How the Chinese Economy Works

The Chinese economy is the second largest in the world, after the United States. It is a mixed economy, with elements of both capitalism and socialism. The government plays a significant role in the economy, but there is also a growing private sector.

Agriculture

Agriculture is a major sector of the Chinese economy, employing about 25% of the workforce. China is a major producer of rice, wheat, corn, soybeans, and cotton. The country is also a leading producer of fruits, vegetables, and livestock.

Manufacturing

Manufacturing is the largest sector of the Chinese economy, accounting for about 40% of GDP. China is a major producer of a wide range of goods, including electronics, textiles, apparel, and machinery. The country is also a major exporter of manufactured goods.

Services

Services are the third largest sector of the Chinese economy, accounting for about 45% of GDP. This sector includes a wide range of activities, such as finance, transportation, real estate, and tourism.

Government

The government plays a significant role in the Chinese economy. The government owns and operates many state-owned enterprises, which are important players in the economy. The government also regulates the economy through a variety of policies, such as tariffs, subsidies, and taxes.

Private Sector

The private sector is growing in importance in the Chinese economy. Private companies are playing an increasing role in manufacturing, services, and other sectors. The government is encouraging the growth of the private sector by reducing regulations and providing support for small businesses.

Challenges

The Chinese economy faces a number of challenges, including:

Inequality: The gap between the rich and the poor is growing in China. Environmental degradation: China is facing serious environmental problems, such as air pollution and water pollution. Political stability: The Chinese government is facing increasing challenges to its authority. Outlook

The Chinese economy is expected to continue to grow in the coming years. However, the growth is likely to slow down as the country faces the challenges mentioned above.

Conclusion

The Chinese economy is a complex and dynamic system. It is a mix of capitalism and socialism, with a significant role for the government. The economy is growing rapidly, but it also faces a number of challenges.

Vale SA faces financial challenges as Chinese economic issues lead to falling iron ore prices, prompting a strategic pivot in its operations.

In the third quarter of 2025, the growth of the real gross domestic product (GDP) in China ranged at *** percent compared to the same quarter of the previous year. GDP refers to the total market value of all goods and services that are produced within a country per year. It is an important indicator of the economic strength of a country. Real GDP is adjusted for price changes and is therefore regarded as a key indicator for economic growth. GDP growth in China In 2024, China ranged second among countries with the largest gross domestic product worldwide. Since the introduction of economic reforms in 1978, the country has experienced rapid social and economic development. In 2013, it became the world’s largest trading nation, overtaking the United States. However, per capita GDP in China was still much lower than that of industrialized countries. Until 2011, the annual growth rate of China’s GDP had constantly been above nine percent. However, economic growth has cooled down since and is projected to further slow down gradually in the future. Rising domestic wages and the competitive edge of other Asian and African countries are seen as main reasons for the stuttering in China’s economic engine. One strategy of the Chinese government to overcome this transition is a gradual shift of economic focus from industrial production to services. Challenges to GDP growth Another major challenge lies in the massive environmental pollution that China’s reckless economic growth has caused over the past decades. China’s development has been powered mostly by coal consumption, which resulted in high air pollution. To counteract industrial pollution, further investments in waste management and clean technologies are necessary. In 2017, about **** percent of GDP was spent on pollution control. Surging environmental costs aside, environmental issues could also be a key to industrial transition as China placed major investments in renewable energy and clean tech projects. The consumption of green energy skyrocketed from **** exajoules in 2005 to **** million in 2022.

