economy of China

History

Historically, China was one of the world's foremost economic powers for most of the two millennia of Pax Sinica, spanning from the 1st until the 19th century. China accounted for around one-quarter to one-third of global GDP until the mid-1800s. China's share of global GDP was one-third in 1820 as the Industrial Revolution was beginning in Great Britain. China's GDP in 1820 was six times as large as Britain's, the largest economy in Europe, and almost twenty times the GDP of the nascent United States.

At the end of the Chinese Civil War, the economy was devastated. As the defeated Kuomintang retreated to Taiwan, they stripped mainland China of liquid assets, including gold, silver, and the country's dollar reserves. By the time the Kuomintang (KMT) was defeated, commerce had been destroyed, the national currency rendered valueless, and the economy reduced to barter.

The development of the People's Republic of China (PRC) from one of the poorest countries to one of the largest economies was the quickest of any country. From 1949 until the reform and opening up in 1978, the country maintained a self-sufficient, state-led economy focused on rapid industrialization, while substantial market activity remained underground. The period of the Great Leap Forward and the Great Chinese Famine negatively impacted the economy. Economic reforms began under Deng Xiaoping. China subsequently became the world's fastest-growing major economy, with growth rates averaging 10% over 30 years. Many scholars consider the Chinese economic model as an example of authoritarian capitalism, state capitalism, or party-state capitalism under the general secretaryship of Xi Jinping. At the same time, scholars have also emphasized differences across reform-era leaderships, especially between the Deng Xiaoping and Xi Jinping era. Another inflection point is the COVID-19 pandemic, which had an enduring impact on the Chinese economy. Yuen Yuen Ang characterizes the post-pandemic period as "China's economic paradox:" a period of rapid technological catch-up paired with a broad growth slowdown.

China brought more people out of extreme poverty than any other country in history. Between 1978 and 2018, China reduced extreme poverty by 800 million people. The percentage of the population living in extreme poverty decreased from 88.1% to 0.2% between 1981 and 2019. Its current account surplus increased by a factor of 53 between 1982 and 2021, growing from $5.67 billion to $317 billion.

Regional economies

China's unequal transportation system, combined with important differences in the availability of natural and human resources and in industrial infrastructure, has produced significant variations in the regional economies of China. The economic development of Shenzhen has caused the city to be referred to as the world's next Silicon Valley.

Economic development has generally been more rapid in coastal provinces than in the interior and there are large disparities in per capita income between regions. The three wealthiest regions are the Yangtze Delta in East China; the Pearl River Delta in South China; and Jing-Jin-Ji region in North China. It is the rapid development of these areas that is expected to have the most significant effect on the Asian regional economy as a whole and Chinese government policy is designed to remove the obstacles to accelerated growth in these wealthier regions. By 2035, China's four cities (Shanghai, Beijing, Guangzhou and Shenzhen) are projected to be among the global top ten largest cities by nominal GDP according to a report by Oxford Economics.

Hong Kong and Macau

In accordance with the one country, two systems policy, the economies of the former British colony of Hong Kong and Portuguese colony of Macau formally preserve a capitalist system separate from mainland China.

Regional development

These strategies are aimed at the relatively underdeveloped regions of China in an attempt to address unequal development:

China Western Development, designed to increase the economic situation of the western provinces through investment and development of natural resources.

Revitalize Northeast China, to rejuvenate the industrial bases in Northeast China. It covers the three provinces of Heilongjiang, Jilin, and Liaoning, as well as the five eastern prefectures of Inner Mongolia.

Rise of Central China Plan, to accelerate the development of its central regions. It covers six provinces: Shanxi, Henan, Anhui, Hubei, Hunan, and Jiangxi.

Third Front of the Cold War period, which focused on the southwestern provinces.

Government

China engages in state-led investment and industrial policy with a significant state-owned enterprise sector. The Chinese Communist Party (CCP) describes China's economic system as the socialist market economy. To guide economic development, the Chinese central government adopts five-year plans that detail its economic priorities and essential policies. The fourteenth five-year plan (2021–2025) is currently being implemented, placing an emphasis on consumption-driven growth and technological self-sufficiency while China transitions from being an upper middle-income economy to a high-income economy.

The public sector plays a central role in China's economy. In Rural China Takes Off (1999), Jean Oi identified reform-era China as a local variety of developmental states, with "local governments in the lead role of the development process." Yuen Yuen Ang's How China Escaped the Poverty Trap (2016) characterized the role of the state in Chinese development as "directed improvisation," a mixture of top-down direction by the central government and bottom-up improvisation among local governments, producing a variety of subnational coevolutionary paths and distinct regional models, rather than a single, fixed China model.

Currently, China's development goals are to achieve the Two Centenaries, namely the material goal of China becoming a moderately prosperous society in all respects by 2021 and the modernization goal of China becoming a "strong, democratic, civilized, harmonious and modern socialist country" by 2049, the 100th anniversary of the founding of the People's Republic. China retains state control over the commanding heights of the economy in key industries like infrastructure, telecommunications, and finance despite significant marketization of the economy since reform and opening up. Specific mechanisms implementing government control of the commanding heights of the economy include public property rights, pervasive administrative involvement, and CCP supervision of senior managers.

The state is more likely to intervene in areas where the prices of goods and services are socially and politically sensitive. For example, China's government intervenes more actively in the commercial banking sector than in private equity, where significantly fewer households participate. The state's involvement in the allocation of finance, contracts, and resources facilitates Chinese government efforts to minimize the effects of market volatility.

