China sees progress under market policy

Beijing, October 15:

China, still officially a communist country, has overseen a remarkable economic boom since opening its economy in the late 1970s.

With China’s economy now the fourth biggest in the world, much focus will be on the ruling Communist Party’s five-yearly Congress that began today during which its economic blueprints until 2012 will be modified and unveiled.

Some of the key facts about China’s economy are its policy, size, forex reserve and trade.

Policy: According to the constitution, the People’s Republic aims to move ‘along the road of Chinese-style socialism,” guided by Marxism-Leninism.

However at the end of June, China had 5.2 million private firms, employing 69.3 million people, only slightly fewer than the 73 million members of the Communist Party.

Size: China’s gross domestic product (GDP) increased by 11.1 per cent last year to be worth 21.1 trillion yuan ($2.8 trillion at current exchange rates), behind only the United States, Japan and Germany.

Despite a range of cooling measures, GDP expanded by 11.5 per cent in the first half of 2007.

Stocks: Closing down the stock markets was among Mao Zedong’s first priorities after seizing power in 1949. Now the bourses are back with a vengeance and experiencing a sustained boom. The main Shanghai index soared by 130 per cent in 2006 and has risen another 120 per cent this year.

Trade: High productivity, low wages, and — critics say — an artificially low currency have turned China into the factory of the world. China’s trade surplus has sky-rocketed in recent years. It reached $185.7 billion in the first nine months of this year, already surpassing the then annual record of $177.47 billion in 2006.

Inequality: China is getting richer but the wealth divide is growing, especially between the city and the countryside. Last year, the average Chinese city dweller earned 3.28 times as much as his fellow citizen in the rural areas, up from 3.21 times in 2004.

Forex Reserves: China’s foreign exchange reserves surpassed $1.43 trillion at the end of September. They have been the world’s largest since early 2006. China has just established a company charged with investing roughly one-seventh of the reserves in world markets.