Class and income equality

See also: Income inequality in China

China's middle-class population (if defined as those with annual income of between US$10,000 and US$60,000) had reached more than 300 million by 2012.^[310] According to the Hurun Report, the number of US dollar billionaires in China increased from 130 in 2009 to 251 in 2012, giving China the world's second-highest number of billionaires.^[311][312] China's domestic retail market was worth over 20 trillion yuan (US$3.2 trillion) in 2012^[313] and is growing at over 12% annually as of 2013,^[314] while the country's luxury goods market has expanded immensely, with 27.5% of the global share.^[315] However, in recent years, China's rapid economic growth has contributed to severe consumer inflation,^[316][317] leading to increased government regulation.^[318] China has a high level of economic inequality,^[319] which has increased in the past few decades.^[320] In 2012, China's official Gini coefficient was 0.474.^[321] A study conducted by Southwestern University of Finance and Economics showed that China’s Gini coefficient actually had reached 0.61 in 2012, and top 1% Chinese held more than 25% of China’s wealth, while 430 million poor Chinese struggled to live.^[322]

Internationalization of the renminbi

Main article: Internationalization of the renminbi

Since 2008 global financial crisis, China realized the dependency of US Dollar and the weakness of the international monetary system.^[323] The RMB Internationalization accelerated in 2009 when China established dim sum bond market and expanded the Cross-Border Trade RMB Settlement Pilot Project, which helps establish pools of offshore RMB liquidity.^[324][325] In November 2010, Russia began using the Chinese renminbi in its bilateral trade with China.^[326] This was soon followed by Japan,^[327] Australia,^[328] Singapore,^[329] the United Kingdom,^[330] and Canada.^[331] As a result of the rapid internationalization of the renminbi, it became the eighth-most-traded currency in the world in 2013.^[332]

Economy

Main articles: Economy of China, Agriculture in China, and List of Chinese administrative divisions by GDP

China and other major developing economies by GDP per capita at purchasing-power parity, 1990–2013. The rapid economic growth of China (red) is readily apparent.^[268]

The Shanghai Stock Exchange building in Shanghai's Lujiazui financial district. Shanghai has the 25th-largest city GDP in the world, totalling US$304 billion in 2011^[269]

China had the largest economy in the world for most of the past two thousand years, during which it has seen cycles of prosperity and decline.^[270][271] As of 2014, China has the world's second-largest economy in terms of nominal GDP, totalling approximately US$10.380 trillion according to the International Monetary Fund.^[12] If purchasing power parity (PPP) is taken into account, China's economy is the largest in the world, with a 2014 PPP GDP of US$17.617 trillion.^[12] In 2013, its PPP GDP per capita was US$12,880, while its nominal GDP per capita was US$7,589. Both cases put China behind around eighty countries (out of 183 countries on the IMF list) in global GDP per capita rankings.^[272]

Economic history and growth

Main article: Economic history of China (1949–present)

From its founding in 1949 until late 1978, the People's Republic of China was a Soviet-style centrally planned economy. Following Mao's death in 1976 and the consequent end of the Cultural Revolution, Deng Xiaoping and the new Chinese leadership began to reform the economy and move towards a more market-oriented mixed economy under one-party rule. Agricultural collectivization was dismantled and farmlands privatized, while foreign trade became a major new focus, leading to the creation of Special Economic Zones (SEZs). Inefficient state-owned enterprises (SOEs) were restructured and unprofitable ones were closed outright, resulting in massive job losses. Modern-day China is mainly characterized as having a market economy based on private property ownership,^[273] and is one of the leading examples of state capitalism.^[274][275] The state still dominates in strategic "pillar" sectors such as energy production and heavy industries, but private enterprise has expanded enormously, with around 30 million private businesses recorded in 2008.^{[276][277][278][279]}

