Economy of China

This article is about the economy of the People's Republic of China. For the economy of the Republic of China, see Economy of Taiwan. For other uses, see Economy of China (disambiguation).

The People's Republic of China (PRC) has a socialist market economy, which includes industrial policies and long-term five-year plans. China has the world's second-largest economy by nominal GDP. Since 2016, it has been the world's largest economy when measured by purchasing power parity (PPP). In 2025, China made up 19% of the global economy in PPP terms and around 17% in nominal terms. Its developing economy includes state-owned enterprises (SOEs), mixed-ownership companies, and a large private sector. Together, these contribute about 60% of GDP, 80% of urban jobs, and 90% of new jobs.

China is the world's largest manufacturing industrial economy and a major exporter of goods. It is often called the "powerhouse of manufacturing," "the factory of the world," and a "manufacturing superpower." Its production is larger than that of the nine next largest manufacturers combined. Exports as a percentage of GDP are around 20%, and China is the largest trading nation in the world. It plays a major role in international trade. Manufacturing is moving toward high-tech industries such as electric vehicles, renewable energy, telecommunications, and IT equipment, and services have also grown as a share of GDP. China is the world's largest high technology exporter. As of 2023, the country spends around 2.6% of GDP on research and development across many sectors of the economy. It is also the world's second-largest importer of goods, though it is a net importer of services.

China has a network of free trade agreements with several countries, but the Regional Comprehensive Economic Partnership (RCEP) accounts for most of its trade connections. Of the world's 500 largest companies, 142 are headquartered in China. The country has three of the world's top ten most competitive financial centers and three of the ten largest stock exchanges, measured by both market capitalization and trade volume. China has the second-largest financial assets in the world, valued at $28.3 trillion as of 2024. In 2025, it was one of the largest recipients of foreign direct investment (FDI) in the world, with inflows of $107 billion. It has the third largest outbound FDI, at US$192.20 billion for 2024. China's economic growth has faced a range of challenges in the 2020s because of a property crisis.

China has the world's largest labor force, with 773 million workers as of 2024, the world's largest. However, this workforce is shrinking because of its rapidly aging population. In March 2026, Forbes estimated that China ranked second in the world, after the U.S., in total number of billionaires and total number of millionaires, with 539 Chinese billionaires. The Hurun Global Rich List estimated that China ranked first, with 1,110 billionaires. China also has 5.3 million millionaires as of 2026, the second highest number after the U.S. Public social expenditure in China was around 10% of GDP.

History

Main articles: Economic history of China before 1912, Economic history of China (1912–1949), and Economic history of China (1949–present)

China was once one of the world's foremost economic powers for most of the two thousand years of Pax Sinica, from the 1st until the 19th century. Until the mid-1800s, China produced around one-quarter to one-third of the world's economic output. At the end of the Chinese Civil War, the economy was badly damaged. As the defeated Kuomintang retreated to Taiwan, they took gold, silver, and the country's dollar reserves, and trade was destroyed. From 1949, the People's Republic of China (PRC) kept a self-sufficient, state-led economy focused on fast industrial growth until the reform and opening up in 1978. The Great Leap Forward and the Great Chinese Famine harmed the economy. Economic reforms began under Deng Xiaoping, and China became the world's fastest-growing major economy, with growth rates averaging 10% over 30 years. Many scholars describe the Chinese economic model as authoritarian capitalism, state capitalism, or party-state capitalism under the general secretaryship of Xi Jinping.

China helped more people escape extreme poverty than any other country in history, reducing it by 800 million people between 1978 and 2018. Its current account surplus grew from $5.67 billion in 1982 to $317 billion in 2021. China moved beyond simple goods like clothing and footwear to make computers, pharmaceuticals, and automobiles. Its factories produced $3.7 trillion in real manufacturing value, more than the US, South Korea, Germany, the UK and France combined. China's manufacturing sector benefits from a large domestic market and strong supply chains. The economy was one of the few major economies to grow in 2020, but it had one of its worst performances in decades in 2022 because of the COVID-19 pandemic. The International Monetary Fund (IMF) expected China to remain one of the fastest-growing major economies in 2023. China's economy adds to rising greenhouse gas emissions and is strongly affected by the adverse impacts of climate change, although its emissions per person remain much lower than those of developed economies like the United States.