State-owned enterprises

China's SOEs perform functions that benefit the state. Academic Wendy Leutert writes, "They contribute to central and local governments revenues through dividends and taxes, support urban employment, keep key input prices low, channel capital towards targeted industries and technologies, support sub-national redistribution to poorer interior and western provinces, and aid the state's response to natural disasters, financial crises and social instability." SOE top management personnel is controlled by the CCP's Organization Department.

Almost 867,000 enterprises in China have a degree of state ownership, according to Franklin Allen of Imperial College London. As of 2017, China has more SOEs than any other country, and the most SOEs among large national companies. State-owned enterprises accounted for over 60% of China's market capitalization in 2019 and generated 40% of China's GDP of US$15.98 trillion dollars (101.36 trillion yuan) in 2020, with domestic and foreign private businesses and investment accounting for the remaining 60%. As of the end of 2019, the total assets of all China's SOEs, including those operating in the financial sector, reached US$58.97 trillion In 2015. Ninety-one (91) of these SOEs belong to the 2020 Fortune Global 500 companies. As of 2025, private firms represent 40% of the country's top-100 listed firms, mixed-ownership firms represent 15%, while state-owned enterprises represent 45%, according to the Peterson Institute for International Economics.

Disputes over economic data

There exist disputes over reliability of official economic data. Foreign and some Chinese sources have claimed that official Chinese government statistics overstate China's economic growth. However, several Western academics and institutions have stated that China's economic growth is higher than indicated by official figures. Others, such as the Economist Intelligence Unit, state that while there's evidence China's GDP data is "smoothed", they believe that China's nominal and real GDP data are broadly accurate. Still, others state that reported GDP growth is irreconcilable with data coming out of China. According to 2007 documents obtained by WikiLeaks, Liaoning Party Secretary and future Premier Li Keqiang said he is far from confident in the country's GDP estimates, calling them "man-made" and unreliable and that data releases, especially the GDP numbers, should be used "for reference only". In its place, he developed the Li Keqiang index as an alternative measurement of Chinese economic performance that uses three variables he preferred. After meeting Alibaba's Jack Ma in February in March 2025, China announced a 5 percent growth target at its annual sessions, despite ongoing trade tensions with the United States. The Washington Post reports that China's two annual political meetings, hosted by the National People's Congress and the Chinese People's Political Consultative Conference, set a growth target of "around 5 percent" for 2025 despite rising trade tensions with the United States, signaling Beijing's certainty in its recovery. Leaders underlined boosting consumption, supporting private-sector innovation, and growing fiscal tools such as a greater deficit ratio and special bonds to stabilize growth. Officials pledged to support exporters, draw foreign investment, and promote technological self-reliance, while encouraging private entrepreneurship. The sessions presented China as a global stabilizer and warned of countermeasures against trade barriers, showing a pragmatic, growth-oriented approach throughout geopolitical challenges.

Chinese provinces and cities have long been suspected of cooking their numbers, with the focus on local government officials, whose performance is often assessed based on how well their respective economies have performed. Local governments have come under increased scrutiny over economic data, with CCP general secretary Xi Jinping stating that economic data forgery "not only hurt our judgment of the economic situation, but also seriously undermined the Communist Party's ideas and truth-seeking style".

Satellite measurements of light pollution are used by some analysts to model Chinese economic growth and suggest growth rate numbers in Chinese official data are more reliable, though are likely to be smoothed. According to an article by the Federal Reserve Bank of St. Louis, China's official statistics are of a high quality compared to other developing, middle-income and low-income countries. In 2016, China was at the 83rd percentile of middle and low-income countries, up from the 38th percentile in 2004. A study by the Federal Reserve Bank of San Francisco found that China's official GDP statistics are "significantly and positively correlated" with externally verifiable measures of economic activity such as import and export data from China's trade partners, suggesting that China's economic growth was no slower than the official figures indicated.

National debt

In 2022, China's total government debt was approximately CN¥ 94 trillion (US$ 14 trillion), or 77.1% of GDP. In 2014, many analysts expressed concern over the overall size of China's government debt. At the end of 2014, the International Monetary Fund reported that China's general government gross debt-to-GDP ratio was 41.44 percent. In 2015, a report by the International Monetary Fund concluded that China's public debt is relatively low "and on a stable path in all standard stress tests except for the scenario with contingent liability shocks", such as "a large-scale bank recapitalization or financial system bailout to deal, for example, with a potential rise in NPLs from deleveraging". Per the State Administration of Foreign Exchange's 2019 balance of payments report, the external debt balance of the entire Chinese government at year end was 2% of GDP.

Chinese authorities have dismissed analysts' worries, insisting "the country still has room to increase government debt". Former Fed Chairman Ben Bernanke, earlier in 2016, commented that "the ... debt pile facing China [is] an 'internal' problem", given the majority of the borrowings was issued in local currency. A 2019 survey by the OECD found that China's corporate debt is higher than other major countries. Shadow banking has risen in China, posing risks to the financial system. Off-the-books debt is a grey area, but estimates place the amount for local governments alone as high as $9 trillion or 63 trillion yuan, up from estimates of around 30 trillion yuan in 2020.

Taxation, regulatory environment and government revenues

Though China's economy has expanded rapidly, its regulatory environment has not kept pace. Since Deng Xiaoping's open market reforms, the growth of new businesses has outpaced the government's ability to regulate them. This has created a situation where businesses, faced with mounting competition and poor oversight, take drastic measures to increase profit margins, often at the expense of consumer safety. This issue became more prominent in 2007, with a number of restrictions being placed on problematic Chinese exports by the United States.

The Chinese technology sector has been characterized as being dominated by few, larger entities including Ant Group and Tencent. There have been attempts by the Xi Jinping Administration to enforce economic competition rules, and probes into Alibaba and Tencent have been launched by Chinese economic regulators.