The Gross Domestic Product (GDP) in China expanded 4.80 percent in the third quarter of 2025 over the same quarter of the previous year. This dataset provides - China GDP Annual Growth Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

In 2024, the gross domestic product (GDP) of China amounted to around 18.7 trillion U.S. dollars. In comparison to the GDP of the other BRIC countries India, Russia and Brazil, China came first that year and second in the world GDP ranking. The stagnation of China's GDP in U.S. dollar terms in 2022 and 2023 was mainly due to the appreciation of the U.S. dollar. China's real GDP growth was 5.4 percent in 2023 and 5.0 percent in 2024. In 2024, per capita GDP in China reached around 13,300 U.S. dollars. Economic performance in China Gross domestic product (GDP) is a primary economic indicator. It measures the total value of all goods and services produced in an economy over a certain time period. China's economy used to grow quickly in the past, but the growth rate of China’s real GDP gradually slowed down in recent years, and year-on-year GDP growth is forecasted to range at only around four percent in the years after 2024. Since 2010, China has been the world’s second-largest economy, surpassing Japan.China’s emergence in the world’s economy has a lot to do with its status as the ‘world’s factory’. Since 2013, China is the largest export country in the world. Some argue that it is partly due to the undervalued Chinese currency. The Big Mac Index, a simplified and informal way to measure the purchasing power parity between different currencies, indicates that the Chinese currency yuan was roughly undervalued by 38 percent in 2024. GDP development Although the impressive economic development in China has led millions of people out of poverty, China is still not in the league of industrialized countries on the per capita basis. To name one example, the U.S. per capita economic output was more than six times as large as in China in 2024. Meanwhile, the Chinese society faces increased income disparities. The Gini coefficient of China, a widely used indicator of economic inequality, has been larger than 0.45 over the last decade, whereas 0.40 is the warning level for social unrest.

China’s economy is opening up to the outside world. This worries those who fear that country’s huge pool of low-cost labor will drain jobs from U.S. shores, and less expensive goods will spark trade problems. The author points out that not only does China’s untapped market present huge opportunities for U.S. businesses that would surely outweigh any loss of jobs, but the sort of jobs that would move to China left the U.S. a long time ago. And with respect to fair trading practices, China has made much progress.

Top 5 industries with influence coefficient.

Graph and download economic data for Outstanding Total International Debt Securities to GDP for China (DDDM07CNA156NWDB) from 1987 to 2020 about issues, China, debt, and GDP.

Evaluation results of industry network.

Top 5 industries with induction coefficient.

The graph shows national debt in China related to gross domestic product until 2024, with forecasts to 2030. In 2024, gross national debt ranged at around 88 percent of the national gross domestic product. The debt-to-GDP ratio In economics, the ratio between a country's government debt and its gross domestic product (GDP) is generally defined as the debt-to-GDP ratio. It is a useful indicator for investors to measure a country's ability to fulfill future payments on its debts. A low debt-to-GDP ratio also suggests that an economy produces and sells a sufficient amount of goods and services to pay back those debts. Among the important industrial and emerging countries, Japan displayed one of the highest debt-to-GDP ratios. In 2024, the estimated national debt of Japan amounted to about 250 percent of its GDP, up from around 180 percent in 2004. One reason behind Japan's high debt load lies in its low annual GDP growth rate. Development in China China's national debt related to GDP grew slowly but steadily from around 23 percent in 2000 to 34 percent in 2012, only disrupted by the global financial crisis in 2008. In recent years, China increased credit financing to spur economic growth, resulting in higher levels of debt. China's real estate crisis and a difficult global economic environment require further stimulating measures by the government and will predictably lead to even higher debt growth in the years ahead.

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Small and medium-sized enterprises (SMEs) were an important part of China’s economy, but they faced challenges to growth due to financing difficulties. Government subsidies are considered as a potential way to address this problem. This study aims to assess the effectiveness of the Chinese government’s subsidy program aimed at improving the accessibility of financing for SMEs. We analyze a comprehensive dataset of Chinese firms’ subsidy programs from 2011 to 2020. We classify subsidies into unconditional and conditional categories and use fixed-effects regression models to control for the effects of time and between-group variation to more accurately assess the effectiveness of government subsidies. In addition, we use a PSM-DID model to reduce the effect of selectivity bias to more accurately estimate the causal effect of subsidies on financing strategies. We also use a mediated effects model to help understand the mechanisms by which different types of subsidies affect financing strategies. The results show that government subsidies can significantly improve SMEs’ financing ability, but different types of subsidies produce subtle differences. Conditional subsidies support debt financing mainly through incentives, while unconditional subsidies help SMEs improve their equity financing ability through information effects. Furthermore, we find that over-reliance on a single subsidy type may reduce its effectiveness, suggesting a complex relationship between government intervention and SME financing. Thus, well-designed policies are crucial for promoting SMEs and fostering economic growth.

