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China's Economic Conditions

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Congressional rept.

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Since the initiation of economic reforms 30 years ago, China has become one of the worlds fastest-growing economies. From 1979 to 2007, Chinas real gross domestic product GDP grew at an average annual rate of 9.8. Real GDP grew 11.4 in 2007. However, China faces a number of challenges, including the fallout from the global financial crisis, widespread government corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, pollution, widening income disparities, growing inflationary pressures, and the current global financial crisis. The Chinese government has indicated that it intends, over time, to create a harmonious society that would promote more balanced economic growth and address a number of economic and social issues. Trade and foreign investment continues to play a major role in Chinas booming economy. From 2004 to 2007, the value of total Chinese merchandise trade nearly doubled. In 2007, Chinas exports at 1,218 billion exceeded U.S. exports 1,162 billion for the first time. Chinas imports were 956 billion and its trade surplus was 262 billion a historic high. Well over half of Chinas trade is conducted by foreign firms operating in China. The combination of large trade surpluses, foreign direct investment flows, and large-scale purchases of foreign currency have helped make China the worlds largest holder of foreign exchange reserves at 1.9 trillion at the end September 2008. Chinas economy continues to be a concern to many U.S. policy makers. On the one hand, U.S. consumers, exporters, and investors have greatly benefited from Chinas rapid economic and trade growth. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on various U.S. industries. This report provides an overview of Chinas economic development, challenges China faces to maintain growth, and the implications of Chinas rise as a major economic power for the United States.

Subject Categories:

  • Economics and Cost Analysis
  • Government and Political Science

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