Explore Article | 25-05-2025

Economy Of China

Economics

The People's Republic of China is a developing mixed socialist market economy, incorporating industrial policies and strategic five-year plans. China is the world's second-largest economy by nominal GDP and, since 2016, has been the world's largest economy when measured by purchasing power parity (PPP). China accounted for 19% of the global economy in 2022 in PPP terms, and around 18% in nominal terms in 2022. The economy consists of state-owned enterprises (SOEs) and mixed-ownership enterprises, as well as a large domestic private sector, which contributes approximately 60% of the GDP, 80% of urban employment, and 90% of new jobs; the system also consists of a high degree of openness to foreign businesses. China is the world's largest manufacturing and industrial economy and exporter of goods. China is widely regarded as the "powerhouse of manufacturing", "the factory of the world", and the world's "manufacturing superpower". Its production exceeds that of the nine next largest manufacturers combined. However, exports as a percentage of GDP have steadily dropped to just around 20%, reflecting their decreasing importance to the Chinese economy. Nevertheless, it remains the largest trading nation in the world and plays a prominent role in international trade. Manufacturing has been transitioning toward high-tech industries such as electric vehicles, renewable energy, telecommunications, and IT equipment, and services have also grown as a percentage of GDP. China is the world's largest high-technology exporter. As of 2021, the country spends around 2.43% of its GDP on research and development across various sectors of the economy. It is also the world's fastest-growing consumer market and second-largest importer of goods. China is also the world's largest consumer of numerous commodities, and accounts for about half of global consumption of metals. China is a net importer of services and products. China has bilateral free trade agreements with many nations and is a member of the Regional Comprehensive Economic Partnership (RCEP). Of the world's 500 largest companies, 142 are headquartered in China. It has three of the world's top ten most competitive financial centers and three of the world's ten largest stock exchanges (both by market capitalization and by trade volume). China has the second-largest financial assets in the world, valued at $17.9 trillion as of 2021. China was the world's largest recipient of foreign direct investment (FDI) as of 2020, receiving inflows of $163 billion. but more recently, inbound FDI has fallen sharply to negative levels. It has the second-largest outbound FDI, at US$136.91 billion for 2019. China's economic growth is slowing down in the 2020s as it deals with a range of challenges, including a rapidly aging population, higher youth unemployment, and a property crisis. With 791 million workers, the Chinese labor force was the world's largest as of 2021, according to The World Factbook. As of 2022, China was second in the world in the total number of billionaires. and second in millionaires with 6.2 million. China has the largest middle class in the world, with over 500 million people earning over RMB 120,000 a year. Public social expenditure in China was around 10% of GDP.