The crackdown on tech giants and internet companies during the 2020–2021 Xi Jinping Administration reform spree was followed with calls by the Politburo against monopolistic practices by commercial retail giants like Alibaba. In August 2024 China's market regulator ended its antitrust review of Alibaba Group Holding after fining them in 2021. The company was fined for US$2.8 billion in 2021. The three years of regulatory scrutiny compelled Alibaba to comply with the antitrust authority. Studies showed that the cumulative effects of the investigation on Alibaba resulted in 17% to 25% decline in abnormal stock returns. In March 2021, Xi stated that China would strengthen its antitrust enforcement in an effort to advance what he described as the healthy and sustainable development of the platform economy. Two major institutional changes resulted. In November 2021, China upgraded the bureaucratic status of the State Administration for Market Regulation's antitrust bureau. In June 2022, it made major amendments to the Anti-Monopoly Law, including explicit language, focused on regulation of the platform economy.

Data

The following table shows the main economic indicators in 1980–2024 (with IMF staff estimates in 2025–2029). Inflation below 5% is in green.

Inflation

As of 2025, China had experienced three inflation peaks: 1987–1989 (18.8%), 1993–1996 (peaking at 24%), and 2008 (8.2%).

According to China's National Bureau of Statistics (NBS), the producer price index rose by 2.8 percent in April 2026 compared with the same month a year earlier. The increase was attributed to rising global energy and raw material prices driven by the war in the Middle East.

Investment cycles

Chinese investment has always been highly cyclical.

In China, the majority of investment is carried out by entities that are at least partially state-owned. Most of these are under the control of local governments. Thus, booms are primarily the result of perverse incentives at the local-government level. Unlike entrepreneurs in a free-enterprise economy, Chinese local officials are motivated primarily by political considerations. As their performance evaluations are based, to a large extent, on GDP growth within their jurisdictions, they have a strong incentive to promote large-scale investment projects.

A typical cycle begins with a relaxation of central government credit and industrial policy. This allows local governments to push investment aggressively, both through state-sector entities they control directly and by offering investment-promotion incentives to private investors and enterprises outside their jurisdictions. The resulting boom puts upward pressure on prices and may also result in shortages of key inputs such as coal and electricity (as was the case in 2003). Once inflation has risen to a level at which it begins to threaten social stability, the central government will intervene by tightening enforcement of industrial and credit policy. Projects that went ahead without required approvals will be halted. Bank lending to particular types of investors will be restricted. Credit then becomes tight and investment growth begins to decline.

Unemployment

Since the Reform and Open Up, unemployment has been a recurring issue that the Chinese economy grapples with. In 1979–80 there were twenty million unemployed people. The reforms in China's state-owned enterprises had led to the dismantling of life-long employment system colloquially coined as iron rice bowl (铁饭碗), a process that later culminated in large-scale layoffs of urban workers during the period known as Xiagang (下岗), which contributed to drastic rise in urban unemployment since the 1990s. The situation of mass unemployment was later improved following China's admission by the World Trade Organization in 2001.

Recently, China's unemployment landscape has become a pressing concern, particularly among its youth. Official figures indicate a relatively stable urban surveyed unemployment rate of 5.0% as of late 2024, with annual unemployment projected to decline slightly from 5.2% in 2023 to 5.1% in 2024. However, youth unemployment paints a more troubling picture. Officially, the unemployment rate for individuals aged 16 to 24 peaked at 21.3% in mid-2023, before declining to 16.1% by November 2024. Yet, independent estimates suggest that the true youth unemployment rate may have been significantly higher, with some analysts, including a prominent Chinese professor, suggesting it could have reached as high as 46.5%, while others speculated it may have approached or exceeded 50%. Reports have also surfaced about the creation of "fake jobs" or positions that exist on paper but provide no meaningful work or income, aimed at artificially lowering the reported unemployment figures. These issues, compounded by a slowing economy, a prolonged property market crisis, and insufficient demand for skilled labor, have led many young Chinese to "lie flat" or retreat from the workforce altogether. As China implements reforms to improve labor conditions and stimulate economic growth, achieving a projected 5% GDP growth target, youth unemployment and underemployment remain critical challenges for policymakers and society alike.

Financial and banking system

China has the world's largest total banking sector assets of around $45.838 trillion (309.41 trillion CNY) with $42.063 trillion in total deposits and other liabilities. Most of China's financial institutions are state-owned and governed. The chief instruments of financial and fiscal control are the People's Bank of China (PBC) and the Ministry of Finance, both under the authority of the State Council. The People's Bank of China replaced the Central Bank of China in 1950 and gradually took over private banks. It fulfills many of the functions of other central and commercial banks. It issues the currency, controls circulation, and plays an important role in disbursing budgetary expenditures. Additionally, it administers the accounts, payments, and receipts of government organizations and other bodies, which enables it to exert thorough supervision over their financial and general performances in consideration of the government's economic plans. The PBC is also responsible for international trade and other overseas transactions. Remittances by overseas Chinese are managed by the Bank of China (BOC), which has a number of branch offices in several countries.

Other financial institutions that are crucial, include the China Development Bank (CDB), which funds economic development and directs foreign investment; the Agricultural Bank of China (ABC), which provides for the agricultural sector; the China Construction Bank (CCB), which is responsible for capitalizing a portion of overall investment and for providing capital funds for certain industrial and construction enterprises; and the Industrial and Commercial Bank of China (ICBC), which conducts ordinary commercial transactions and acts as a savings bank for the public. China initiated the founding of the Asian Infrastructure Investment Bank in 2015 and the Silk Road Fund in 2014, an investment fund of the Chinese government to foster increased investment and provide financial supports in countries along the One Belt, One Road.