Regional economies

See also: Megalopolises in China and List of cities in China

China's transportation system is uneven. Differences in natural and human resources and in infrastructure have created big differences between the economies of its regions. The growth of Shenzhen has led people to call it the world's next Silicon Valley. Economic development has usually been faster in the coastal provinces than in the inland areas, and per capita income varies a lot from region to region. The three richest regions are the Yangtze Delta in East China, the Pearl River Delta in South China, and the Jing-Jin-Ji region in North China. Chinese government policy aims to remove the obstacles that slow growth in these wealthier regions. By 2035, four Chinese cities, Shanghai, Beijing, Guangzhou, and Shenzhen, are expected to be among the world's top ten cities by nominal GDP, according to a report by Oxford Economics.

Main article: List of Chinese provincial-level divisions by GDP

Main articles: Economy of Hong Kong and Economy of Macau

Under the one country, two systems policy, the former British colony of Hong Kong and the former Portuguese colony of Macau keep a capitalist economic system that is separate from mainland China. China also has several plans to help its less developed regions. China Western Development aims to improve the economy of the western provinces through investment and the development of natural resources. Revitalize Northeast China aims to renew the industrial bases in the northeast, which covers Heilongjiang, Jilin, and Liaoning, as well as five eastern prefectures of Inner Mongolia. The Rise of Central China Plan aims to speed up development in six central provinces: Shanxi, Henan, Anhui, Hubei, Hunan, and Jiangxi. Finally, the Third Front was a Cold War-era effort that focused on the southwestern provinces.

Government

See also: Five-year plans of China

The Chinese Communist Party (CCP) describes China's economic system as a socialist market economy. The central government uses five-year plans to set its economic priorities. The fifteenth five-year plan (2026–2030) is now being carried out, after the fourteenth five-year plan (2021-2025), which focused on consumer spending and technology. The government plays a central role in the economy, and local governments have a lot of power to make economic decisions. They may offer subsidies or tax breaks to attract businesses. State-owned enterprises are a large part of the economy, and the government keeps control of key industries such as infrastructure, telecommunications, and finance, even though the economy has become much more market-based since reform and opening up.

China's goals include becoming a moderately prosperous society in all respects by 2021 and a "strong, democratic, civilized, harmonious and modern socialist country" by 2049. Some people question the accuracy of official economic data. Some Western academics and institutions have said China's growth may be higher than official figures show. Others have said the data is reasonably accurate. Former Premier Li Keqiang once said he was not confident in GDP estimates, so he created the Li Keqiang index as another way to measure economic performance. China has also shifted its approach to private businesses, moving away from sudden crackdowns toward a more stable, regulated system. Government debt is another topic discussed by analysts and the International Monetary Fund.

Main article: State-owned enterprises of China

Main article: National debt of China

Main article: Taxation in China

Main article: Corruption in China

Data

See also: Historical GDP of China

The following table shows the main economic indicators in 1980–2024 (with IMF staff estimates in 2025–2029). Inflation below 5% is in green.

Inflation in China has risen and fallen over time. As of 2025, China had experienced three inflation peaks: 1987–1989 (18.8%), 1993–1996 (peaking at 24%), and 2008 (8.2%). In April 2026, China's National Bureau of Statistics (NBS) reported that the producer price index rose by 2.8 percent compared with a year earlier. This was linked to higher global energy and raw material prices caused by the war in the Middle East.

Chinese investment has always been highly cyclical. Most investment is carried out by state-owned entities, and most of these are controlled by local governments. Local officials are judged largely on GDP growth in their areas, so they have a strong reason to promote large investment projects. A typical cycle begins when the central government eases credit and industrial policy, which lets local governments push investment. This can raise prices and cause shortages, as happened with coal and electricity in 2003. When inflation starts to threaten social stability, the central government tightens its rules and credit, and investment growth then begins to slow.

