What can be said about a country that went from being an isolated rural nation to an economic giant that holds a 20% share of global GDP? Despite its problematic past, an ongoing trade war with the US, and several controversial issues raised around its business policies, the People’s Republic of China economic growth statistics are showing remarkable sustained progress over the last couple of decades.
In this article, you’re going to find out more about the history behind the economic success of the Asian Giant. We’ll also try to unveil some of China’s advantages and challenges it faces, and give you some potentially surprising details about China’s relations with the US.
Top 10 Economic Growth of China Statistics & Facts
- China is the only country to reverse the economic effect of the COVID-19 pandemic.
- China is the largest holder of forex reserves.
- The gap between the American and Chinese economies is disappearing.
- The US is China’s most important economic partner and vice versa.
- Chinese economy depends mainly on Foreign Direct Investments.
- China’s economic growth history remains unprecedented in recent years.
- China has the world’s highest PPP, which is likely to continue to grow.
- The economy is burdened by demographic challenges.
- Special economic zones are the secret behind China’s success.
- China is facing significant debt.
China Economic Growth Statistics Explained
1. China is currently the only country to reverse the impact that COVID-19 had on the economy.
(World Bank) (BBC) (NBSC) (IMF)
Despite facing an abrupt 6.8% decline in Q1 of 2020, the Chinese government announced that their economy was back on track, marking a positive 3.2% economic growth no less.
According to the National Bureau of Statistics of China, their total value of industrial enterprises in August 2020 grew by 5.6% compared to 2019. Likewise, their Index of Services Production increased by additional 4%, which has been the driving force behind the economic shift from July to August.
China’s GDP growth rate in 2020 was affected by the challenges the economy faced because of the pandemic. Still, despite the fact that predictions about financial statistics made in times like these may not be the most accurate, the IMF expects China to bounce back with a rate of growth of 9.2% in 2021.
2. China earned $139 billion in 2018 from Foreign Direct Investments (FDIs).
Data gathered by the United Nations Conference on Trade and Development indicate that, in 2018, China had the second-highest FDI inflow in the world, with a total of $139 billion. The only country that surpassed this number was the US.
The economic growth of China further relied on a 2005 strategic plan and on investing more in FDI outflow, reaching a record in 2016 with $196 billion in investments.
Despite the criticism and suspicions they face in foreign politics, China remains the second-largest global investor and a substantial financial source for technology companies around the world—China invested $1.8 billion into US tech companies in the first quarter of 2019.
3. China has an outstanding debt of $40 trillion.
Despite the perpetual economic growth in China, their total debt was estimated at $40 trillion in 2019, and it remains to be seen how the coronavirus outbreak influenced the government borrowings and bank stress. This means China is facing debt that is 303% the size of its GDP, making up for 15% of the world debt.
4. China has a below-average GDP per capita.
With a population of almost 1.5 billion people, China represents the most populated country globally. This contributed to it being ranked as the 70th country in the world based on the GDP per capita, which amounts to $10,100.
5. They run the world’s biggest infrastructure investment project.
The Belt and Road Initiative was first introduced in 2013 by China’s President Xi Jinping as the country’s way to accelerate infrastructure development, boost its foreign cooperation, and improve China’s economic growth graph.
By the end of 2019, more than 136 countries have officially entered what had become a transcontinental investment initiative, which consisted of a number of smaller development projects that were incredibly beneficial to the economic growth rate of China.
6. It is home to the highest number of billionaires.
(Credit Suisse) (CNBC)
The latest issue of the Global Wealth Report notes that China alone contributed $1.9 trillion to the global wealth in 2019. The report analyzed 10% of the world’s richest population who jointly own 82% of the world’s wealth and found that they are, for the first time in history, mostly citizens of China. For reference, China’s GDP growth rate in 2019 stood at 6.1%.
7. Economic growth rate in China relies on trade.
The World Trade Organization published statistics that show a yearly growth of 13.8% on average in import/export in China. According to the latest available data, China had a 10.8% and 12.8% share in the global import and export, respectively.