China's economic reforms greatly increased the economic role of the banking system. In theory any enterprises or individuals can go to the banks to obtain loans outside the state plan, in practice, 75% of state bank loans go to State Owned Enterprises. (SOEs) Even though nearly all investment capital was previously provided on a grant basis according to the state plan, policy has since the start of the reform shifted to a loan basis through the various state-directed financial institutions. It is estimated that, as of 2011, 14 trillion Yuan in loans was outstanding to local governments. Much of that total is believed by outside observers to be nonperforming. Increasing amounts of funds are made available through the banks for economic and commercial purposes. Foreign sources of capital have also increased. China has received loans from the World Bank and several United Nations programs, as well as from countries (particularly Japan) and, to a lesser extent, commercial banks. Hong Kong has been a major conduit of this investment, as well as a source itself. On 23 February 2012, the PBC evinced its inclination to liberalize its capital markets when it circulated a telling ten-year timetable. Following on the heels of this development, Shenzhen banks were able to launch cross-border yuan remittances for individuals, a significant shift in the PBC's capital control strictures since Chinese nationals had been previously barred from transferring their yuan to overseas account.

Stock markets

As of 2024, China has the second-largest equity markets and futures markets in the world, as well as the third largest bond market. China's stock market exchanges include the Beijing Stock Exchange, the Shanghai Stock Exchange (including the STAR Market), the Shenzhen Stock Exchange, and the Hong Kong Stock Exchange. China's stock market is relatively underdeveloped in comparison to other aspects of its economy.

To be listed on China's stock exchange, companies must demonstrate good financial standing (including sustained profitability), solid corporate governance, including a board of independent directors, supervisory board, auditing, and no history of misreporting or fraud, and have a market capitalization equivalent to at least US$4 million. The government regulates initial public offerings, encouraging them when the market is high in an effort to cool down prices and prohibiting them when the market is low.

When the stock markets re-opened in the PRC period in 1990, most of the listed companies were state-owned enterprises; this was part of an experiment in subjecting SOEs to market discipline. The Shanghai and Shenzhen stock exchanges were under municipal control and termed "experimental points" until 1997. In 1997, the central government brought the exchanges under central government control and affirmed that the exchanges had a legitimate role in the socialist market economy. In 2015, a stock market plunge in China eliminated $2 trillion of global stock market value.

Currency system

The renminbi ("people's currency") is the currency of China, denominated as the yuan, subdivided into 10 jiao or 100 fen. The renminbi is issued by the People's Bank of China, the monetary authority of China. The ISO 4217 abbreviation is CNY, although also commonly abbreviated as "RMB". As of 2005, the yuan was generally considered by outside observers to be undervalued by about 30–40%. In 2011, the IMF stated that the renminbi was undervalued by 23%. In 2026, the IMF stated that the renminbi was undervalued by 16%.

There is a complex relationship between China's balance of trade, inflation, measured by the consumer price index and the value of its currency. Despite allowing the value of the yuan to "float", China's central bank has decisive ability to control its value with relationship to other currencies An article published in International Review of Economics & Finance in 2010 by Mete Feridun (University of Greenwich Business School) and his colleagues provide empirical evidence that financial development fosters economic growth in China.

The renminbi is held in a floating exchange-rate system managed primarily against the US dollar. China has moved to an exchange rate system that references a basket of currencies and has allowed the renminbi to fluctuate at a daily rate of up to half a percent. A market-based "representative" exchange rate against the U.S. dollar is one of the requirements for designation of a currency as one with Special Drawing Rights (SDR) by the International Monetary Fund (IMF), one of China's goals. Since the late-2000s, China has sought to internationalize the renminbi. As of 2013, the RMB is the 8th most widely traded currency in the world. The internationalization of the Chinese economy continues to affect the standardized economic forecast officially launched in China by the Purchasing Managers Index in 2005.

Nonfinancial debt

China aims for roughly 5% GDP growth and 2% inflation, using higher fiscal deficits and expanded local government bond issuance to replace shadow LGFVs with official debt. Total government borrowing, including LGFVs, has risen sharply to 124% of GDP, with local government debt over 60% and overall non-financial debt at 312%. In 2014, nonfinancial debt to GDP stood at ~140%. Despite accommodative monetary policies, weak domestic consumption and uncertain exports make growth targets challenging. Nonfinancial debt is the total nominal value of outstanding debt instruments issued by the non-financial corporate sector. This includes corporate, household and government debt.

Household debt has risen past 60% of GDP, mainly from mortgages and leveraged investments, affecting 5–7% of adults. High savings provide some buffer, but a property slump, youth unemployment, and aggressive debt collection heighten financial and social stress. Limited regulations, including cautious personal bankruptcy laws, leave many households exposed while the government balances support with broader economic stability.

Sectors

According to Fortune Global, of the world's 500 largest companies, 135 are headquartered in China. As of 2023, mainland China and Hong Kong were home to 324 largest listed companies measured by revenue in the Fortune Global 2000, ranking second globally. China is also home to more than two hundred privately held technology startups (tech unicorns), each with a valuation of over $1 billion, the highest number in the world.

