(Last updated: 23 Jun 2011)

Country facts

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

Economic climate

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.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade - Country economic fact sheet)

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 Kuomintan (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:

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.

Please see the Department of Foreign Affairs and Trade - Country economic fact sheet for key trade statistics.