Nanjing Road, a major shopping street in Shanghai

Since economic liberalization began in 1978, China has been among the world's fastest-growing economies,^[280] relying largely on investment- and export-led growth.^[281] According to the IMF, China's annual average GDP growth between 2001 and 2010 was 10.5%. Between 2007 and 2011, China's economic growth rate was equivalent to all of the G7 countries' growth combined.^[282] According to the Global Growth Generators index announced by Citigroup in February 2011, China has a very high 3G growth rating.^[283] Its high productivity, low labor costs and relatively good infrastructure have made it a global leader in manufacturing. However, the Chinese economy is highly energy-intensive and inefficient;^[284] China became the world's largest energy consumer in 2010,^[285] relies on coal to supply over 70% of its energy needs, and surpassed the US to become the world's largest oil importer in September 2013.^[286][287] In the early 2010s, China's economic growth rate began to slow amid domestic credit troubles, weakening international demand for Chinese exports and fragility in the global economy.^{[288][289][290]}
In the online realm, China's e-commerce industry has grown more slowly than the EU and the US, with a significant period of development occurring from around 2009 onwards. According to Credit Suisse, the total value of online transactions in China grew from an insignificant size in 2008 to around RMB 4 trillion (US$660 billion) in 2012. The Chinese online payment market is dominated by major firms such as Alipay, Tenpay and China UnionPay.^[291]

China in the global economy

China is a member of the WTO and is the world's largest trading power, with a total international trade value of US$3.87 trillion in 2012.^[20] Its foreign exchange reserves reached US$2.85 trillion by the end of 2010, an increase of 18.7% over the previous year, making its reserves by far the world's largest.^[292][293] In 2012, China was the world's largest recipient of inward foreign direct investment (FDI), attracting $253 billion.^[294] In 2014, China's foreign exchange remittances were $US64 billion making it the second largest recipient of remittances in the world.^[295] China also invests abroad, with a total outward FDI of $62.4 billion in 2012,^[294] and a number of major takeovers of foreign firms by Chinese companies.^[296] In 2009, China owned an estimated $1.6 trillion of US securities,^[297] and was also the largest foreign holder of US public debt, owning over $1.16 trillion in US Treasury bonds.^[298][299] China's undervalued exchange rate has caused friction with other major economies,^{[204][300][301]} and it has also been widely criticized for manufacturing large quantities of counterfeit goods.^[302][303] According to consulting firm McKinsey, total outstanding debt in China increased from $7.4 trillion in 2007 to $28.2 trillion in 2014, which reflects 228% of China's GDP, a percentage higher than that of some G20 nations.^[304]

Graph comparing the 2014 nominal GDPs of major economies in US$ billions (IMF)[305]

China ranked 29th in the Global Competitiveness Index in 2009,^[306] although it is only ranked 136th among the 179 countries measured in the 2011 Index of Economic Freedom.^[307] In 2014, Fortune's Global 500 list of the world's largest corporations included 95 Chinese companies, with combined revenues of US$5.8 trillion.^[308] The same year, Forbes reported that five of the world's ten largest public companies were Chinese, including the world's largest bank by total assets, the Industrial and Commercial Bank of China.^[309]

Military

Main articles: Military history of China before 1911 and People's Liberation Army

A PLAAF Chengdu J-10 fighter aircraft

The Lanzhou (DDG170), a Type 052C destroyer of the PLAN

With 2.3 million active troops, the People's Liberation Army (PLA) is the largest standing military force in the world, commanded by the Central Military Commission (CMC).^[246] The PLA consists of the Ground Force (PLAGF), the Navy (PLAN), the Air Force (PLAAF), and the People's Liberation Army Rocket Force (PLARF). According to the Chinese government, China's military budget for 2014 totalled US$132 billion, constituting the world's second-largest military budget.^[22] However, many authorities – including SIPRI and the U.S. Office of the Secretary of Defense – argue that China does not report its real level of military spending, which is allegedly much higher than the official budget.^[22][247]
As a recognized nuclear weapons state, China is considered both a major regional military power and a potential military superpower.^[248] According to a 2013 report by the US Department of Defense, China fields between 50 and 75 nuclear ICBMs, along with a number of SRBMs.^[21] However, compared with the other four UN Security Council Permanent Members, China has relatively limited power projection capabilities.^[249] To offset this, it has developed numerous power projection assets since the early 2000s – its first aircraft carrier entered service in 2012,^{[250][251][252]} and it maintains a substantial fleet of submarines, including several nuclear-powered attack and ballistic missile submarines.^[253] China has furthermore established a network of foreign military relationships along critical sea lanes.^[254]
China has made significant progress in modernising its air force in recent decades, purchasing Russian fighter jets such as the Sukhoi Su-30, and also manufacturing its own modern fighters, most notably the Chengdu J-10, J-20 and the Shenyang J-11, J-15, J-16, and J-31.^[250][255] China is furthermore engaged in developing an indigenous stealth aircraft and numerous combat drones.^{[256][257][258]} Air and Sea denial weaponry advances have increased the regional threat from the perspective of Japan as well as Washington.^[259][260] China has also updated its ground forces, replacing its ageing Soviet-derived tank inventory with numerous variants of the modern Type 99 tank, and upgrading its battlefield C3I and C4I systems to enhance its network-centric warfare capabilities.^[261] In addition, China has developed or acquired numerous advanced missile systems,^[262][263] including anti-satellite missiles,^[264] cruise missiles^[265] and submarine-launched nuclear ICBMs.^[266] According to the Stockholm International Peace Research Institute's data, China became the world's third largest exporter of major arms in 2010–14, an increase of 143 per cent from the period 2005–09.^[267]