Agriculture, aquaculture, livestock, fishing and forestry

China is the world's largest producer and consumer of agricultural products – and some 300 million Chinese farm workers are in the industry, mostly laboring on pieces of land about the size of U.S. farms. Virtually all arable land is used for food crops. China is the world's largest producer of rice and is among the principal sources of wheat, corn (maize), tobacco, soybeans, potatoes, sorghum, peanuts, tea, millet, barley, oilseed, pork, and fish. Major non-food crops, including cotton, other fibers, and oilseeds, furnish China with a small proportion of its foreign trade revenue. Agricultural exports, such as vegetables and fruits, fish and shellfish, grain and meat products, are exported to Hong Kong. Yields are high because of intensive cultivation, for example, China's cropland area is only 75% of the U.S. total, but China still produces about 30% more crops and livestock than the United States. China hopes to further increase agricultural production through improved plant stocks, fertilizers, and technology.

According to the United Nations World Food Programme, in 2022, China fed eighteen percent of the world's population with only seven percent of the world's arable land.

Animal husbandry constitutes the second most important component of agricultural production. China is the world's leading producer of pigs, chickens, and eggs, and it also has sizable herds of sheep and cattle. Since the mid-1970s, greater emphasis has been placed on increasing the livestock output. China has a long tradition of ocean and freshwater fishing and of aquaculture. Pond raising has always been important and has been increasingly emphasized to supplement coastal and inland fisheries threatened by overfishing and to provide such valuable export commodities as prawns. China is also unmatched in the size and reach of its fishing armada with anywhere from 200,000 to 800,000 boats, some as far afield as Argentina. Fueled primarily by government subsidies, its growth and activities have largely gone unchecked.

Environmental problems such as floods, drought, and erosion pose serious threats to farming in many parts of the country. The wholesale destruction of forests gave way to an energetic reforestation program that proved inadequate, and forest resources are still fairly meagre. The principal forests are found in the Qin Mountains and the central mountains and on the Yunnan–Guizhou Plateau. Because they are inaccessible, the Qinling forests are not worked extensively, and much of the country's timber comes from Heilongjiang, Jilin, Sichuan, and Yunnan.

Housing and construction

In 2010, China became the world's largest market for construction. It has remained the world's largest through at least 2024. The real estate industry is about 20% of the Chinese economy. As of 2023, real property accounts for 60% of Chinese household assets. Also as of 2023, China has the highest rate of home ownership in the world. 90% of urban households own their home.

Compared to other nations, investing in stock markets and other assets is harder due to currency controls within the country. As a result, many Chinese citizens own multiple properties, as they are one of the few ways in which it is comparatively easy to grow and preserve wealth. Due to this, many economists have speculated about a property bubble within the Chinese economy. On 16 July 2020, The Wall Street Journal reported that the housing market within the Chinese economy had grown to US$52 trillion, eclipsing the US 2008 housing market before the 2008 financial crisis.

Energy and mineral resources

Over the years, large subsidies were built into the price structure of certain commodities and these subsidies grew substantially in the late 1970s and 1980s. Since 1980, China's energy production has grown dramatically, as has the proportion allocated to domestic consumption. Some 80 percent of all power is generated from fossil fuel at thermal plants, with about 17 percent at hydroelectric installations; only about two percent is from nuclear energy, mainly from plants located in Guangdong and Zhejiang. Though China has rich overall energy potential, most have yet to be developed. In addition, the geographical distribution of energy puts most of these resources relatively far from their major industrial users. The northeast is rich in coal and oil, the central part of north China has abundant coal, and the southwest has immense hydroelectric potential. But the industrialized regions around Guangzhou and the Lower Yangtze region around Shanghai have too little energy, while there is relatively little heavy industry located near major energy resource areas other than in the southern part of the northeast.

Due in large part to environmental concerns, China has wanted to shift China's current energy mix from a heavy reliance on coal, which accounts for 70–75% of China's energy, toward greater reliance on oil, natural gas, renewable energy, and nuclear power. China has closed thousands of coal mines over the past five to ten years to cut overproduction. Since 1993, China has been a net importer of oil, a large portion of which comes from the Middle East. According to Chinese statistics, this has reduced coal production by over 25%. As of 2023, solar power has become cheaper than coal-fired power in China.

By 2010, rapidly rising wages and a general increase in the standard of living had put increased energy use on a collision course with the need to reduce carbon emissions in order to control global warming. There were diligent efforts to increase energy efficiency and increase use of renewable sources; over 1,000 inefficient power plants had been closed, but projections continued to show a dramatic rise in carbon emissions from burning fossil fuels.

While not the largest source of historical cumulative emissions, today China accounts for one quarter of global greenhouse gas emissions. On a per capita basis, China's emissions in 2019 (9 tonnes CO2-equivalent [tCO2e] per year) surpass those of the European Union (7.6 tCO2e) but remain slightly below the Organisation for Economic Co-operation and Development (OECD) average (10.7 tCO2e) and well below the United States average (17.6 tCO2e). However, the carbon intensity of China's GDP—the amount of carbon used to generate a unit of output—remains relatively high. To avoid the long-term socioeconomic cost of environmental pollution in China, it has been suggested by Nicholas Stern and Fergus Green of the Grantham Research Institute on Climate Change and the Environment that the economy of China be shifted to more advanced industrial development with low carbon dioxide emissions and better allocation of national resources to innovation and R&D for sustainable economic growth in order to reduce the impact of China's heavy industry. This is in accord with the planning goals of the central government. Contrary to the publicized goals, China is building a large number of coal fired power plants and it carbon emissions could further increase.

Industry and manufacturing

China has a strong global position in the production of industrial goods and some of its companies are global leader in the areas of steel, solar energy, and telecommunications accessories. As of 2024, industry accounts for 36.5% of China's GDP. From 2010 until at least 2023, China produces more industrial goods than any other country. As of 2023, China manufactures approximately one fifth of the world's total output of industrial products.

