Economy

Agriculture

As in the past, producing enough food for its huge population is one of the most urgent concerns of China. This is especially difficult as only slightly more than 10 per cent of the land is suitable for farming. About 64 per cent of the people work in agriculture. Virtually all of the farmland is in eastern China. In many areas steep hillsides are terraced for growing crops. Nearly everywhere cultivation is intensive, involving much hand labor. Normally, crop yields are quite high, but droughts and floods frequently inflict great damage upon crops.

In efforts to improve agriculture, the Communists have made drastic changes. They first abolished the large holdings of landowners, which were traditionally rented in small plots, and distributed them among peasants and farm laborers. This program was followed in the early 1950's by a gradual merging of farm plots into cooperatives and later, beginning in 1958, into communes.

Each commune covered a large area and included many villages. The land was worked by production teams of perhaps 30 to 40 families. In the early 1980's the commune system was phased out. Commune land was divided among households, and, although some quotas were imposed by the state, families were given considerable freedom in running their own farms.

In order to help increase agricultural production, technical and mechanical improvements—such as the increased use of chemical fertilizers, electric irrigation pumps, improved seeds and insecticides, and modern tools and machinery—have been given a high priority by the government.

Crops

Grain is China's chief agricultural product. In rice production China far surpasses any other nation. Rice is grown mainly in southern China, where irrigation and warm weather allow two, sometimes three, rice crops to be grown on the same plot each year.

Wheat and corn are also major crops; both are grown mainly in the north, where conditions are generally unsuited for rice. Other grains include kaoliang (a grain sorghum), millet, and barley. Also grown in large amounts are sweet potatoes, white potatoes, beans, peas, peanuts, soybeans, tea, sugarcane, and many fruits.

China also produces numerous industrial crops, both for domestic use and for export. Of these, cotton is the leader. Other fibers—silk, ramie, jute, and hemp—are also major industrial crops, as are various oil seeds and tobacco.

Livestock

In China Proper, especially in the farming areas, the raising of livestock has always been a sideline rather than a principal endeavor, mainly because of the necessity for growing food crops. Traditionally, most farm animals are raised for a variety of purposes in addition to providing meat. They provide many products, such as milk, eggs, and wool; many are used as beasts of burden. Manure is widely used as fertilizer.

Pigs and poultry, primarily chickens and ducks, are the most numerous and widely raised animals. Oxen and water buffalo are found throughout southern China, where they are used mainly for plowing and hauling. In the north, horses, donkeys, and mules are more commonly used for these purposes. In the dry outer regions of China—Tibet, Xinjiang, and Inner Mongolia—many people subsist by herding sheep and goats and, to a lesser extent, cattle, horses, and camels.

Fishing

China's annual catch of fish is the largest in the world. For many Chinese, fish is one of the few protein-rich foods available. Much of the catch is obtained in shallow coastal waters, mainly south of the Yangtze's mouth. Equally important is the freshwater catch, taken from rivers, streams, lakes, and flooded rice paddies. Fish are also obtained in great quantities through fish culture—the breeding and raising of fish in ponds.

Manufacturing

When the Communists came to power in 1949, after decades of intermittent conflict, China's manufacturing industries were in disarray, with many facilities destroyed or severely damaged. Heavy industry, developed largely by the Japanese during the 1930's, was centered in southern Manchuria. Light industry, developed by Europeans and other foreigners, clustered in leased areas and ports along the coast, such as Shanghai, Tianjin, and Guangzhou.

Reconstruction and expansion began soon after the Communists came to power. The period of the First Five-Year Plan (1953–57) was one of rapid growth, especially in heavy industry, which had high priority. The Second Five-Year Plan began in 1958, but was soon replaced for political and ideological reasons by an accelerated program called the Great Leap Forward. After several years, this program collapsed despite enormous efforts to greatly increase production. Another setback in development occurred in the early 1960's, when the Soviet Union withdrew its assistance because of a growing ideological dispute with China.

After a relatively slow recovery, the economy began to expand again. China launched its Third Five-Year Plan in 1966. Another downturn came with the disturbances caused by the Cultural Revolution (an attempt to increase Communist zeal among the people) in 1966–68. By 1970, however, recovery was generally complete and many of China's industries were producing at record levels. Long-range economic planning continues. In the 1980's and 1990's manufacturing was increasingly managed at local levels and operated on a profit-making basis.

The development of heavy industry, such as the making of iron and steel, has long been a major goal of the Chinese. Establishing new industrial centers inland, while expanding the older ones in Manchuria and along the coast, has been another major long-standing objective. Of more recent importance has been the development and expansion of industries that produce consumer goods, both for domestic consumption and for export.

Major Industrial Areas

Industrial development, though widespread, has generally been greatest in China's coastal provinces, which account for more than 60 per cent of the country's industrial output. The government has aided this development by establishing six “special economic zones” along China's southeastern coast. These zones have open trade policies that have attracted large amounts of investment, from both domestic and foreign sources.

Manchuria is China's foremost center of heavy industry. The region is the country's largest producer of electric power, iron and steel, aluminum, refined petroleum, timber, paper, and trucks. Among the chief cities in the region are Shenyang, Anshan, Fushun, and Harbin.

The region around the Yangtze's mouth and lower course, which includes Shanghai, Nanjing, and Hangzhou, is a leading center for the production of textiles and other consumer goods. The region also ranks high in the production of ships, iron and steel, and machinery. Much of the region's productive capacity is located in Shanghai, China's largest industrial and commercial metropolis.

The Beijing-Tianjin-Tangshan area, in the north, is also a major industrial complex. Items manufactured here include machine tools, electronic equipment, agricultural machinery, textiles, and chemicals.

