Economy of China The Peoples Republic of China, the most populous country and third largest in the world, was once the home of a centrally planned economic system; a system that held the country for decades past in an economic and global market limbo. But now, with Chinas attempts to create its new socialist market economy, it is quickly becoming one of the worlds fastest growing economies and is currently the worlds third largest. It is with this economic surge that China has so rapidly been able to expand its presence within the global market. Chinas economic history is very similar to its economic present as for as its intra-country economic commodities. About sixty percent of Chinas work force is agricultural, although only about fifteen percent of its land surface is suitable for farming and agriculture composes only twenty-five percent of Chinas gross domestic product.
Its principal agricultural crops include rice, wheat, corn, millet, barley, and kaoliang, a form of sorghum. Other valuable crops include peanuts, sweet potatoes, soybeans, cotton, tobacco, and tea. Also important to Chinas economy is the raising of hogs, poultry, and marine fishing. Besides its strength in agricultural products, China is also one of the worlds leading producers of minerals. Coal, the most abundant mineral produced in China, is also its principal energy source. Chinas reputation as a major importer of petroleum has been pushed aside in recent years, though, as they are now the worlds fifth ranked oil producer. Both coal and petroleum have become very important sources of foreign exchange for the country.
China also produces vast deposits of iron, tin, mercury, aluminum, salt, gold, and uranium. With the plentitude of economic resources in China, it is easy to see why it is one of the worlds fastest growing economies. Chinas economy is not without fault, though. Although 1997 was an excellent year for Chinas economy, with economic growth reaching 8.8 percent, total foreign investment increasing by thirteen percent, and exports increasing by twenty percent, 1998 has left Chinas once seemingly unstoppable, emerging economy noticeably hindered. Currently, the Chinese government is attempting to implement several strategic economic plans for reform to combat the casualties caused by an Asian financial crisis during which unemployment was rampant and the yuan, the national currency of China, was facing possible devaluation at the end of 1997 and leading into 1998.
The threat of currency devaluation caused Chinas prices on its products to soar upward making them less attractive to the Western markets. One strategy the government has developed is reform of Chinas state owned enterprises. This plan involves three objectives; one of which is increased governmental support and development of large firms, as to make them more competitive within their respective markets. The government plans to invest an estimated three trillion yuan (or $300 billion U.S. dollars) into these corporation as a means of boosting economic growth.
The Chinese government hopes that with the growth of these state owned enterprises it can meet its other two objectives: dissipate Chinas surplus workforce and alleviate unemployment and aid these large firms in becoming the backbone of the Chinese economy. With the emergence of these more competitive government developed enterprises, it is almost certain that Chinas unemployment problem will remain somewhat constant until the government has been able to fully implement its plans for reform. But the next few years are not without hope. The next few years will see China gain a new competitive advantage in many markets and an improved restructuring of its current industries. As the government supports these state owned enterprises, there will be an emergence of powerful local competitors.
This uprise of competitors will affect many foreign multinational companies that have entered or plan to enter China. These MNCs will choose these more powerful state owned enterprises to enter into partnership with, thereby greatly expanding and improving Chinas economy and their standing in the global marketplace.