Major industries include mining and ore processing; iron and steel; aluminium; coal; machinery; armaments; textiles and apparel; petroleum; cement; chemical; fertilizers; food processing; automobiles and other transportation equipment including rail cars and locomotives, ships, and aircraft; consumer products including footwear, toys, and electronics; telecommunications and information technology.

Since the founding of the People's Republic, industrial development has been given considerable attention; as of 2011 46% of China's national output continued to be devoted to investment; a percentage far higher than any other nation. Among the various industrial branches the machine-building and metallurgical industries have received the highest priority. These two areas alone now account for about 20–30 percent of the total gross value of industrial output. In these, as in most other areas of industry, however, innovation has generally suffered at the hands of a system that has rewarded increases in gross output rather than improvements in variety, sophistication and quality. China, therefore, still imports significant quantities of specialized steels. Overall industrial output has grown at an average rate of more than ten percent per year, having surpassed all other sectors in economic growth and degree of modernization.

Following its 2001 entry into the World Trade Organization, China quickly developed a reputation as the "world's factory" through its manufacturing exports. The complexity of its exports increased over time, and as of 2019 it accounts for approximately 25% of all high tech goods produced globally. The proportion of Chinese manufactured goods at the higher end of the value chain grew at a faster rate after 2020. As of 2024, China has significant industrial capacity in excess of its domestic needs. The government has sought to alleviate industrial capacity by channeling it abroad, including through the Belt and Road Initiative.

Services

Prior to the onset of economic reforms in 1978, China's services sector was characterized by state-operated shops, rationing, and regulated prices – with reform came private markets, individual entrepreneurs, and a commercial sector. The wholesale and retail trade has expanded quickly, with numerous shopping malls, retail shops, restaurant chains and hotels constructed in urban areas. Public administration remains a main component of the service sector, while tourism has become a significant factor in employment and a source of foreign exchange.

The affordability of mobile phones and internet data in China has resulted in the number of mobile internet users in China surpassing the number of computer internet users. By 2023, the number of Internet users in China increased to over 1.09 billion. The proportions of Chinese netizens accessing the Internet via mobile phones, desktop computers, laptop computers, TVs and tablet computers were 99.9%, 33.9%, 30.3%, 22.5% and 26.6%, respectively.

China's economy is one of the world's leaders in consumer retailing, consumer internet and mobile payments. As of 2024, China has more internet users than any other country. Internet users in China generate large amounts of data, thereby providing a competitive benefit in the development of machine learning for artificial intelligence technology. Mobile payment methods via apps including Alipay and WeChat Pay were quickly adopted in China in part due to the relative lack of credit cards in the country. This technological leapfrogging also led to a boom in online shopping and retail banking.

China's platform economy has grown substantially since the early 2010s, with its transactional volume reaching RMB 3.7 trillion in 2021. The platform economy has absorbed a large number of workers from China's decreasing manufacturing workforce and from its population of internal migrant workers. As of 2020, 84 million people worked as platform economy service providers and 6 million were employees of platform companies.

The platform economy sector is highly concentrated in Alibaba and Tencent, both of which have ride-hailing and food delivery businesses as key assets in their investment portfolios. Ride-hailing and food delivery businesses have significantly consolidated since 2016.

The New York Times described both Alibaba and Tencent as China's two dominant internet giants competing to control daily life through e-commerce, payments, and social media. In mobile payments, many companies have to partner with Alibaba's Alipay or Tencent's platform services. They also control major apps and payment platforms, which limits competition in the digital space. Both Alibaba and Tencent are recognized as tech giants that are driving innovation in e-commerce, social networking, and mobile services. Alibaba generates the majority of its revenue from e-commerce platforms like Taobao and Tmall, while Tencent derives most of its revenue from social services like WeChat, gaming, and fintech.

Income and wealth

China has the largest national proportion of the global middle class. As of 2020, China had 400 million middle-income citizens. It is projected to reach 1.2 billion by 2027, making up one fourth of the world total. According to a 2021 Pew Research Center survey, there were 23 million Chinese individuals with a per capita daily income of $50 or more, 242 million with a daily income between $20–50 per day, 493 million between $10–20, 641 million $2–10 per day, and 4 million under $2 per day; all the figures are expressed in international dollars and 2011 purchasing power parity values. In 2022, the National Bureau of Statistics reported that China's average disposable income per capita was ¥36,883, of which ¥20,590 was from wages and salaries, ¥6,175 was net business income, ¥3,227 was net income from property, and ¥6,892 was net transfer income. The median per capita disposable income was reported as ¥36,231 with a 4.4% annual growth for 2025.

As of April 2023, China was second in the world, after the US, in total number of billionaires and total number of millionaires, with 495 Chinese billionaires and 6.2 million millionaires in 2022. According to the Hurun Global Rich Report In 2020, China had the world's highest number of billionaires, which is more than the US and India combined, and as of March 2021, the number of billionaires in China reach 1,058 with the combined wealth of US$4.5 trillion. According to the 2019 Global Wealth Report by Credit Suisse Group, China surpassed the US in the wealth of the top ten percent of the world's population. In other words, as of 2019, a hundred million Chinese are in the top ten percent of the wealthiest individuals in the world – those who have a net personal wealth of at least $110,000. According to the list in 2021, China is home to six of the world's top ten cities (Beijing, Shanghai, Shenzhen, Hong Kong, Hangzhou and Guangzhou in the 1st, 2nd, 4th, 5th, 8th and 9th spots, respectively) by the highest number of billionaires, which is more than any other country. As of January 2021, China had 85 female billionaires, two-thirds of the global total.