8. They are working toward becoming the “manufacturing superpower.’’
(CRS Report) (The Diplomat)
In 2015, the Chinese government published a plan called “Made in China 2025,” explaining the intended upgrade and modernization of China’s manufacturing industry in 10 key sectors.
The document explains the goal of boosting the People’s Republic of China economic growth rate over time by becoming the number one manufacturer of power infrastructure and telecommunications by 2025 and using 70% domestic components by that same period.
9. China has the highest PPP, and it will continue to grow.
In 2017, China became the leading country in the world measured by the Purchasing Power Parity, and its PPP in 2020 reached $20,984. Based on the International Monetary Fund and the People’s Republic of China economic growth statistics predictions, China’s PPP will continue its stable growth pattern to reach $28,110 by 2024.
10. China is the largest holder of forex reserves.
(SAFE) (Forbes) (IMF)
For over 14 years, China has been the number one country in the world when it comes to forex reserves, reaching $3 trillion in April 2020. On top of that, it is the only one ever to reach a net worth of over $4 trillion.
Strictly speaking, Chinese reserves did decline from 47.6% of GDP in 2010 and now make up less than 30% of Chinese GDP, but these numbers are actually indicative of China’s real economic growth rate—their nominal GDP has doubled since 2010, and the foreign deposits didn’t keep the pace.
11. Their future is based on innovation.
(Xinhua) (Global Innovation Index)
In 2019, after four years of rapid growth in the number of tech startups, China was the only middle-income economy in the top 20 countries in the Global Innovation Index, finding itself in the company of developed Western countries such as Sweden, Switzerland, and Finland.
The latest edition of the GII 2020 observing the People’s Republic of China GDP growth rates, ranked them 14th in terms of innovation, characterizing it as a country with the most significant innovational progress over time.
Despite not being in the top ten, China ranks as number one in several innovation criteria set by the GII, such as intangible assets, creative goods exports, and innovation quality.
12. Special economic zones are the secret behind China’s success.
(Investopedia) (World Bank)
Special economic zones are one of the main factors in China’s rapid and continued economic development. They account for an estimated 22% of China’s GDP growth by the year 2015, 60% of exports, and over 45% in FDI. On top of that, activities related to the functioning of SEZs provide jobs for 30 million people.
The most successful and internationally famous Shenzhen SEZ used to be a village but has now grown to over 3 million registered businesses and 12 million inhabitants. In 2017, its GDP rose to over $338 billion, overtaking Singapore and Hong Kong in terms of growth.
13. The People’s Republic of China economic growth rate remains unprecedented in modern history.
(World Bank) (Investopedia) (Harvard Business Review)
Since the 1980s economic and free-market reforms, China’s GDP grew from $150 billion in 1978, to an estimated $14 trillion in 2020.
The World Bank described their success as the fastest economic expansion in history and estimated that it lifted over 850 million people out of poverty.
The Economic Growth Rate of the US vs China
14. China used to be the number one US trade partner until 2019.
(BBC) (CRS Report)
However, this is no longer the case, partly because of the tariffs that the US imposed on over $250 billion worth of Chinese goods in the ongoing trade war between Washington and Beijing.
This is not to say that the two countries have completely stopped trading, and they still remain important partners. While this did initially slow down China, rapid economic growth was soon reestablished.
15. Trade activities between America and China created about 2.6 million jobs in the US.
Most of these jobs are connected to the industries related to export/import activities, but it also includes jobs created by a number of different Chinese companies operating in the US. Thanks to the economic growth in China and all of the recent consumer spending statistics showing that Chinese purchasing power is increasing, this number is expected to grow even further.
16. In 2015, exports to China made up 7.3% of American exports.
At that time, this meant that China acquired $165 billion worth of services and goods from the United States. It is estimated that this accounted for 1% of the total economic output of the US for the year.
