CHINA'S ECONOMY: CHINA'S THE WORLD'S TOP EXPORTER, THE NEW SECTORS TO DRIVE CHINA'S ECONOMIC GROWTH, CHINA'S REAL ECONOMY HAS ALSO DECREASED WITH $19 TRILLION IN STATE ASSETS,HERE IS HOW CHINA COULD DIFFUSE IT'S MASSIVE DEBT.

China is the largest export economy in the world. China has 1.37 billion people, more than any other country in the world. China is still a relatively poor country in terms of its standard of living. Its economy only produces $15,400 per person, compared to the U.S. GDP per capita of $57,300.The low standard of living allows companies in China to pay their workers less than American workers. That makes products cheaper, which lures overseas manufacturers to outsource jobs to China.

China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.China built its economic growth on low-cost exports of machinery and equipment. Massive government spending went into state-owned companies to fuel those exports. These companies dominate their industries. They include the big three energy companies: PetroChina, Sinopec and China National Offshore Oil Corporation. These state-owned companies are less profitable than private firms. They return only 4.9 percent on assets compared to 13.2 percent for private companies.China developed cities around these factories to attract workers. As a result, one-fourth of China's economy is in real estate. The government also funded construction of railways and other infrastructure to support growth. China is the largest export economy in the world. In 2016, China exported $2.06T and imported $1.32T, resulting in a positive trade balance of $736B. In 2016 the GDP of China was $11.2T and its GDP per capita was $15.5k.The top exports of China are Computers ($136B), Broadcasting Equipment ($115B), Telephones ($84.3B), Integrated Circuits ($54.8B) and Light Fixtures ($29.7B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Integrated Circuits ($128B), Crude Petroleum ($116B), Gold ($62.6B), Iron Ore ($58B) and Cars ($44B).

The Industry is 72.8% of China’s gross domestic product (GDP) . Industry (including mining, manufacturing, construction, and power) contributed 46.8 percent of GDP and occupied 27 percent of the workforce . As of 2015, the manufacturing industrial sectors contribute 40% of China's GDP. The manufacturing sector produced 44.1 percent of GDP and accounted for 11.3 percent of total employment . China is the world’s leading manufacturer of chemical fertilizers, cement, and steel.Chinese industrial companies, most of which are medium to large cap. Top holdings including: Weichai Power, Anhui Conch Cement Company, and China National Building Material. CHII's sector breakdown includes: 63% industrial materials, 25% business services, and 12% consumer goods. Over the past decade Chinese industry and manufacturing sectors have seen unpredicented growth. As China positions itself as the world's manufacturing center, and with still more room to grow.

China’s economy has always depended heavily on investment into fixed assets such as roads, railways and apartment complexes. But over the past decade, as cheap exports’ share of the economy has collapsed and as household consumption has continued to slide, this investment has become one of the primary drivers of economic growth and employment in China  and, by extension, a cornerstone of its stability.That much of China’s fixed asset investment comes from the country’s biggest state-owned banks (including the “Big Four,” which answer directly to Beijing) not only highlights its importance as a policy tool but also explains why Chinese leaders have wielded it so liberally to offset weaknesses in other areas of the economy.Of course, the funds for such ample investment have to come from somewhere, and over the years Beijing has gotten them through many different means. From slashing benchmark interest rates and bank reserve requirements to boosting domestic equity markets and direct spending, the Chinese government has paid for its purchases in several ways. The largest trading nation and the most popular destination of foreign direct investment in th e world. Many economists are optimistic about China’s growth potential  China is set to surpass the U.S. as the leading economy in a decade. The Chinese growth miracle started with agriculture in the late 1970s. The essence of the reform was collectivization of agricultural production and land user rights . The most important part of the reform was officially called the household responsibility system (HRS). HRS granted farmers land cultivation rights and empower them to make their own production decisions. With better aligned incentives, agricultural production and rural incomes witnessed a dramatic increase in the ensuing years. During the first period of HRS implementation between 1978 and 1984, output in the Chinese agricultural sector increased by more than 61% and HRS accounted for 49% of the output growth . In a few years, hundreds of millions of farmers were released from their land, providing the nonfarm sector with a seemingly unlimited l abor supply.Economic relations between China and Africa, one part of more general Africa–China relations, began centuries ago and continue through the present day. Nowadays, China seeks resources for its growing population, and African countries seek funds to develop their infrastructures.China has become Africa’s largest trade partner and has greatly expanded its economic ties to the continent, but its growing activities there have raised questions about its noninterference policy. Over the past few decades, China’s rapid economic growth and expanding middle class have fueled an unprecedented need for resources. The economic powerhouse has focused on securing the long-term energy supplies needed to sustain its industrialization, searching for secure access to oil supplies and other raw materials around the globe. As part of this effort, China has turned to Africa.

