Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented approach that has allowed it to play an important role globally — in 2010 it became the world’s largest exporter.
Measured by purchasing power parity (PPP), which adjusts for price differences, China was the second-largest economy in the world after the US in 2010. It is also second to the US in the value of services it produces. However, per capita income is still below the world average.
The Chinese government faces numerous economic challenges, including: a) reducing a high domestic savings rate and correspondingly low domestic demand; b) sustaining adequate job growth for tens of millions of migrants and new entrants to the workforce; c) reducing corruption and other economic crimes; and d) containing environmental damage and social strife related to the economy’s rapid transformation.
In 2009, the global downturn reduced demand for Chinese exports for the first time in many years, but the country rebounded quickly, outperforming all other major economies in 2010 with GDP growth of roughly 10 per cent. The economy seems sure to remain on a strong growth trajectory in 2012.