Further information: Xiagang

Since the Reform and Open Up, unemployment has been an ongoing problem for China's economy. In 1979–80 there were twenty million unemployed people. Changes in state-owned enterprises ended the lifelong job system known as the iron rice bowl (铁饭碗). This was followed by large-scale layoffs of city workers in the period known as Xiagang (下岗), which caused a sharp rise in urban unemployment from the 1990s. The situation improved after China's admission by the World Trade Organization in 2001. Today, youth unemployment is a major concern. Officially, the unemployment rate for people aged 16 to 24 peaked at 21.3% in mid-2023 and fell to 16.1% by November 2024. Many independent estimates suggest the real figure was much higher. Some young people have chosen to "lie flat" and step back from work, as slower growth and weak demand for skilled workers make jobs harder to find.

Financial and banking system

Main articles: Banking in China, List of banks in China, Foreign-exchange reserves of China, Hedge fund industry in China, China Venture Capital Association, List of venture capital firms § Asia, Securities industry in China, and Insurance industry in China

China has the world's largest total banking sector assets, around $45.838 trillion (309.41 trillion CNY). Most of China's financial institutions are state-owned and governed. The main controls are the People's Bank of China (PBC) and the Ministry of Finance, both under the authority of the State Council. The People's Bank of China replaced the Central Bank of China in 1950 and gradually took over private banks. It does many of the jobs of other central and commercial banks. It issues the currency, controls how much money is in circulation, and plays a big role in paying government spending. It is also responsible for international trade and other overseas transactions. Remittances by overseas Chinese are handled by the Bank of China (BOC), which has branch offices in several countries. Other important banks include the China Development Bank (CDB), which funds economic development; the Agricultural Bank of China (ABC), which serves farming; the China Construction Bank (CCB), which provides capital funds for some industrial and construction businesses; and the Industrial and Commercial Bank of China (ICBC), which handles everyday business and acts as a savings bank for the public. In 2015, China started the Asian Infrastructure Investment Bank, and in 2014 it started the Silk Road Fund, which supports investment in countries along the One Belt, One Road.

China's economic reforms greatly increased the economic role of the banking system. In theory, any business or person can borrow from banks outside the state plan, but in practice, 75% of state bank loans go to State Owned Enterprises (SOEs). Investment money was once mostly given as a grant, but it has since shifted to loans. China has received loans from the World Bank, several United Nations programs, and countries such as Japan. Foreign investors have also bought large amounts of Chinese stocks and bonds, and China has four of the world's top ten financial centers: Shanghai, Hong Kong, Beijing, and Shenzhen. China also has three of the world's ten largest stock exchanges by market capitalization and by trade volume. As of 2024, China has the second-largest equity markets and futures markets, and the third largest bond market. Its stock exchanges include the Beijing Stock Exchange, the Shanghai Stock Exchange (including the STAR Market), the Shenzhen Stock Exchange, and the Hong Kong Stock Exchange. The government regulates initial public offerings, and in 2015, a stock market plunge in China eliminated $2 trillion of global stock market value. The yuan, also called the renminbi, is divided into 10 jiao or 100 fen. Its ISO 4217 code is CNY, and it is often called "RMB." China manages its currency mainly against the US dollar, and it has sought to internationalize the renminbi since the late-2000s. Its economic goals include about 5% GDP growth and 2% inflation. Total government borrowing has risen sharply to 124% of GDP, and overall non-financial debt is at 312%.

See also: Renminbi

Sectors

According to Fortune Global, 135 of the world's 500 largest companies have their headquarters in China. As of 2023, mainland China and Hong Kong were home to 324 of the largest listed companies measured by revenue in the Fortune Global 2000, which ranks second in the world. China also has more than two hundred privately held technology startups, each valued at over $1 billion, the most of any country.

China is the world's largest producer and consumer of farm products, and it grows rice more than any other country. Its economy also includes large livestock, fishing, and energy sectors, with coal as its main energy source. China is a major manufacturer, making steel, automobiles, electronics, and many other goods, and it is the world's largest automobile producer. Its service sector includes telecommunications, online shopping, and tourism.