Territorial disputes

Main article: Foreign relations of China § International territorial disputes

See also: List of wars involving the People's Republic of China, Cross-Strait relations, and One-China policy

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Map depicting territorial disputes between the PRC and neighbouring states. For a larger map, see here.

Ever since its establishment after the second Chinese Civil War, the PRC has claimed the territories governed by the Republic of China (ROC), a separate political entity today commonly known as Taiwan, as a part of its territory. It regards the island of Taiwan as its Taiwan Province, Kinmen and Matsu as a part of Fujian Province and islands the ROC controls in the South China Sea as a part of Hainan Province and Guangdong Province. These claims are controversial because of the complicated Cross-Strait relations, with the PRC treating the One-China policy as one of its most important diplomatic principles.^[212]
In addition to Taiwan, China is also involved in other international territorial disputes. Since the 1990s, China has been involved in negotiations to resolve its disputed land borders, including a disputed border with India and an undefined border with Bhutan. China is additionally involved in multilateral disputes over the ownership of several small islands in the East and South China Seas, such as the Senkaku Islands and the Scarborough Shoal.^[213][214] On 21 May 2014 Xi Jinping, speaking at a conference in Shanghai, pledged to settle China's territorial disputes peacefully. "China stays committed to seeking peaceful settlement of disputes with other countries over territorial sovereignty and maritime rights and interests", he said.^[215]

Emerging superpower status

China is regularly hailed as a potential new superpower, with certain commentators citing its rapid economic progress, growing military might, very large population, and increasing international influence as signs that it will play a prominent global role in the 21st century.^[18][216] Others, however, warn that economic bubbles and demographic imbalances could slow or even halt China's growth as the century progresses.^[217][218] Some authors also question the definition of "superpower", arguing that China's large economy alone would not qualify it as a superpower, and noting that it lacks the military power and cultural influence of the United States.^[219]

Sociopolitical issues, human rights and reform

See also: Human rights in China, Hukou system, Social welfare in China, Elections in the People's Republic of China, Censorship in China, and Feminism in China

The Chinese democracy movement, social activists, and some members of the Communist Party of China have all identified the need for social and political reform. While economic and social controls have been significantly relaxed in China since the 1970s, political freedom is still tightly restricted. The Constitution of the People's Republic of China states that the "fundamental rights" of citizens include freedom of speech, freedom of the press, the right to a fair trial, freedom of religion, universal suffrage, and property rights. However, in practice, these provisions do not afford significant protection against criminal prosecution by the state.^[220][221] Although some criticisms of government policies and the ruling Communist Party are tolerated, censorship of political speech and information, most notably on the Internet,^[222][223] are routinely used to prevent collective action.^[224] In 2005, Reporters Without Borders ranked China 159th out of 167 states in its Annual World Press Freedom Index, indicating a very low level of press freedom.^[225] In 2014, China ranked 175th out of 180 countries.^[226]
Rural migrants to China's cities often find themselves treated as second-class citizens by the hukou household registration system, which controls access to state benefits.^[227][228] Property rights are often poorly protected,^[227] and taxation disproportionately affects poorer citizens.^[228] However, a number of rural taxes have been reduced or abolished since the early 2000s, and additional social services provided to rural dwellers.^[229][230]

