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Setting up a Business in China |
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» China
Business News
About China
China is the world's fourth-largest country (after Russia, Canada, and
US). It has a population of about 1.3 billion and an estimated population
growth of 0.87%. Its GDP, based on purchasing power parity, equates to
US$ 6 trillion, making it the second largest economy in the world.
In late 1978 the Chinese leadership began moving the economy from a centrally planned economy to a more market-oriented system.
Whereas the system operates within a political framework of strict Communist
control, the economic influence of non-state organisations and individual
citizens has been steadily increasing. The authorities have switched to
a system of household and village responsibility in agriculture in place
of the old collectivisation, increased the authority of local officials
and plant managers in industry, permitted a wide variety of small-scale
enterprise in services and light manufacturing, and opened the economy
to increased foreign trade and investment.
The result has been a quadrupling of GDP since 1978.
Agriculture and industry have posted major gains, especially in coastal
areas near Hong Kong and opposite Taiwan, where foreign investment has
helped spur output of both domestic and export goods.
Access to the WTO strengthens China's ability to maintain sturdy growth
rates, and at the same time puts additional pressure on the hybrid system
of strong political controls and growing market influences. Beijing
has claimed 7%-8% annual growth in recent years. However, China faces a set of
substantial domestic economic policy challenges - banks, social welfare
and agriculture - that will require considerable further effort on the
part of the Chinese authorities to ensure continued economic success over
the medium term.
China is the largest recipient of foreign direct investment ("FDI") among
developing countries and looks set to overtake the US as the largest recipient
in the world. The top investors, in decreasing order of investment, are
Hong Kong, USA, BVI, Japan, Taiwan, Singapore, Republic of Korea, UK,
Germany, France, Holland, Cayman Islands, Macao, Australia, and Canada.
Many foreign firms have been attracted to China by the potentially huge
domestic market, despite widespread poverty and unemployment. Other investors
have specifically entered China in order to produce goods for export.
These firms view China as part of their global production strategies,
and seek to take advantage of China's undoubted low labour costs. By 2001,
foreign invested enterprises accounted for half of China's exports.
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