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China has, since 2010, been the second largest economy in the world after the United States. However, since 2014, in terms of purchasing power it is the biggest one. The gross domestic product of China was 16.08 trillion USD in 2013. In addition, China holds the world's largest foreign currency reserves (around 3.9 billion USD).
In 2014 the Chinese economy grew at a rate of 7.4 percent, which by international standards is ranked as very high, although the staggering double-digit growth of recent years wasn’t achieved. The long-term growth trend will continue to weaken due to the demographic development of an aging population. Consequently, fewer people are entering the labour market to stunt the growth potential of China. In the wake of such forecasts, the Chinese government has decided to get rid of its infamous One Child Policy.
The Chinese foreign trade has increased more than tenfold in the last 12 years. The trade surplus amounted to approximately 382 billion USD or 3.8 percent of gross domestic product in 2014 (official figures from the Chinese Ministry of Commerce, MOFCOM). China thus remains the world champion of exports, ahead of the USA and Germany. The largest markets for Chinese goods in 2014 were, the United States (16.9 percent of exports), European Union (15.83 percent), Hong Kong (15.5 percent) and ASEAN countries (11.61 percent).
China's economy is very diversified and is dominated by the manufacturing and agricultural sectors.
Why invest in China?
- China has an extensive network of railway lines, highways, motorways and airports that allows for easy transportation of goods both within and outside the country. In addition, China is also working towards establishing an international trade corridor with Pakistan that would allow its goods easier access to the Middle East and Europe by going through the Gwadar Port.
- China has a highly skilled workforce. On average, 6 million students graduate from college annually. This allows for an increased influx of potential employees while putting a downward pressure on wages. Furthermore, most of the Chinese graduates are bilinguals and are fluent in both English and Mandarin.
- Despite the growth rate slowing down in recent years, China will still be the world’s fastest growing economy for at least the next decade. Such growth potential, coupled with the political stability offered by the Communist Part of China, makes the country an ideal destination for foreign investment.
- The middle-income group in the Chinese market is huge which allows for increased demand for technology and goods that improve the overall quality of life.
- China’s huge economic and geographical footprint makes it the regional superpower in Asia. For this reason, it has Free Trade Agreements and other economic cooperation endeavors in force with most of the continent’s growing economies. Therefore any business operating in China can have easy access to these countries.
- China offers very attractive tax incentives, no interference in export-related activities and accelerated company registration schemes in specific Free Trade Zones in the country.