17. The US is expected to continue to export to China at a pace that predicts $520 billion in exports by 2030.
While the trade war was responsible for China’s economic growth rate slowing down and made the relationships between the countries more complicated and difficult to predict, the mutual dependence that these two nations have developed isn’t likely to go away easily.
Even now, the US relies on China as a major importer of US-manufactured high-value products like semiconductors, construction equipment, trucks, cars, etc.
18. The gap between the American and the Chinese economies is disappearing.
According to the International Monetary Fund’s research regarding China, its current economic growth rate is rapidly catching up with the US. The data for 2020 show that the difference between economies is $7.05 trillion, while the predictions and trends point to a sharp drop to $5.47 trillion in 2023.
Economic Growth Rate in China: the Challenges
19. Income inequality reached alarming levels.
(BBC) (Credit Suisse)
Since 2010, the Chinese Gini coefficient (a measure of wealth inequality, with values between 0 and 1) has been hovering around 0.47. The economic growth data from China indicate that the threshold of 0.4 is a point at which income distribution inequality in society is regarded as dangerously high. It should be noted that the US Gini index was also quite stable in this period, rarely fluctuating far from 0.48.
The average wealth of Chinese citizens in 2010 was estimated at $17,126, double the numbers of other growing economies, and by 2018, this number increased to $58,544. Still, despite the overall China’s GDP growth rate, many billionaires and around 400 million middle-class citizens demonstrate that the average wealth is indicative of the growing gap between the country’s rich and the middle class.
20. The economy is burdened by demographic challenges.
The size of China’s workforce has been in decline for seven years in a row. In 2011 their working population (16–59) was 925 million people.
Due to a drastic drop in fertility rate, which went from 5.8 in 1964 to 1.6 in 2012, the labor force dropped to 897 million in 2018 and is predicted to keep dropping until it reaches 700 million by 2050, which will have a tremendous effect on the People’s Republic of China economic growth rates.
21. Chinese economy is the number one polluter.
(CIA) (Reuters) (The Guardian)
Data show that almost 1.25 million people die each year due to particle pollution in China. Coal is still one of the country’s major energy sources, and responsible for the emission of airborne particles that are putting the health of 81% of Chinese citizens at risk.
The PR China signed the Paris Climate Agreement in 2016 as a part of its plan to reduce carbon dioxide emissions and join the international struggle to face climate change.
22. China struggles with poverty.
Due to the high number of inhabitants, lack of arable land, and being an isolated country, China was home to 770 million people living in extreme poverty in 1978. China’s economic growth rate history indicates that economic reforms and leaving the state of isolation helped China decrease this number by an average of 13 million inhabitants annually.
Poverty incidence (number of households with per capita income lower than the poverty threshold) dropped to 1.7% in 2018, the same year that China was declared the world’s largest retailer by the Global Retail Development Index. The number of impoverished people was reduced to 16.6 million, with an investment plan for 330 poorest Chinese counties.
How much does China’s economy grow each year?
On average, the Chinese economy grew at an annual rate of 10% since the 1980s. However, China’s rate of economic growth seems to have reached its peak and is now at 6.6% with projections that indicate a decline to 5.5% in 2024.
How did China’s economy grow so fast?
The economy expanded thanks to a set of economic reforms introduced in the 1980s. One of the major turning points was attracting up to $139 billion a year in foreign investments and focusing on export activities, which rose by 9.3% in 2018.
How long before China becomes the biggest economy?
Measured in nominal GDP, the Chinese economy is around 65% the size of the American economy. However, IMF data show that China replaced the US as the world’s largest economy measured in GDP PPP in 2014.
In 2017, American GDP on PPP dropped from 24% to 15.3% while the Chinese remained at 18.3%. Based on China’s GDP growth in 2020, the Chinese economy will be 56% bigger than the US economy based on PPP by 2024.
Although it’s practically a communist country, the People’s Republic of China economic growth statistics show that they have managed to make a unique combination of their political and capitalist economic models. This has allowed them to embrace the free market and private ownership, cautiously keeping the government in the center of decision-making.