Candlelight vigil on the 20th anniversary of the Tiananmen Square protests

A number of foreign governments, foreign press agencies and NGOs also routinely criticize China's human rights record, alleging widespread civil rights violations such as detention without trial, forced abortions,^[231] forced confessions, torture, restrictions of fundamental rights,^[174][232] and excessive use of the death penalty.^[233][234] The government has suppressed popular protests and demonstrations that it considers a potential threat to "social stability", as was the case with the Tiananmen Square protests of 1989.
Falun Gong was first taught publicly in 1992. In 1999, when there were 70 million practitioners,^[235] the persecution of Falun Gong began, resulting in mass arrests, extralegal detention, and reports of torture and deaths in custody.^[236][237] The Chinese state is regularly accused of large-scale repression and human rights abuses in Tibet and Xinjiang, including violent police crackdowns and religious suppression.^[238][239]
The Chinese government has responded to foreign criticism by arguing that the right to subsistence and economic development is a prerequisite to other types of human rights, and that the notion of human rights should take into account a country's present level of economic development.^[240] It emphasizes the rise in the Chinese standard of living, literacy rate and average life expectancy since the 1970s, as well as improvements in workplace safety and efforts to combat natural disasters such as the perennial Yangtze River floods.^{[240][241][242]} Furthermore, some Chinese politicians have spoken out in support of democratization, although others remain more conservative.^[243] Some major reform efforts have been conducted; for an instance in November 2013, the government announced plans to relax the one-child policy and abolish the much-criticized re-education through labour program,^[129] though human rights groups note that reforms to the latter have been largely cosmetic.^[236] During the 2000s and early 2010s, the Chinese government was increasingly tolerant of NGOs that offer practical, efficient solutions to social problems, but such "third sector" activity remained heavily regulated.^[244][245]

Foreign relations

Main article: Foreign relations of China

Chinese President Xi Jinping holds hands with fellow BRICS leaders at the 2014 G20 Brisbane summit in Australia

The PRC has diplomatic relations with 174 countries and maintains embassies in 162. Its legitimacy is disputed by the Republic of China and a few other countries; it is thus the largest and most populous state with limited recognition. In 1971, the PRC replaced the Republic of China as the sole representative of China in the United Nations and as one of the five permanent members of the United Nations Security Council.^[189] China was also a former member and leader of the Non-Aligned Movement, and still considers itself an advocate for developing countries.^[190] Along with Brazil, Russia, India and South Africa, China is a member of the BRICS group of emerging major economies and hosted the group's third official summit at Sanya, Hainan in April 2011.^[191]
Under its interpretation of the One-China policy, Beijing has made it a precondition to establishing diplomatic relations that the other country acknowledges its claim to Taiwan and severs official ties with the government of the Republic of China. Chinese officials have protested on numerous occasions when foreign countries have made diplomatic overtures to Taiwan,^[192] especially in the matter of armament sales.^[193]
Much of current Chinese foreign policy is reportedly based on Premier Zhou Enlai's Five Principles of Peaceful Coexistence, and is also driven by the concept of "harmony without uniformity", which encourages diplomatic relations between states despite ideological differences.^[194] This policy may have led China to support states that are regarded as dangerous or repressive by Western nations, such as Zimbabwe, North Korea and Iran.^[195] China has a close economic and military relationship with Russia,^[196] and the two states often vote in unison in the UN Security Council.^{[197][198][199]}

Chinese President Xi Jinping with U.S. Secretary of State Hillary Clinton and Vice President Joe Biden, 14 February 2012

Trade relations

In recent decades, China has played an increasing role in calling for free trade areas and security pacts amongst its Asia-Pacific neighbours. China became a member of the World Trade Organization (WTO) on 11 December 2001. In 2004, it proposed an entirely new East Asia Summit (EAS) framework as a forum for regional security issues.^[200] The EAS, which includes ASEAN Plus Three, India, Australia and New Zealand, held its inaugural summit in 2005. China is also a founding member of the Shanghai Cooperation Organization (SCO), along with Russia and the Central Asian republics.
In 2000, the United States Congress approved "permanent normal trade relations" (PNTR) with China, allowing Chinese exports in at the same low tariffs as goods from most other countries.^[201] China has a significant trade surplus with the United States, its most important export market.^[202] In the early 2010s, US politicians argued that the Chinese yuan was significantly undervalued, giving China an unfair trade advantage.^{[203][204][205]} In recent decades, China has followed a policy of engaging with African nations for trade and bilateral co-operation;^{[206][207][208]} in 2012, Sino-African trade totalled over US$160 billion.^[209] China has furthermore strengthened its ties with major South American economies, becoming the largest trading partner of Brazil and building strategic links with Argentina.^[210][211]