The average income of a rural resident in China is 30% of the average income for an urban resident. The rural population is relatively older as the rural youth migrate to cities for higher earning jobs while the aged stay behind. Much of this rural population works small plots of land in order to survive and have little earning power. Former Chinese Premier Li Keqiang stated, in 2020, that 600 million Chinese live on or under 1,000 yuan per month. At a conversion rate of 7 yuan to the dollar, this translates to $143 per month. A family of 3 at this income level would have a yearly income of $5,150. The difference in income is also a reflection of the difference in retirement payments to urban retirees versus rural retirees. Urban workers receive much more a month in retirement benefits on average compared to rural/farm workers who receive a pittance. Despite income inequality in China, the absolute income of nearly all income groups has risen quickly. From 1988 to 2018, China's rural and urban populations had per capita increases in real income (i.e., accounting for inflation) of 8–10 times.

Wages

In 1979–1980, the state reformed factories by giving wage increases to workers, which was immediately offset by sharply rising inflation rates of 6–7%. Urban wages rose rapidly from 2004 to 2007, at a rate of 13 to 19% per year with average wages near $200/month in 2007. By 2016 the average monthly wage for workers engaged in manufacturing goods for export was $424. This wage, combined with other costs of doing business in China, had, more or less, equalized any Chinese cost advantage with respect to developed economies.

Taxes

The government's tax revenues primarily result from indirect taxes like the value added tax. China's personal income tax accounts for about 6.5% of tax revenues, as of 2024. It is a progressive tax, with the top income tax bracket is taxed at 45% of income.

External trade

International trade makes up a sizeable portion of China's overall economy. Since 2018, firms have begun a broad reorganisation of supply chains away from China, with 244 documented relocation decisions between 2018 and 2023; Vietnam, Taiwan, the United States, Mexico, Thailand and India were the principal destinations, and only 15.6% of moves constituted reshoring to the home country. Companies predominantly pursued "China-plus-many" strategies that spread production across multiple countries rather than exiting China altogether, with two-thirds (66.4%) of moves involving multi-country portfolios. Executive statements most frequently cited geopolitical tensions (164 mentions) and increases in US-facing tariffs (163) as triggers for relocation, alongside cost and COVID-19 constraints.

In 2010, China became the world's largest exporter, and has continued to be the world's largest exporter as of 2023. It has free trade agreements with several nations, including ASEAN, Australia, Cambodia, New Zealand, Pakistan, South Korea and Switzerland. By 2020, China became the largest trading partner of more than 120 countries. As of 2022, China's largest trading partners are ASEAN, the European Union, Japan, South Korea, Taiwan, Australia, Russia, Brazil, India, Canada, and the United Kingdom.

During the Cold War, a meaningful segment of China's trade with the Third World was financed through grants, credits, and other forms of assistance. However, after Mao Zedong's death in 1976, these efforts were scaled back. After which, trade with developing countries became negligible, though during that time, Hong Kong and Taiwan both began to emerge as major trading partners.

Since economic reforms began in the late 1970s, China sought to decentralize its foreign trade system to integrate itself into the international trading system. In November 1991, China joined the Asia-Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation in the economic, trade, investment, and technology spheres. China served as APEC chair in 2001, and Shanghai hosted the annual APEC leaders meeting in October of that year.

China became a member of the World Trade Organization in 2001. The completion of its accession protocol and Working Party Report paved the way for its entry into the WTO on 11 December 2001, after 16 years of negotiations, the longest in the history of the General Agreement on Tariffs and Trade. However, U.S. exporters continue to have concerns about fair market access due to China's restrictive trade policies and U.S. export restrictions. In October 2019, Chinese Vice Premier Han Zheng promised to further decrease tariffs and remove non-tariff barriers for global investors, he also welcomed multinational companies to invest more in China.

Foreign investment

From 1992 until at least 2023, China has been either the number one or number two worldwide destination for foreign direct investment. In 2022, China attracted $180 billion. As of the end of June 2020, FDI stock in China reached US$2.947 trillion, and China's outgoing FDI stock stood at US$2.128 trillion. Relocation decisions in 2018–2023 often leveraged established supplier relationships—67% of recorded capacity shifts went to existing suppliers overall (including about 60% in Vietnam and about 90% in Mexico)—with a gradual rise in new-supplier entries as firms expanded or built dual supply chains. The total foreign financial assets owned by China reached US$7.860 trillion, and its foreign financial liabilities US$5.716 trillion, making China the second-largest creditor nation after Japan in the world.

China's investment climate has changed dramatically with more than two decades of reform. In the early 1980s, China restricted foreign investments to export-oriented operations and required foreign investors to form joint-venture partnerships with Chinese firms. The Encouraged Industry Catalogue sets out the degree of foreign involvement allowed in various industry sectors. From the beginning of the reforms legalizing foreign investment, capital inflows expanded every year until 1999. Foreign-invested enterprises account for 58–60% of China's imports and exports.

Since the early 1990s, the government has allowed foreign investors to manufacture and sell a wide range of goods on the domestic market, eliminated time restrictions on the establishment of joint ventures, provided some assurances against nationalization, allowed foreign partners to become chairs of joint venture boards, and authorized the establishment of wholly foreign-owned enterprises, now the preferred form of FDI. In 1991, China granted more preferential tax treatment for Wholly Foreign Owned Enterprises and contractual ventures and for foreign companies, which invested in selected economic zones or in projects encouraged by the state.

China also authorized some foreign banks to open branches in Shanghai and allowed foreign investors to purchase special "B" shares of stock in selected companies listed on the Shanghai and Shenzhen Securities Exchanges. These "B" shares sold to foreigners carried no ownership rights in a company. In 1997, China approved 21,046 foreign investment projects and received over $45 billion in foreign direct investment. China revised significantly its laws on Wholly Foreign-Owned Enterprises and China Foreign Equity Joint Ventures in 2000 and 2001. The Vice Minister of Finance Zhu Guangyao announced, foreign investors will be allowed to own up to 51% on domestic financial service companies. Formerly foreign ownership was limited to a 49% stake in these firms.

