Business is booming in China, despite the current financial climate. This is still especially true for foreign enterprises entering the country in search of markets and low cost labor for assembly and manufacturing operations. Housing prices have risen and housing construction has slowed a little, but is still moving forward at a fast pace in support of this effort along with construction in infrastructure, commercial and housing.


US $7 Trillion

GDP Per Head

US $8289

GDP Growth




Local Currency

Yuan (CNY)

Exchange Rate

CNY 6.3: US $1

Capital City



1.3 Billion

Area Size

9.6 million sq. kilometers

Top Import Sources

US, Hong Kong, Japan, EU

Top 3 Export Markets

US, Japan, Europe

Chinese Economy

In late 1978 the Chinese leadership began moving the economy from a sluggish Soviet-style centrally planned economy to a more market-oriented system. Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state managers and enterprises has been steadily increasing. The authorities have switched to a system of household responsibility in agriculture in place of the old collectivisation, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the economy to increased foreign trade and investment.

The result has been a quadrupling of GDP since 1978. On the negative side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy and lassitude) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, retightening central controls at intervals.

The government has struggled to
(a) collect revenues due from provinces, businesses, and individuals;
(b) reduce corruption and other economic crimes; and
(c) keep afloat the large state-owned enterprises, many of which had been shielded from competition by subsides and had been losing the ability to pay full wages and pensions.

From 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time low-paid jobs. Popular resistance, changes in central policy and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table, especially in the north. China continues to lose arable land because of erosion and economic development.

Beijing will intensify efforts to stimulate growth through spending on infrastructure - such as water control and power grids -and poverty relief and through rural tax reform aimed at eliminating arbitrary local levies on farmers.
Source: CIA World Factbook.

International Trade

Over the last 20 years, China's government has made great achievements in attracting foreign investment and developing an export-oriented economy. Foreign investors have been attracted to China by its rapid economic growth, with the latest quarterly economic expansion rate running at 10%.

The government has promulgated various favourable policies for foreign investment and assigned several special regions. The favourable policies mainly cover the hi-tech industry, agriculture, forestry, telecommunications, energy, export-oriented sectors.

The special regions include five Special Economic Zones (SEZ), i.e., Shenzhen, Zhuhai, Xiamen, Shantou and Hainan (note - Shanghai's Pudong area isn't an SEZ, but is treated in the same way), 14 coastal cities (Beijing city is treated as a coastal city) and 52 state-level hi-tech development zones or hi-tech bases. These special regions can provide overseas investors with a more advantageous environment in terms of advanced infrastructures, land and qualified human resources.

Analysts say that China's stable economic situation amid a slowdown in the world economy is the main factor behind Foreign Direct Investment (FDI) growth. Many overseas companies have increased their investment in China following the country's entry into the World Trade Organisation. The Chinese government has been actively promoting foreign trade, including calling off import adjusting tax and export subsidies and cutting tariff rates. It also promises to reduce the number of goods which need import permit licenses and abolish import quota in the future.

Legal System

China's current legal system remains in the socialist mould but due to the open-door policy which was initiated in 1979 Chinese law has become more international, incorporating elements of foreign contract law, civil law, criminal law and constitutional law, among others.

An overview of the Chinese legal system reveals it to be an organic, comprehensive and unified whole consisting of well-defined divisions or branches of laws and varieties of functional organs. In this respect it resembles the civil law tradition as opposed to the common law system.


The Chinese Communist Party (CCP) dominates the government. Hu Jintao is concurrently state president, general secretary of the party, and chairman of the Central Military Commission (CMC). Wen Jiabao heads the state administration as premier. The standing committee of the political bureau (politburo) of the CCP is the ultimate policy-making body. The National People's Congress (NPC) is the largely rubber-stamp legislature. The Chinese People's Political Consultative Conference (CPPCC) groups political, social and religious constituencies within a showcase, powerless institution. There is no formal political opposition to the CCP; dissent is suppressed.

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