Article by Jim Trippon Editor of China Stock Digest

China Economy OverviewThe Chinese economy is one of the fastest growing economies in the world. China has exhibited a consistent growth of more than 9 percent since 1978 with the per capita income swelling by four times since 2001. The economy of China is expected to grow in the range of 7 to 9 percent over the next decade, which can be termed as a strong growth rate compared to leading economies like America and Japan.

Over the years, the development in China and the growth of Chinese economy has placed it strongly on the global map. Consumption patterns in China have made a huge impact on the global economy. One of the reasons for rising in oil prices can be attributable to the surge in demand from China. The significant growth of automobiles has lead to higher dependence oil imports. Chinese oil consumption was 6.6 million barrels per day (bpd) in 2005 that is approximately 33 percent of U.S. consumption, but oil imports of China is likely to increase significantly and is projected to be in the range of 9 to 13 million bpd by 2020.

The Chinese economy revolution started in 1978 when the Chinese government opened its gate for foreign investments. Some of the analysts closely studying the Chinese economy expect it to become larger than the U.S. economy in the next two decades, while another section of the analysts believe the same could be achieved in the next ten years time. According to information provided by the State Council For Research Center, China, the Chinese economy is projected to grow at 8 percent annually during its 11th five-year plan. China’s gross domestic product (GDP) is projected to reach $ 2.3 trillion and $ 4.7 trillion by the end of 2010 and 2020 respectively. China is expected to experience rapid industrialization over the next 15 years, which in turn indicates of higher consumption of resources and energy needs.

The Chinese economy comprises a 32 percent contribution from the services sector; approximately 53% is contributed by industry and the remaining 15 percent from forestry and agriculture. Primary exports made in China include toys, clothes, machinery and equipment. Three main countries, the United States, Hong Kong and Japan account for more than 50 percent of the exports.

Speedy growth in fixed asset investment, higher rate of savings coupled with sizeable FDI inflow will act as key drivers of economic development in future. Growth of the Chinese economy is driven by combining multiple factors that have been built on higher rates on investments made across the all the sectors. The Chinese economy has experienced outstanding foreign direct investments (FDI) steadily over the recent past. FDI in the Chinese economy have increased from $ 40.7 billion in 2001 to $ 70.3 billion in 2007 with investments primarily in the manufacturing sector.

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