Informal economy

Main article: Informal economy of China

See also: Gambling in China

Income and wealth

Main article: Income distribution in China

See also: List of Chinese provincial-level divisions by GDP, List of Chinese provincial-level divisions by GDP per capita, List of top Chinese cities by GDP, and List of prefecture-level divisions of China by GDP

See also: Minimum wage in China

Main article: Taxation in China

Main article: Income inequality in China

Main article: Welfare in China

China has the largest national share of the world's middle class, with 400 million middle-income citizens as of 2020. A 2021 Pew Research Center survey counted 23 million Chinese people earning $50 or more a day, measured in international dollars. In 2022, the National Bureau of Statistics reported that China's average disposable income per person was ¥36,883, and the median per capita disposable income was ¥36,231. China had 495 billionaires and 6.2 million millionaires in 2022, second only to the US. The average income of a rural resident is 30% of an urban resident's, and many rural people are older because young people move to cities for better-paying jobs. Even so, more than 1 billion Chinese people have been lifted out of poverty since reform and opening up. From 1988 to 2018, rural and urban incomes each grew 8 to 10 times after adjusting for inflation. China is also the world's largest saving country as of 2022.

Wages rose after the state reformed factories in 1979–1980, though inflation rose sharply at the same time. By 2016, the average monthly wage for workers making goods for export was $424. Taxes mainly come from indirect taxes, such as the value added tax. China's personal income tax made up about 6.5% of tax revenue in 2024. It is a progressive tax, with the top bracket taxed at 45% of income. China is home to six of the world's top ten cities for billionaires, including Hangzhou and Guangzhou. Historians generally agree that the policies after Mao greatly reduced poverty.

External trade

Main article: History of trade of the People's Republic of China

Further information: List of the largest trading partners of China, List of exports of China, List of Chinese administrative divisions by exports, and Free trade agreements of China

International trade is a large part of China's economy. Since 2018, many companies have started moving parts of their supply chains away from China, mostly to Vietnam, Taiwan, the United States, Mexico, Thailand and India, and most spread their production across several countries rather than leaving China altogether. In 2010, China became the world's largest exporter, and it has remained the largest as of 2023. China has free trade agreements with several nations, including ASEAN, Australia, Cambodia, New Zealand, Pakistan, South Korea and Switzerland. As of 2022, China's largest trading partners included ASEAN, the European Union, Japan, South Korea, Taiwan, Australia, Russia, Brazil, India, Canada, and the United Kingdom.

During the Cold War, China helped many countries in the Third World through grants and loans, but after Mao Zedong died in 1976, this help was reduced. Since economic reforms began in the late 1970s, China has worked to open its foreign trade to the world. In November 1991, China joined the Asia-Pacific Economic Cooperation (APEC) group, which promotes free trade. China became a member of the World Trade Organization in 2001, after 16 years of talks, the longest in the history of the General Agreement on Tariffs and Trade. Export growth has been a major part of China's fast economic growth, and China's exports are about 80 percent manufactured goods. Three of the five busiest ports in the world are in China. China is also a member of the Regional Comprehensive Economic Partnership, the world's largest free-trade area, and in September 2021 it formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Foreign investment

Main articles: Foreign direct investment in China and Special economic zones of China

See also: Foreign Investment Law of the People's Republic of China, Qualified Domestic Institutional Investor, Qualified Foreign Institutional Investor, China Investment Promotion Agency, China Council for the Promotion of International Trade, and Ministry of Commerce (China)

Foreign investment has been an important part of China's growth. From 1992 until at least 2023, China was either the first or second most popular destination in the world for foreign direct investment, and it attracted $180 billion in 2022. In the early 1980s, foreign investment was mostly limited to export businesses and often had to be shared with Chinese partners. Over time, the rules were loosened. The Encouraged Industry Catalogue lists how much foreign involvement is allowed in each industry. Foreign investors were given some protection against nationalization, could become chairs of joint venture boards, and could set up fully foreign-owned businesses through Wholly Foreign Owned Enterprises, which later became the preferred form. Foreign investors could also buy special "B" stock that carried no ownership rights. Most foreign investment came from Hong Kong, Macau and Taiwan. From 1993 to 2001, China was the world's second-largest recipient of foreign direct investment after the United States. In 2011, China overtook the United States as the top destination, receiving over $280 billion that year. Investment slowed in 2015, and the United States regained the top spot. China's foreign exchange reserves are the largest in the world. The Shanghai Free Trade Zone, set up in 2013, is a testing ground for economic and social reforms. Under its negative list, published by the Shanghai Municipal Government, foreign investment is allowed in all sectors unless a sector is specifically banned. In 2019, China's National People's Congress adopted the Foreign Investment Law, which came into effect on 1 January 2020.

