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Country Forecast China

  • ID: 2118714
  • Country Profile
  • Region: China
  • 49 Pages
  • The Economist Intelligence Unit
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Background: The People's Republic of China was founded in 1949 by the Chinese Communist Party (CCP). The CCP chairman, Mao Zedong, then led the country for nearly three decades. After coming to power in 1978, two years after Mao's death, Deng Xiaoping introduced economic reforms. From 1989 to 2002 Jiang Zemin presided over a more collective leadership-a trend strengthened under his successor, Hu Jintao, but weakened since 2012 under the current CCP general secretary, Xi Jinping; Mr Xi has cultivated a more centralised and authoritarian style of leadership. The scrapping in March 2018 of a ten-year constitutional term limit on the office of the presidency indicated that Mr Xi intends to stay in power beyond 2023, in a break with the recent tradition of once-a-decade leadership transitions.

Political structure: The CCP dominates the government. Mr Xi is general secretary of the CCP and chairman of the Central Military Commission, which controls the armed forces. Li Keqiang leads the government as premier, while Mr Xi is state president. The CCP politburo standing committee is China's main decision-making body. The National People's Congress is the (largely rubber-stamp) legislature. The Chinese People's Political Consultative Conference, a prominent advisory body, contains representatives of political, social and religious groups. There is no formal political opposition to the CCP.

Policy issues: Mr Xi's administration seeks sustainable growth alongside enduring CCP political control. The president has signalled a gradual shift in focus away from GDP targeting (likely to be formalised only after 2020) in favour of addressing environmental degradation, corruption and wealth inequality, as well as curbing financial risk, reducing pollution and eliminating rural poverty. Slowing economic growth and the US-China trade war, however, have disrupted this agenda. Planned reforms in the state-owned-enterprise sector are conservative and progress on market liberalisation has stalled, despite government commitments. Mr Xi seeks an expanded international role for China, highlighted by the Belt and Road Initiative, but this will add to tensions in China's relations with Western powers.
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Country Forecast China

China--highlights: Political outlook

China--highlights: Business environment outlook

China--highlights: Economic outlook

China--highlights: Demographic outlook

China--highlights: Market opportunities

China--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability

Political outlook: Political and institutional effectiveness

Political outlook: Election watch

Political outlook: International relations

Business environment outlook: Business environment rankings

Business environment outlook: China's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
The labour market
Technological readiness

Business environment outlook: Macroeconomic environment

Business environment outlook: Policy towards private enterprise and competition
SOE reforms are likely to remain modest

Business environment outlook: Policy towards foreign investment
The new FDI law leaves many issues unresolved

Business environment outlook: Foreign trade and exchange controls
US-China trade talks will yield minor improvements to the business environment

Business environment outlook: Taxes
The individual tax base narrows and will put pressure on fiscal expenditure

Business environment outlook: Financing
The QFII quote has been doubled

Business environment outlook: The labour market
Skills shortages will be most acute in the finance and information technology sectors

Business environment outlook: Infrastructure
Office rents remain high

Business environment outlook: Technological readiness
China needs to move from patenting to commercialisation

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in China
Stocks and flows
Origin and distribution

Demographic assumptions
Public finances will come under strain as the population ages
A low fertility rate will persist even despite the abolition of family-planning restrictions

Market opportunities: Market outlook
Foreign enterprises will need to prioritise innovation to remain competitive

Market opportunities: Consumer expenditure
Car sales will slow slightly amid growing market saturation and the phasing-out of auto-purchase subsidies

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook
Stalled policy reform will stunt growth in the future
The trade basket will shift increasingly towards more complex products
Major upheaval is a possibility if the political system remains unchanged

Long-term outlook: Long-term trends
Climate change and sustainability
Technological developments
Migration and urbanisation

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model
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