Country overview

(Last updated: 13 Dec 2007)

Country facts

Capital city:	Beijing
Surface area:	9,561,000 sq km
Population:	1,314.1 million
Official language(s):	Mandarin
Government:	Communist Republic
Australian exports to China:	A$22,800 million
Australian imports from China:	A$27,137 million
China's principal export destinations:	USA, Hong Kong, Japan (Australia 15th)
China's principal import sources:	Japan, Republic of Korea, Taiwan (Australia 7th)

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

China’s economy is playing pivotal role in fuelling global economic growth. According to figures released by the International Monetary Fund in July 2007, China’s economic growth rate is estimated to reach 11.2 per cent in 2007, and 10.5 per cent in 2008. If these estimates are attained, China’s economy will achieve double-digit growth rates for the sixth consecutive year.                

Deng Xiaoping, one of China’s modern leaders, set the country on a transitionary path to a market based economy in December 1978, when he instigated an ‘open door policy’. His idea was to modernise China by encouraging foreign trade and investment and stimulating the country’s economic growth. 

China’s ‘open door policy’ also coincided with a shift in thinking from a centralised planned economy to a so-called ‘socialist market economy with Chinese characteristics’.  Consequently, this unique combination of Marxist ideology mixed with market liberalisation has contributed towards China’s economic growth. 

China has the fastest-growing manufacturing sector in the world, which has been propelled by extensive foreign direct investment, cheap land and a low-cost labour-intensive base.  These conditions have given rise to an increase of foreign enterprises relocating manufacturing operations to China, and a boom in demand for resources and raw materials.

The country’s service sector continues to improve and expand with the rise in prosperity and foreign investment. Consequently, there has been a structural shift in labour from agriculture to the manufacturing and services sectors, and also a shift from rural to urban living.

The Chinese authorities have placed an emphasis on ‘building a harmonious society’ as China reorientates towards a market based economy. While almost all Chinese have benefited from a rise in income levels and living standards, growth and reform have brought on fundamental structural shifts in China’s economy. Some of the challenges that the Chinese authorities face includes: reform of the State Owned Enterprises and banking system, widening income gaps, rising inflation and pollution levels.

Key economic indicators and statistics (2006)

• GDP – US$2,644.6 billion
• GDP per capita – US$2,013
• Real GDP growth – 11.1 per cent
• Inflation – 1.5 per cent

Political climate

Chinese politics is dominated by the Communist Party of China (CPC). While there are some minor political parties, they work in harmony with the CPC and under its leadership.  The CPC came to power on 1 October 1949 upon defeating the Kuomintang (Nationalist Party), and subsequently founded the People’s Republic of China (PRC). From this point in time, the CPC has controlled all aspects of political power in China.   

The Chinese Government works subordinate to the CPC and its primary function is to implement CPC policies. There are two major instruments of state (government) in China, the National People’s Congress (NPC) and the State Council. In recent years, efforts have been made by China to decentralise power from the CPC leaders to government institutions.            

Under the leadership of the CPC, the National People’s Congress is the highest organ of state power in China. The NPC is comprised of leaders from provinces, autonomous regions and municipalities, which meets annually to agree on new policy and legislation presented by the State Council. Every five years, a National Congress of the Party is held, and the NPC selects the Central Committee, which in turn appoints the Politburo Standing Committee (PBSC).           

The PBSC is the highest tier within the CPC. This Committee is comprised of senior-level Communist Party officials, and is responsible for making key strategic policy decisions.

The State Council is China’s highest organ of state administration, and is responsible to
the NPC and its Standing Committee. The State Council has a number of subordinate Ministries, administrative bodies and bureaus that carry out China’s administrative work. 

Links to China’s state administrative bodies can be found on http://china.org.cn.

Key leaders of China include:

Head of State/General Secretary of the Central Committee of the CPC	President Hu Jintao
Head of Government/Premier of the State Council	Prime Minister Wen Jiabao
Chairman of the Standing Committee of the NPC	Wu Bangguo
Vice President	Zeng Qinghong
Vice Premiers	Wu Yi, Zeng Peiyan, Hui Liangyu
Minister of Foreign Affairs	Yang Jiechi
Minister of Finance	Jin Renqing
Minister of National Defence	Cao Gangchuan

Trade relations and statistics

Australia's relationship with the People's Republic of China (PRC) is one of the government's most important foreign policy priorities. Considerable effort has been put into strengthening and broadening the bilateral relationship by both the Australian and Chinese governments.   

Two-way trade between Australia and China has increased significantly over the past decade. As a result, China is now Australia’s second-largest merchandise trading partner behind Japan. Figures show that bilateral merchandise trade grew from around $8 billion in 1996 to around $46 billion in 2006. 

The Australian and Chinese governments signed a Trade and Economic Framework (TEF) agreement in October 2003, and subsequently conducted a joint Free Trade Agreement (FTA) feasibility study which was completed in March 2005.

China is a permanent member of the United Nations Security Council and sees an increasing international role both globally and in the region. China is also a member of the World Trade Organisation and the Asia Pacific Economic Cooperation.

Major Australian exports to China (2006-07):

• Iron ore – A$8,359 million 
• Wool – A$1,739 million  
• Copper ores – A$915 million  
• Coal – A$507 million

Major Australian imports from China (2006-07):

• Clothing – A$3,398 million  
• Computers – A$2,727 million  
• Telecommunications equipment – A$1,897 million 
• Toys, games and sporting goods – A$1,405 million

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)