China has become the manufacturing center of the world and China continues to expand at unprecedented levels. With China's firm integration into the global economy, China continues to fuel an accelerated change in the global economic environment and this is expected to continue for at least the next decade.

China, with a population approximately 23 percent of the world's total is a land of beauty and fascination. It is a massive country, covering 9,600,000 sq km and spanning 60 longitudinal degrees. China has an infinite variety of people, enchanting natural landscape, brilliant history, a culture that is among the most ancient in the world and fascinating destinations for the visitor.

For business, China is a region of great opportunity for all types of companies. To fully understand the language, customs, local markets, suppliers and cultural barriers along with everything else that comes with doing business in China, relationships are key to finding a good business partner in China.

Economic History
In late 1978 the Chinese leadership began moving the economy from a centrally planned economy to a market-oriented system. The result has been a quadrupling of GDP since 1978. Measured on a purchasing power parity (PPP) basis, China in 2004 stood as the second-largest economy in the world after the US, although in per capita terms the country is still developing. China has benefited from a huge expansion in computer internet use, with over 100 million users at the end of 2005. Foreign investment remains a strong element in China's remarkable economic growth. Shortages of electric power and raw materials may affect industrial output in 2005 while more power generating capacity is scheduled to come on line in 2006. In its rivalry with India as an economic power, China has a lead in the absorption of technology, the rising prominence in world trade, and the alleviation of poverty. These trends are already resulting in new businesses, greater efficiencies, and a much broader portfolio of choice for customers.

GDP/Economy
China remains a developing market with an economy of USD $1.65 trillion, spread over a population of 1.3 billion. By the end of 2004, the Chinese government reported that the annual rural per capita net income was USD $355 and urban per capita disposable income was USD $1,140 (at current exchange rates). China's export volume in 2004 expanded to US $593.36 billion while China's GDP in 2004 was US $1,664 billion. The purchasing power parity is $7.262 trillion (2004 est.) while the GDP was 9.1% in 2004 (official data).

The trade surplus was $25.5 billion in 2003, a decrease of $4.9 billion from 2002. The utilization of foreign capital continued to increase. Foreign exchange reserves went up by a large margin. At the end of 2003, China's foreign exchange reserves reached $403.3 billion, an increase of $116.8 billion as compared with that at the end of the previous year.

Foreign currency reserves exceeded USD $600 billion by yearend, up 52 percent from yearend in 2003. After rising sharply earlier in the year, inflation declined to a 3.9 percent rate. In 2004, the government fiscal deficit declined. Total trade resulted in a small surplus. Fixed asset investment rose rapidly (25 percent) to reach USD $846 billion (slightly more than 50 percent of GDP) and China attracted USD $60.6 billion in foreign direct investment.

WTO (World Trade Organization)
Since China's accession into the World Trade Organization (WTO) in 2001, previously existing restrictions and tariffs on exports and imports plus controls on foreign manufacturers is to be abolished gradually over a seven-year transition period. This has made the way for China to continue to lead the world in trade, growth and development in many areas. The opening up of Chinese Mainland markets under the WTO agreement will enable China to develop further a consumer market economy.

China's accession into the WTO helps China to increasingly open the Chinese economy. As China implements its commitments under the WTO in a thorough and systematic manner, the number of sectors with market potential accessible to overseas companies will continue to expand dramatically. Accession to the WTO symbolizes China's ongoing integration into the world economy. There is no doubt that China's transition from central planning to market-based regulatory principles offers significant improvements in market access for many businesses both importing and exporting.

Exports
The growth of imports from the United States and other countries in many key sectors, such as energy, chemicals, machinery, telecommunications, medical equipment, construction, services and franchising suggests that China will remain an interesting and viable market for some time to come for importing countries.

Imports
Rapid economic growth has fueled strong growth in imports. According to the National Bureau of Statistics, the total value of imports increased to USD $561.4 billion, up 36 percent. China is now the world's third largest trading nation behind the United States and Germany. Imports into China will continue to rise as growth in the Chinese economy continues.

The general level of consumer prices in 2004 was up 1.2 percent over the previous year. Of this total, the consumer price level in urban areas was up 0.9 percent, and in rural areas, 1.6 percent. Of the total consumer prices, the prices for food increased 3.4 percent and for service items, up 2.2 percent. The retail prices of commodities were down 0.1 percent, while the producers' prices for manufactured goods increased 2.3 percent. The purchasing prices for raw materials, fuels and power went up by 4.8 percent. The prices for investment in fixed assets were up 2.2 percent. Producers' prices of farm products were up 4.4 percent. Specifically, the price for cereals was up 2.3 percent; for cotton, 35.3 percent; for oil-bearing crops, 19.4 percent; and for livestock products, 1.8 percent.

Workforce
At the end of 2003, there were 744.32 million employed people in China, 6.92 million more than at the end of 2002. Of this total, 256.39 million were employed in urban areas, 8.59 million more than at the end of 2002. In the year, 4.4 million once laid-off workers of state-owned enterprises were reemployed. The urban unemployment rate through unemployment registration was 4.3 percent at the end of the year, up by 0.3 percentage points.

China/US Import-Export
According to U.S. Customs statistics from January to November 2004, China-U.S. trade reached a historical high of USD $210.7 billion during the first 11 months of 2004. The U.S. imported USD $179.2 billion of goods to the United States, up 29 percent. The U.S. exported USD $31.5 billion to China during the same period, up 25 percent from the year before. China has become the US's 5th largest export market. As a result of these trends, the bilateral trade deficit with China increased 29 percent to USD $147.7 billion in the first 11 months of the year.

China Facts

Formal name: People's Republic of China (PRC) Capital: Beijing National flag: Red flag with five stars. Animal: The giant panda is considered a Chinese national treasure. Just over 1,000 survive in the wild, most of them in Sichuan Province. The giant panda is one of more than 100 species of wild animals found only in China, including three endangered monkey species that are almost as rare as the panda: the black leaf monkey, the Guizhou golden monkey or snub-nosed monkey and the Yunnan golden monkey. Land size: China has a landmass of 9,600,000 sq km, making it roughly the same area as the continental United States. The area of cultivated land in China was 123.5 million ha at the end of 2003, a decrease from 126 million hectares the previous year. Location: In the east of the Asian continent, on the western shore of the Pacific Ocean. Border countries: Korea, Mongolia, Russia, Kazakhstan, Kyrgyzstan, Tadzhikistan, Afghanistan, Pakistan, India, Nepal, Bhutan, Myanmar, Laos and Vietnam. Climate: Extremely diverse; tropical in the south to sub arctic in the north. Geography: Mountains, high plateaus, and deserts in the west plains, deltas, and hills in the east. The highest mountain in China is the highest mountain in the world: Mount Qomolangma (MT. Everest). The mountain towers above all others at 8,848 m or 29,035 feet. Population: China is the world's most populous country with a population estimated at about 1.294 billion by the end of 2003, one-fifth of the world's total. This figure does not include the Chinese living in the Hong Kong and Macau Special Administrative Regions, and Taiwan Province. Languages: Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect). Economy: China's economy has boomed since 1978, as a result of sweeping economic reforms. GNP grew from $128 billion in 1980 to $745 billion in 1998. China's economy continues to grow rapidly, with a GDP real growth rate of 8 percent in 2002, and an annual industrial production growth rate of 11.6 percent between 1979 and 2000. Currency: Renminbi (RMB)/yuan