Economic situation In 1994 China achieved an economic growth rate of about 12% with an Economic data inflation rate of more than 24%. Progress occurred predominantly in the Special Economic Zones on the coast and in the rural industrial developments of the richer provinces. State-controlled industry is continuing to decline in proportion to the private sector.
Price inflation reached 26% and living costs rose as a result of deregulation of food costs and a reduction in state subsidies on rents.
Since the reform campaign foreign investors have shown more interest in China. China travel maps english The biggest investor is Hong Kong, followed by Taiwan, Japan and the USA. 90% of investment, however, goes to the coastal provinces. With an inadequate infrastructure and rigid bureaucracy, inland provinces are still unable to compete fairly.
Economic growth has brought with it a number of problems prompting government measures to countersigns of overheating in the economy (high inflation, large budget deficit) and structural weaknesses. Consequently most Special Economic Zones by the coast have been required to relinquish their special economic status. Furthermore, there is growing chasm between the prosperity of coastal provinces and the hinterland. The differences between income levels is widening. According to statistics supplied by the World Bank, 120 million Chinese live in poverty. A further problem is the inefficiency of the state-run industries 45% of which are loss-making and kept afloat only by subsidies. Their contribution to China’s gross domestic product is negligible compared with that of the private sector (well above average). Many workers who have lost their jobs as a result of the reforms are now leaving their home towns and pouring into the coastal regions together with the impoverished peasants. These huge movements in population (150 million people) and the new “capitalist” way of thinking are threatening to destroy the social fabric in which solidarity and a sense of community are valued qualities. Corruption, violent crime and speculation have been the consequence of these latest developments.
In 1994 China’s foreign trade balance was in surplus, the country’s principal exports being light engineering goods, clothing and textiles in which sectors highly competitive labour costs led to an increase in market share. Machinery and transport equipment are the main imports, accounting for more than half the total. Japan heads the list of China’s trading partners as far as imports are concerned, followed by Taiwan and the US; in the case of exports the list is topped by Hong Kong, the US and Japan in that order. Trade with the EU continues to expand and in 1993 amounted to 13% of the import and export total.