See also: Go Out policy and Belt and Road Initiative

Chinese companies have been expanding outside China since 2005, investing in both developed and developing countries. In 2013, they invested US$90 billion in non-financial sectors around the world, 16% more than in 2012. Many Chinese companies prefer mergers and acquisitions, which they see as a fast way to gain brands, distribution, talent and technology, and a way to avoid the risks of starting from nothing. From 1993 to 2010, Chinese companies took part in 25,284 mergers and acquisitions worth a known total of US$969 billion. Even so, these investments have not changed many consumers' view that Chinese goods and brands are low in quality and low in price.

Labor force

Main article: Demographics of China

Further information: Migration in China, Urbanization in China, Chinese emigration, Standard of living in China, Poverty in China, Unemployment in China, and Labor relations in China

China has 773 million workers as of 2024, making its labor force the largest in the world. Family size rules have also changed. In January 2016, a two-child policy replaced the one-child policy. In May 2021, a three-child policy followed, and in July 2021, all family size limits and penalties for breaking them were removed.

The All-China Federation of Trade Unions is the only trade union that is legal in the country. Attempts to form unions that are independent of it have been rare and short-lived. One example was the Beijing Workers' Autonomous Federation, formed during the 1989 Tiananmen Square protests and massacre. It was declared illegal and ordered to disband. E-commerce also provides many jobs. A study linked Alibaba's online retail platform to about 40.82 million jobs in China in 2018. As of 2024, China has one of the lowest retirement ages among major world economies, with many women able to retire at 50 and men at 60.

Transportation and infrastructure

Transportation

Main article: Transport in China

See also: Roads in China, Rail transport in China, Civil aviation in China, and List of ports in China

Chinese transportation network

National Trunk Highway System network

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National railway network

China has the world's longest and most widely used high-speed rail network, stretching over 45,000 kilometers.

China's transportation plans have changed a lot since 1949, shaped by politics, the military, and the economy. Right after the People's Republic was founded, the main goal was to repair existing transport so it could meet military transport and logistics needs and help keep the country united. In the 1950s, new roads and railways were built, and old ones were improved. In the 1960s, local governments took on much of the work of improving regional transport, and many small railways were built. Builders also focused on remote rural, mountainous, and forested areas to connect poorer regions and help farming grow.

Before the reforms began in the late 1970s, transport links were mostly in coastal areas, and the inland regions were hard to reach. Since then, railways and highways have been built in the remote northwest and southwest. China also expanded its international transport and greatly broadened its ocean shipping.

Freight haulage is mainly done by rail transport. The rail sector is run by China Railway, and the services it offers vary widely. In late 2007, China became one of the few countries to launch its own homegrown high-speed train. Because trains struggle to carry the growing amount of goods and coal, air routes, roads, and waterways are quickly being developed to carry more of China's transport needs.

Some economic experts have said that China's early focus on big infrastructure projects helps explain why it grew faster than other emerging economies such as Brazil, Argentina, and India. In the 1990s and 2000s, China spent about 9% of its GDP on infrastructure, while most emerging economies spent only 2% to 5%. This large spending gap helped China's economy grow in near-ideal conditions, while many South American economies faced problems like poor transport networks, aging power grids, and weak schools.

Water supply and sanitation

Main article: Water supply and sanitation in China

The situation has improved greatly. In 2024, 97% of the population had basic hygiene services.

Science and technology

Main article: Science and technology in China

See also: Artificial intelligence industry in China and Biotechnology industry in China

According to WIPO, China is the largest source of patent filings in the world and makes up more than half of global patent contributions. In recent decades, science and technology in China has developed rapidly. The government has supported it through funding, reforms, and high social status, seeing it as a basic part of the country's development and its national pride. China has made fast progress in education, infrastructure, high-tech manufacturing, artificial intelligence, academic publishing, patents, and business uses.

China is now increasingly focused on developing its own innovations and aims to fix its remaining weaknesses. Its Thousand Talents Plan aims to bring innovative Chinese scientists who live abroad, as well as some foreigners, back to China to support its economic goals. A 2023 study by the Australian Strategic Policy Institute looked at 44 important technologies and concluded that China leads the world in 37 of them, including 5G internet, electric batteries, and hypersonic missiles.