Trends of Chinese Economy

Chinese Economy is considered as the economic wonder of the world. In terms of nominal GDP it is the fourth largest country of the world. People's Republic of China is basically a communist state but have its own characteristics. The economic model followed by them is known as market socialism which has been adopted from the time of Deng Xiaoping.

The economic growth rate of Chinese Economy has been fascinating because from the 1980s till today it has grown at a annual rate of around 10%. It is expected to grow around 9.5% in 2007 though many economists are referring it to be over-heated.

The main agricultural products of China Economy are Rice, Potato, Wheat, Tea, Cotton, Oilseed and many more. In the whole world, Chinese economy ranks as the leader in overall farm output although the net cultivable area of China is well below 20% of its total land area. Following the general traits of a growing economy, contribution of agriculture to GNP has steadily decreased to 20%.

China is rich in minerals with abundance in coal and iron. It is the largest Coal producing country in the whole world. Its rich resource of coal is situated in the north and north-east region of the country.

Ores of iron are abundant in China with the largest mines situated in Benxi and Anshan in the province of Liaoning. Some of the leading industries of Chinese Economy are Coal, Iron, Steel, and Textiles.

The whole economy has posted a decade long high economic growth of 11.1% in the first quarter. According to Bloomberg News Survey, investments in factories and properties has increased at a phenomenal rate of 25.4% (approximately) during Jan-May 2007.

Market performance of the China Economy can be judged from the phenomenal performance of its bourse. Chinese Stock Market mainly consists of two stock exchanges Shanghai Stock Exchange and Shenzhen Stock Exchange . The most common index of Shanghai Stock Exchange is SSE Composite Index which was launched on 15.07.1991. It has reached 2675.47 mark at the end of 2006 fiscal.

Chinese Stock Market is witnessing a portfolio investment mania which saw a 130% gain in 2006 and has already crossed 50% profit margin within mid-May,2007. In fact, the market capitalization of the overall Chinese Stock Market upto May, 2007 was US$2.3 trillion only lagging behind Japanese Stock Market (US$4.7 trillion) in Asia. It is being projected by many analysts and economists that this fast rising market is going to be the 2nd largest Share Market after USA within a span of 12 years.

Chinese Economy is witnessing new highs in its trade surpluses which has jumped to US$177.5billion increasing by a neat 74%. Forex reserves of the China Economy have ballooned to a big kitty where the surging export earnings have contributed a lot amounting to a huge $1trillion and more. Deutsche Bank presumes the export earnings to slow down a bit to 17% in the current fiscal (2007).