union, The United States, Japan, Hong Kong and South Korea. This page includes: China Balance of Trade chart, historical data and news.

14. Labor force: 813.5 million (2009 est.)Budget: revenues: $1.002 trillion expenditures: $1.111 trillion (2009 est.)Public debt: 16.9% of GDP (2009 est.) 15.6% of GDP (2008 est.)Industries: mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites

15. system..

16. China's leaders call their economic system "market socialism." It has also been called "state capitalism" and a "market-oriented mixed economy under one-party rule." Benefits:China's economic success over the past 30 years is a testament to the effectiveness of their reforms. Their Gross Domestic Product grew an average of 9.4% per year over that time. It has the third largest GDP in the world behind only the US and Japan. In 2007 it was $3.42 trillion US dollars. China has raised the standard of living and consumption of its citizens. The per capital income increased an average of 8% a year over the past 30 years.Risk Factors:China's infrastructure is struggling to keep up. While the economic reforms made some Chinese people rich, it exacerbated the needs of China's poorest citizens. Pollution is also an issue as China makes the transition from an agrarian-based economy to an industrial one.

17. Effects:This increases China's wealth at the same time its economy is growing from within. A burgeoning middle class is demanding more luxuries and material goods. This is driving trade even harder and making China more economically viable.

18. Issues..

19. 1. PollutionPollution is a major problem in many industrialised cities. Increased car ownership has led to problems of smog and worsening air quality. Pollution also occurs from China’s vast industrial sector. Often regulation of pollution is very limited with untreated sewage often been poured directly into rivers.

20. 2. Shortage of powerThe growing demand of the Chinese economy has placed great demands on China’s creaking power infrastructure. This has led to the creation of projects like the Three Gorges Dam. This has been criticised for creating environmental and social problems. Environmentalists fear that the dam will severely impact on the natural habitats of many species.

21. 3. Growing income inequalityChina’s economic growth has benefited the south and eastern regions more than anywhere else. This has created a growing disparity between north and south. The agricultural north has, by contrast, been left behind. Many farmers struggle to make a living. Therefore, this has encouraged a migration of workers from north to south. China has struggled to deal with this regional inequality.

22. 4. Property boomThere are fears that China has been caught up in its own speculative property bubble. Especially in Beijing and the south East, houseprices have increased significantly. There are concerns that this property bubble could burst, creating negative equity.

24. 5. Inefficient banking sectorIn particular the Chinese banking sector has a bad reputation for making bad loans. Many loans are not repaid back. This is a legacy of the Communist intervention in industry. Banks often made loans to large government business’ with little regard for free market principles. As a consequence it is difficult for genuine new starts to get sufficient capital funding. But, much investment is squandered.

25. 6. unemploymentIt sounds a paradox that the Chinese economy can grow at 8% and yet unemployment is still a problem. The reason is that there are still many state owned enterprises which are grossly inefficient. Therefore, in the process of privatisation and modernisation many surplus workers are being made redundant. There is also a lot of unemployment (and disguised unemployment) in the agricultural sector.

26. 7. Undervaluation of yuanThe Chinese Yuan has been tied to the dollar. As the dollar had devalued the Yuan has also devalued. However, it is argued by many (especially in the US) that the Yuan is undervalued against the US dollar by up to 40%. The impact of an undervaluation of the Yuan is that:It increases inflationary pressure in the Chinese economy.It makes it expensive for the Chinese to buy foreign goodsIt gives an artificial advantage to Chinese manufacturers

27. 8. Overheating economyBecause the Chinese economy is growing so quickly there are concerns that this could easily lead to inflationary pressures. This is particularly a problem because of:relatively loose monetary policyundervalued exchange rateProperty Boom.Inflation is currently 3.8%, but, there are upward pressures.

28. 9. Huge balance of payments surplusMaybe not such a serious problem for China. But, the US sees it as creating a great disequilibrium. The US, if not anyone else, would like to see the China use its balance of payments surplus elsewhere.

29. Best practices..

30. When the Communists took over China in 1949, only 15 percent of people lived in cities, only 5 percent comprised the industrial population, and the National income per person was only $50.The communists took over a country with a war torn economy. It needed to stop hyperinflation, redistribute land, and find a way to improve the lives of millions of poor and even starving people.To do this, industry was nationalized, land was distributed and the first five-year plan was put into effectThe government collectivized farms into communes as it instituted monopolies on markets such as grain in 1953.This was in an attempt to widen the price scissors i.e. widening the margin between selling industrial goods from government factories at a high price, and buying agricultural goods at low prices.

31. This took the alleged surplus from agriculture to reinvest it in industry.

32. Its goal was self-strengthening.

33. Many communes developed "rural industry in backyard production facilities, and basic industrial products increased '58-'59 although quality was generally very poor." This had the effect of taking too much labor away from agriculture.

34. This also caused food shortages and famine thus "some where between 15 million and 30 million deaths during this time".