China FAI: Source of Fund: YoY: Year to Date: Self Raised: Share Issue data was reported at 0.000 % in Dec 2011. This stayed constant from the previous number of 0.000 % for Nov 2011. China FAI: Source of Fund: YoY: Year to Date: Self Raised: Share Issue data is updated monthly, averaging 0.000 % from Apr 2007 (Median) to Dec 2011, with 56 observations. The data reached an all-time high of 0.000 % in Dec 2011 and a record low of 0.000 % in Dec 2011. China FAI: Source of Fund: YoY: Year to Date: Self Raised: Share Issue data remains active status in CEIC and is reported by National Bureau of Statistics. The data is categorized under China Premium Database’s Investment – Table CN.OC: Fixed Asset Investment: Source and Use of Fund.

Graph and download economic data for Net Issues of International Debt Securities for Issuers in General Government Sector, All Maturities, Residence of Issuer in China (IDSGAMRINICN) from Q4 1987 to Q2 2025 about issues, China, maturity, sector, debt, Net, residents, securities, and government.

This data package includes the underlying data to replicate the charts, tables, and calculations presented in How China collateralizes, PIIE Working Paper 25-20.

If you use the data, please cite as:

Gelpern, Anna, Omar Haddad, Sebastian Horn, Paulina Kintzinger, Bradley C. Parks, and Christoph Trebesch. 2025. How China collateralizes. PIIE Working Paper 25-20. Washington: Peterson Institute for International Economics.

Top 5 industries with betweenness centrality.

China Treasury Bond: Issue Date: Coupon Rate: Interest-bearing Book-entry: 10 Year data was reported at 3.250 % pa in 21 Nov 2018. This records a decrease from the previous number of 3.540 % pa for 24 Oct 2018. China Treasury Bond: Issue Date: Coupon Rate: Interest-bearing Book-entry: 10 Year data is updated daily, averaging 3.520 % pa from Aug 2004 (Median) to 21 Nov 2018, with 106 observations. The data reached an all-time high of 4.860 % pa in 09 Aug 2004 and a record low of 2.340 % pa in 14 Jul 2006. China Treasury Bond: Issue Date: Coupon Rate: Interest-bearing Book-entry: 10 Year data remains active status in CEIC and is reported by China Central Depository & Clearing Co., Ltd. The data is categorized under China Premium Database’s Money Market, Interest Rate, Yield and Exchange Rate – Table CN.MF: CCDC: Treasury Bond Yield: Primary Market: Daily.

About the Project The KAPSARC Energy Model of China (KEM China) project began in 2014 to study energy and environmental issues in China, focusing initially on the coal supply industry. KEM China has been developed to understand China’s energy economy and fuel mix, how they are impacted by government intervention, as well as their interaction with global markets. It optimizes supply decisions, minimizing fuel and technology costs, while taking into account the effect of government regulation on prices and the environment.Key Points The extraordinary pace of development of China’s coal industry created transportation bottlenecks, which increased the price of delivered domestic coal and impacted global seaborne coal prices. Congestion costs added extra costs of energy supply to the Chinese economy, calculated to be RMB 228 billion in 2011. Debottlenecking has reduced the price of Chinese domestic coal delivered to the coastal regions and contributed to the reduction in global seaborne prices since 2011. Our analysis suggests that the existing tariff structure retains most of the economic efficiency of marginal cost pricing. Though many of the infrastructure expansions delivered strongly positive rates of return, some may represent pre-investment in future needs.

China recorded a Government Debt to GDP of 88.30 percent of the country's Gross Domestic Product in 2024. This dataset provides - China Government Debt To GDP - actual values, historical data, forecast, chart, statistics, economic calendar and news.