Chinese investment abroad

Outward foreign direct investment is a new feature of Chinese globalization, where local Chinese firms seek to make investments in both developing and developed countries. It was reported in 2011 that there was increasing investment by capital rich Chinese firms in promising firms in the United States. Such investments offer access to expertise in marketing and distribution potentially useful in exploiting the developing Chinese domestic market.

Since 2005, Chinese companies have been actively expanding outside of China, in both developed and developing countries. In 2013, Chinese companies invested US$90 billion globally in non-financial sectors, 16% more than 2012.

China is willing to invest in riskier countries.

During the administration of Xi Jinping, outbound foreign investment and infrastructure projects have often been construed as part of the Belt and Road Initiative. Between 2013 and 2021, the Middle East was a prominent recipient of China's outbound FDI, particularly because of the importance of its energy supplies for China.

There are two ways Chinese companies choose to enter a foreign market: organic growth and Merge & Acquisition (M&A). Many Chinese companies would prefer M&A for the following reasons:

Fast. M&A is the fastest way for a company to expand into another country by acquiring brand, distribution, talents, and technology. Chinese CEOs has been used to growing at 50%+ speed and do not want to spend capital.

China market. China has become the world's largest economy. Many Chinese acquire foreign companies and then bring their products/services to China, anything from premium cars to fashion clothing to meat to Hollywood movies.

Cheap capital access. The huge Chinese domestic market help many Chinese companies accumulated financial capital to do M&A. Chinese government also provides long-term, low-interest capital for companies to expand abroad.

Mergers and acquisitions

From 1993 to 2010, Chinese companies have been involved as either an acquiror or acquired company in 25,284 mergers and acquisitions with a total known value of US$969 billion.

Labor force

With 773 million workers, China's labor force is the world's largest as of 2024.

In January 2016, a two-child policy replaced the one-child policy, which was in turn was replaced with a three-child policy in May 2021. In July 2021, all family size limits as well as penalties for exceeding them were removed.

The All-China Federation of Trade Unions is the country's only legally permissible trade union. Attempts to form trade unions independent of the ACFTU have been rare and short-lived. One notable example is the Beijing Workers' Autonomous Federation formed during the 1989 Tiananmen Square protests and massacre. Martial Law Command Headquarters issued a public notice declaring the BWAF an illegal organization and ordering it to disband on the grounds that Federation leaders were among "the main instigators and organizers in the capital of the counterrevolutionary rebellion.

As of 2024, China has one of the lowest retirement ages among major world economies, with many working women eligible for retirement at 50 and men at 60.

Transportation and infrastructure

Transportation

China has the world's longest and most extensively used high-speed rail network in the world — the network extends over 45,000 kilometers.

China's transportation policy, influenced by political, military, and economic concerns, has undergone major changes since 1949. Immediately after the People's Republic was founded, the primary goal was to repair existing transportation infrastructure in order to meet military transport and logistics needs as well as to strengthen territorial integrity. During most of the 1950s, new road and rail links were built, while at the same time old ones were improved. During the 1960s much of the improvement of regional transportation became the responsibility of the local governments, and many small railways were constructed. Emphasis was also placed on developing transportation in remote rural, mountainous, and forested areas, in order to integrate poorer regions of the country and to help promote economies of scale in the agricultural sector.

Before the reform era began in the late 1970s, China's transportation links were mostly concentrated in the coastal areas and access to the inner regions was generally poor. This situation has been improved considerably since then, as railways and highways have been built in the remote and frontier regions of the northwest and southwest. At the same time, the development of international transportation was also pursued, and the scope of ocean shipping was broadened considerably.

Freight haulage is mainly provided by rail transport. The rail sector is monopolized by China Railway and there is wide variation in services provided. In late 2007 China became one of the few countries in the world to launch its own indigenously developed high-speed train. As rail capacity is struggling to meet demand for the transport of goods and raw materials such as coal, air routes, roads and waterways are rapidly being developed to provide an increasing proportion of China's overall transportation needs.

Some economic experts have argued that the development gap between China and other emerging economies such as Brazil, Argentina and India can be attributed to a large extent to China's early focus on ambitious infrastructure projects: while China invested roughly 9% of its GDP on infrastructure in the 1990s and 2000s, most emerging economies invested only 2% to 5% of their GDP. This considerable spending gap allowed the Chinese economy to grow at near optimal conditions while many South American economies suffered from various development bottlenecks such as poor transportation networks, aging power grids and mediocre schools.

Water supply and sanitation

The situation has been improved greatly. In 2024, proportion of population with basic hygiene services was 97%

Science and technology

According to WIPO, China is the largest source of patent filings globally. China accounts for more than half of global patent contributions.

Science and technology in China has in recent decades developed rapidly. The Chinese government has placed emphasis through funding, reform, and societal status on science and technology as a fundamental part of the socio-economic development of the country as well as for national prestige. China has made rapid advances in areas such as education, infrastructure, high-tech manufacturing, artificial intelligence, academic publishing, patents and commercial applications. China is now increasingly targeting indigenous innovation and aims to reform remaining weaknesses. Its Thousand Talents Plan aims to attract innovative Chinese academics living abroad (as well as some foreigners) back to China in support of its economic innovation goals.

A 2023 Australian Strategic Policy Institute study of what it deemed as 44 critical technologies concluded that China leads the world in 37 of them, including 5G internet, electric batteries, and hypersonic missiles.