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GDP of China

gdp of china

GDP of China Between 1952 and 2005

GDP of China

You may have heard that the GDP of China has increased again, but not as much as the Chinese might have hoped. In order to better understand the GDP of China, we have to understand the factors that go into making the GDP of China, why it matters, and look at some of the historical data that supports it.

Why does the GDP of China matter?

GDP stands for Gross Domestic Product. It is one of the main factors that economists look at when trying to determine the country’s economy. It means the total currency value of all the services and goods produced during a specified period. For example, if the GDP is up four percent in the last year, it means that over the last year, the economy has grown by four percent.

The facts on the GDP of China

China has a top individual income tax rate is 45 percent. Meanwhile, the top corporate tax rate is 25 percent. There is a real estate tax and a value-added tax (VAT). The overall tax burden of China is 19 percent of the GDP. Approximately 24 percent of the GDP is accounted for by total government expenditures and 23 percent of gross domestic output is accounted for by the reported public debt. Despite the fact that the GDP of China is still growing, the government is still offering stimulus spending and temporary small-business tax cuts.

Historical data of China’s GDP

Looking at the GDP of China is interesting because it has seen such a dramatic shift in the last few decades. The Chinese civil war ended and hyperinflation was checked in 1953. This pushed the GDP of China to a whopping 15.6 percent. Yet between 1958 and 1959, the agricultural output dropped dramatically. Despite the best efforts to ensure that the GDP pushed forward, it only decreased. In fact, it dropped by 27.3 percent.


Between 1963 and 1966, China worked on the restoration of its economy. This helped the GDP bounce to an impressive 10.2 percent, in part due to the restoration of the market economy. The ‘cultural revolution’ in China took place in the 1960s. This again caused the GDP to increase drastically.


Unfortunately for China, the boom would not continue, because the widespread earthquakes in 1976, coupled with Chairman Mao’s death, had a negative effect on the agricultural output. The GDP of China once again plummeted after this.


China decided to liberate its foreign policies in the 1980s. This led to a fresh wave of foreign investments of Western nations who wanted to invest in China (how the tables have turned now). The investments led to double-digit GDP growth.


The massive foreign direct investment flow continued into the beginning of the 1990s. This increased the inflation rate and improved the Chinese economy by improving trade. This would continue until the late 1990s. This led to high foreign exchange reserves, especially because of the continued foreign investment in China.


We know that the dramatic improvements in the GDP of China have continued into the 21st century. On average, the yearly growth is between 8 and 11.5 percent.

The largest GDP in the world

Despite the fact that the United States economy has long been the largest in the world, the latest figures from the New World Bank suggest that China is already overtaking the United States in GDP. Even though most economists have long considered this an inevitability, it would be a lot faster than most experts would have predicted.


If the GDP of China does become the largest in the world, it would be a historic milestone. While there would not be any immediate significance, it does mark the start of the China dominated market. Considering that the United States has far fewer people to spread its GDP across, it does not mean that the average Chinese citizen is richer than the average American though.


Even as far as trade goes, it is not a massive shift because China is already an established economic powerhouse, regardless of what the GDP of China might be. In fact, according to the McKinsey Global Institute, China has been the world’s largest trading nation since 2012.

Possible pitfalls to the Chinese economy

Despite the fact that China has amassed some amazing figures, there are still a number of different economic challenges that the Chinese government has to deal with. These may ultimately affect the GDP of China in a negative way, unless the Chinese are able to deal with these factors.


  • China currently has millions of immigrants. It is currently difficult for the Chinese government to balance their own new entrants in the job market and sustain sufficient job growth for these migrants. This means that unless they are capable of doing so in the short term, chances are that unemployment will rise throughout China.
  • The question of how to contain the environmental damage in this rapidly changing economy is one of the main economic challenges that the country is facing. The interiors of the country have less economic development than the coastal area. The environment is deteriorating because of a falling water table, higher air pollution, and soil erosion, especially in Northern China.


The Chinese government introduced the 12th five-year plan in March 2012. The plan stresses the fact that the country’s domestic consumption has to increase and should be less dependent on exports. We will see what the Chinese GDP does in the immediate future, it should be interesting to see.

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Updated: April 12, 2016 — 11:36 am
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