ECONOMY OF THE PEOPLE'S REPUBLIC OF CHINA
Since normalizing relations with the United States of America, the People's Republic of China has developed into an economic powerhouse. In 2012, the PRC became the world's largest exporter. Less than three years later, it became the world's largest trading nation. In 2018, China's GDP (purchasing power parity) stood at $25.36 trillion.
COVID-19 has had significant negative impacts on state actors from across the world, and the PRC is no exception. Official government numbers from April of 2020 broadcasted a nearly 6.8% decline in GDP for the first quarter of the year, the first ever contraction since China began reporting quarterly GDP data in 1992. Of course, a deep contraction isn't surprising given the massive quarantine and lockdown implemented to contain the deadly virus. More concerning for the Communist Party, however, is the rate at which countries are shifting their supply chains out of China. Encouraging an increase in domestic consumption to offset a decrease in global demand will prove to be a major issue for the central government throughout the 2020s.
Economy Type: Socialist Market Economy
GDP (Real Growth Rate): 6.1%
Gross National Savings: 44.6%
Government Consumption: 17.1%
GDP (Purchasing Power Parity): $25.27 Trillion
GDP (Per Capita): $19,504.00
Household Consumption: 38.8%
Exports of Goods and Services: 30.55%
The People's Republic of China (PRC) has maintained a previously unimaginable level of economic growth since the 1970s. Yet, despite impressive numbers, the PRC's has several fundamental and potentially catastrophic issues beneath the surface.
- Aging Population -
The People's Republic of China boasts the largest population on earth. With nearly 1.393 billion citizens, it is undoubtedly an economic powerhouse to be reckoned with. However, the PRC has an increasingly old population. In fact, The Intelligence Ledger assesses that China's dependency ratio for retirees alone can be as high as 38% by 2050. Analysts are correct in noting that a lack of hands may not necessarily cause production to fall, especially given increased reliance upon artificial intelligence and robots. An older population, however, means more debt and less domestic consumption. Furthermore, the Chinese government may have to foot the bill for retirement care through increased stimulus spending.
- Rising Unemployment -
Since it began publicly releasing economic data, the People’s Republic of China has officially maintained an unemployment rate of 5-6%. This isn’t a bad number to be around, especially given the sheer size of China's population. However, official government numbers are notoriously deceptive. Prior to the COVID-19 pandemic, unemployment in China was a mere 5.2%. When lockdowns was instituted and demand evaporated, unemployment only rose to 5.9%. Given the fact nearly 460,000 Chinese businesses declared bankruptcy, it is hard to believe that unemployment only rose by 0.7%. Furthermore, employment figures published by the central government do not include the nearly 300,000,000 imported foreign workers in the manufacturing, construction, and other low wage sectors. According to economist Zhang Bin of the Chinese Academy of Social Sciences, their inclusion would mean nearly 80 million people could’ve been unemployed as a result of COVID-19.
Due to the severity of the situation, The Intelligence Ledger assesses unemployment will remain a major issue in the PRC throughout the opening years of the 2020s.
- Pollution -
Pollution is a major problem throughout the countryside and metropolitan areas of the People’s Republic of China. With little regulation and enforcement of standards, Chinese industrialists have made their country’s air unbreathable, water undrinkable, and land toxic in many areas of the country. Not only does this make life for the average citizen extremely difficult, but is resulting in the loss of arable land due to erosion and disintegration.
Although China has attempted to curb the issue, there is still an extremely long way to go before change is effective.
- Privacy -
Beijing's imposition of an unwanted national security law upon Hong Kong highlighted a growing concern about Chinese disregard for privacy. While Chinese tech conglomerates and the Chinese government may claim user data is confidential, reality says otherwise.
Chinese law requires any company within China to assist the security state in achieving government objectives. In 2014, China instituted the Counter-Espionage Law, which states, "when the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organizations and individuals shall provide it truthfully and may not refuse." The 2017 National Intelligence Law goes further, requiring that, "any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law."
India and the United States of America have already taken action to target Beijing's abuse of user data. Last year, the Department of Defense ordered that TikTok be deleted from government phones. They also highly recommended that government employees delete the application from personal devices. Early in 2020, Chinese tech conglomerates Huawei and ZTE were designated by the Federal Communications Commission (FCC) as, "national security threats."' This means that the United States government can not purchase, repair, maintain, or support any equipment from the two state-support companies. It is also an open secret that Washington is considering banning several Chinese apps from US devices, including the popular social media app TikTok. If more states prove unwilling to allow China access to their tech markets, the communist nation may suffer a severe economic downturn.
- Economic Inequality -
China's swift and unabated economic growth has not benefited all Chinese citizens. The majority of profits have flowed to the nation's coastal regions in the south and east, creating a growing rift between these two and the north. Although there has been a significant decrease in poverty along the coast, the northern regions continue to scrape by and are unable to enjoy the fruits of wealth.
The uninterrupted flow of energy plays a major role in the economic development of a nation. This fact is only amplified for the PRC. Due to the nation's sheer geographic and population size, it has immense energy needs. In fact, the PRC is the world’s largest consumer of energy and largest emitter of carbon dioxide.
China relies predominantly on coal for energy production. In 2018, the black rock made up nearly 60% of the PRC’s energy use and was the main cause of 80% of China’s enormous emissions. Sensing that reliance upon coal may cause more harm than good in the long run, Beijing has increasingly funded renewable energy projects. One notable examples the Three Gorges Damn in China’s Hubei province, which produces nearly 22,500 megawatts of electricity. China has also increased its investments in crude, solar, natural gas, and nuclear energy production.
Population w/ Access to Electricity: 100%
Total Amount of Electricity Consumption: 5.564 trillion kWh
Total Amount of Electricity Exported: 6.185 billion kWh
Total Amount of Crude Oil Imported: 6.71 million bbl/day
Total Amount of Electricity Produced: 5.883 trillion kWh
Total Amount of Electricity Imported: 18.91 billion kWh
Total Amount of Crude Oil Production: 3.773 million bbl/day
Total Amount of Crude Oil Exported: 57,310 bbl/day