CHINA IN AFRICA : Chinese migrants have changed the face of South Africa. Now they’re leaving.Zhu Jianying, the owner of a home goods shop in southwest Johannesburg, plans to leave South Africa as soon as she can. Her store is making less than half of what it was two years ago when it first opened. She worries about security Chinese traders like herself are often targeted. She and her family hardly ever leave the mall that houses her store and their apartment on an upper floor.Ethiopia Draws Asia Manufacturing Interest .For a long time, economists have discussed East Africa's chances to "get a foot in the door" of global manufacturing. China, as the world's leading hub for mass production, has become expensive due to rising labor and energy costs. Meanwhile, East Africa offers a large young and cheap labor force. Until recently though, delays at ports, bad roads, power outages and political instability have prevented a shift from happening. But now, the Ethiopian government is building new industrial mega-zones that have successfully attracted some foreign investors who are moving manufacturing from China.

China’s economic growth was not even across space. In order to better utilize China’s comparative advantage of cheap labor in the international market, China adopted an export - oriented development strategy. It set up numerous special zones in the coastal provinces to attract foreign direct investment (FDI). From 1978 to the mid - 2000s, the coastal areas attracted most of FDIs and created millions of jobs. China’s entry to the World Trade Organization (WTO) further increased the trend to global integration. As the coastal provinces became a growth pole, workers from interior regions migrated there to seek better - paid jobs. The total number of migrants increa sed by nearly fivefold from merely 25 million in 1990 to 145 million in 2009.However, the progress against poverty has been uneven over time and across space. Most of the drop in poverty happened in the early 1980s when the HRS reform took place. Consequently, the rural poverty rate dropped sharply from 76% in 1980 to 24% in 1986 b ased on the international poverty line of 1$ per day (Ravallion and Chen, 2007) . In other words, more than 400 million people moved out of poverty in a short, six - year spell. Agricultural growth played a key role in China’s massive poverty reduction. After wards, however, the pace of poverty reduction stalled in the 1990s and early 2000s during the period of SOE reform. Urban poverty emerged as a problem . In the past decade, thanks to rising wages and the introduction of social safety net programs, poverty rate showed a steady decline . Yet, there are still pockets of poverty, mainly concentrated in the western region.Previously, debt and investment fueled China's expanding economy. Chinese leaders know that future growth cannot rely on debt and investment alone, and spending measures will not be a part of the plan to fuel the economy. Tampering with the country’s interest rate could harm the economy further. Measures to decrease the housing supply could negatively impact China's financial market and industry sector. High levels of debt have harmed economic output.With $19 trillion in state assets; here is how China could defuse its massive debt bomb.China’s state researchers say government debt isn’t as risky as it might look. Scholars at the Chinese Academy of Social Sciences, a government think tank in Beijing, analyzed several years worth of government balance sheets and concluded that the state’s massive assets can offset the debt threat. CASS calculates in a new report that government assets stood at about 125.4 trillion yuan ($19 trillion) in 2015, or about 1.8 times GDP. Holdings include fixed assets such as buildings and cars, resources like land and oilfields, and cold hard cash in government deposits, the social security fund, and financial institutions.Still, those aren’t easily liquidated in a crisis, and the researchers also warn of hidden dangers. They cite so-called implicit debt, or obligations that have an implicit state guarantee. That includes bond issuance by quasi-governmental organizations like policy banks, state railway debt, contingent local government liabilities, non-performing loans by state-owned financial institutions, hidden foreign debt, and a potential shortfall in the country’s pension fund. “China’s government sits on many resources available for use, and has great resilience and flexibility to fend off risks,” researchers wrote. They estimate that the ratio of government net assets to gross domestic product is greater than 80 percent, offering a generous cushion against financial instability.

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