Other areas of industrial importance include Guangzhou, Shenzhen, Kunming, and Hong Kong in the south; Wuhan and Changsha in the Yangtze Valley; Chongqing and Chengdu in the Sichuan Basin; Taiyuan, Qingdao, and Jinan on or near the North China Plain; Xi'an and Lanzhou in the west; and Baotou in Inner Mongolia.

Mining

China is relatively well endowed with most minerals, and has sufficient reserves to support major industrial expansion. Before 1949 most of the mining was done in southern Manchuria and in the coastal provinces. Extensive geological exploration, however, has resulted in a much wider development, especially in the interior.

Much of China's current effort in the mining industry is directed to increasing production through construction of processing facilities, purchase of new equipment abroad, and introduction of new techniques. The industry is also rapidly training technicians and workers.

Metals and Minerals

China is one of the world's largest producers of iron ore. Nonetheless, it does not produce enough to supply its massive steel industry and needs to import some iron ore. The ore deposits are fairly widespread, particularly north of the Yangtze Valley. Major ore-producing mines include those located in Liaoning, Hebei, and Sichuan provinces.

China ranks among the world's top five producers of several other minerals, including tin, lead, manganese, zinc, and nickel. Other minerals produced include copper, tungsten, bauxite, fluorite, graphite, and gold.

Fuels

China is the world's largest producer of coal. Coal is found in virtually every province, but is most abundant in the east, north of the Yangtze's mouth. Coal is used to generate about 75 per cent of the electric power in China. Hydroelectric power, developed best in the south and southwest, and nuclear power account for the rest.

Since the 1950's, China has greatly expanded its petroleum production and now ranks as the world's fifth largest producer. Production, however, does not meet domestic demand and oil must be imported. The principal producing fields are in Manchuria, in the Huang He Basin, in the Bo Gulf shoreline area, and in scattered sites in Xinjiang province. Natural gas production has also grown rapidly, especially in Sichuan province.

Transportation

A modern transportation system is one of the goals of China, and much has been done to build new facilities and modernize old ones. Though greatly improved, transportation is still poorly developed in all but a few areas.

Railways are concentrated primarily in Manchuria and on the North China Plain. The southeast also has fairly extensive trackage. The rest of China Proper has only a few north-south and east-west lines linking the major cities. China continues to expand trackage to remote areas, especially in the west. The Trans-Xinjiang line runs northwestward across Xinjiang to the Kazakhstan border.

The road system provides the chief means for passenger transportation and is of growing importance for freight. Only a small portion of China's roads are paved; the remainder are mainly dirt or gravel. Expanding and improving the road network has become an important priority, especially because of increasing use of automobiles. Some of the country's large cities have expressway systems. Bicycles are a major form of transportation in cities.

Rivers and canals are traditional arteries of commerce and transportation, carrying the largest share of the country's freight. The Yangtze, which is navigable far inland, is the most intensively used river. Also significant are the Xi in the south; the Huang He, the Huai, and the Grand Canal in the north; and the Amur, Ussuri, and Songhua in Manchuria. The Manchurian rivers are closed by ice for as much as 180 days each year. Use of the Huang He and other northern waterways is limited by silting and by very low water during spring and winter.

The nation's largest seaport is Shanghai, which serves much of central China. Also prominent are the ports of Guangzhou in the south, Qingdao and Tianjin in the north, and Dalian in Manchuria. Many other cities, both coastal and on rivers, have sizable ports.

Domestic air service, which has increased, is provided to scores of cities by many Chinese airlines. The largest Chinese air carrier, for both domestic and international flights, is Air China, which is owned and operated by the government. The busiest international airports are those serving Beijing, Shanghai, and Guangzhou.

Many traditional means of transportation are still used in China. They include animal-and human-drawn carts, pack animals, and sampans and junks.

Communications

All communications systems in China are operated and controlled by the government. Beijing, the chief broadcasting center, is the home of China National Radio, the chief station for domestic programs, and China Radio International, which broadcasts throughout the world in many languages. There are also local broadcasting stations. Television is somewhat less developed than radio.

Although much progress has been made since the 1980's, China's telephone network is still far less developed than the networks of the industrial countries of the West. Outside of major cities, telephones are not widely available.

The Chinese press is tightly controlled by the government. There are more than 1,700 newspapers and a daily newspaper is published in each province. Newspapers with the largest circulations include People's Daily and Sichuan Daily.

Currency

China's basic currency unit is the yuan, which is divided into 10 jiao.

Trade

China traded primarily with other Communist countries until the early 1960's, but most of its trade later shifted to Japan and other industrialized nations. Its foreign trade greatly increased after it joined the World Trade Organization in 2001.

The major part of China's purchases consists of chemicals, iron and steel, petroleum and petroleum products, and machinery. Its major exports include clothing, machinery, textiles, footwear, and agricultural products.

When the Communists came to power in 1949, China's economy was backward and suffering from many years of war and civil strife. Agriculture was disrupted and producing at a low level. Modern factories, then located in only a few places, lay idle or in ruins.

Since the Communist takeover, agriculture has been reorganized and production increased, and modern industry has been greatly expanded. New mineral resources have been discovered, production of electric power increased, and transportation improved.

In general, China's development has been guided by five-year plans, patterned originally after those used in the Soviet Union. The state owns most industry and controls the financial system. Since the late 1970's, however, the centralization of economic decision-making has lessened and greater use has been made of market forces. In 1979 four “special economic zones” were established by the government (Shenzhen, Shantou, Zhuhai, and Xiamen). In these areas foreign investment is encouraged by government tax concessions and by lessened government control over the local economy. Since 1979, many other special economic zones have been established. Most are located on the coast.

Although accomplishments have been considerable, development has not been continuous. Many setbacks have occurred and much remains to be done in order to raise the relatively low standard of living.