From 2003 to 2010, the Chinese economy experienced near-uninterrupted double-digit growth – with the exception of 2008 and 2009, during the global economic downturn. Nevertheless, the Chinese economy still managed to post respectable growth figures during that period – 9.635 percent and 9.214 percent respectively
In 2013, China is expected to be the 13th fastest growing economy in the world, at a rate of 8.038 percent. However in the first quarter of 2013, growth unexpectedly weakened due to weaknesses in capital formation, particularly from a swing in stock-building. Given the strong growth in credit and more supportive fiscal policy, most analysts still expect some turnaround in output growth by mid-2013.
Underlying its new economic reforms and the recovering global economy, China hopes to maintain a minimum growth rate of 8 percent through to 2018. Barring a sudden downturn or financial crisis, China is expected to overtake the US as the world’s largest economy – by GDP (PPP) – in 2017.
China is the 2nd largest economy in the world according to both GDP (current prices, US dollars) and GDP (PPP). In 2012, China’s GDP (current prices, US dollars) was US$8.227 trillion and its GDP (PPP) was US$12.405 trillion.
In 2013, its GDP (PPP) is expected to reach $13.623 trillion – or a 9.81 percent increase. Comparatively, China’s GDP (PPP) grew by 9.73 percent from 2011 to 2012. Forecasts for the next five years predict the nation’s GDP (PPP) will grow by an average of 13.24 percent per annum, reaching $22.641 trillion in 2018.
Nonetheless, while its GDP (PPP) is set to overtake that of the US’s, China’s nominal GDP (current prices, US dollars) will still be below that of its rival in 2018. The US’s GDP (current prices) is forecasted to hit $21.101 trillion in five years, significantly higher than China’s $14.911 trillion. Going by current growth rates, it will take another 30-40 years for China to become the world’s largest economy in both GDP (PPP) and GDP (current prices).
Since initiating market reforms in 1978, China has shifted from a centrally planned to a market based economy. More than 600 million citizens have been lifted out of poverty as a result, but over 170 million people still live below the $1.25-a-day international poverty line. In 2012, China’s GDP (PPP) per capita was $12,405.67. This is 37 times higher than what it was just 30 years ago. By 2018, China’s GDP (PPP) per capita will climb from the 90th to 75th highest in the world – at $16,231.50. This however will still be below the forecasted world average of $18,867.17.
The official unemployment rate for China in 2012, provided by government statistics, was 4.1 percent. However most analysts believe that it does not take into account of the nation’s rural population. This is also reflected in the fact that China has maintained an unemployment rate of 4 to 4.3 percent over the last ten years, according to government figures. Not surprisingly, estimates of China’s unemployment rate for the next five years are remarkably consistent. The IMF predicts little to no change to the figure through to 2018.
Nevertheless, China has the world’s largest labour force of 795.4 million. Some estimates place China’s potential labour force – calculated as anyone between the working ages of 15-64 years – to be far higher at 1.004 billion people.
The Chinese government has set its inflation target for this year at 3.5 percent, higher than the actual inflation rate for 2012, which stood at 2.65 percent. According to IMF forecasts, inflation (average consumer price change) will carry on at 3 percent for the next five years.
Controlling inflation and maintaining inclusive economic growth is one of the toughest challenges faced by the government. Infamously from 1993 to 1995, inflation spiralled out of control at an average of 18.6 percent per annum on the back of rampant economic growth. Since then the Chinese government has more or less been able to control inflation, though it experienced four periods of deflation during the last fifteen years in 1998, 1999, 2002 and 2009.
Historically, China has run a current account surplus since 1994. Its peak was in 2008, when the nation recorded a massive surplus of $420.569 billion in the midst of the financial crisis.
However there are signs that China's economic relationship with the rest of the world is becoming more balanced, as China soaks up less money from the outside world and as its central bank is intervening less in markets to keep down the value of the yuan.