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Economic and political overview

Economic Overview

China is the second-largest global economy, the largest exporter and has the largest exchange reserves in the world. After a 5.3% increase in 2023, China’s economic growth remained robust at 4.8% in 2024, despite facing multiple challenges. However, growth has moderated since the second quarter of the year, primarily due to subdued domestic demand and a prolonged downturn in the property sector. The government has introduced policy stimulus aimed at balancing short-term support for domestic demand with longer-term financial stability objectives. Manufacturing and infrastructure investment have remained robust, partially offsetting the contraction in real estate investment. Robust net exports, driven by strong external demand, supported economic activity, contributing 2 percentage points to overall growth. China’s GDP growth is projected to slow to 4.5% in 2025. Slower household income growth and the negative wealth effect from lower home prices are expected to weigh on consumption. Policy support for the property sector may provide a modest boost to housing demand and help reduce high inventory levels, though a full recovery in the sector is not expected until late 2025. Elevated uncertainty and reduced profitability will likely dampen manufacturing investment, while public spending will support infrastructure investment (World Bank).

Concerning public finances, China's fiscal revenue in 2024 grew 1.3% year-on-year, a sharp slowdown from the 6.4% increase in 2023, as a prolonged property market slump and slowing domestic demand weighed on the economy. Total fiscal revenues in 2024 amounted to CNY 21.97 trillion (USD 3.03 trillion), including CNY 17.497 trillion in tax receipts and CNY 4.473 trillion in non-tax income. Tax revenue fell 3.4%, while non-tax revenue surged 25.4%. Revenue from land sales by local governments dropped 16%, reflecting the deep property downturn. Such revenues have historically driven local economic growth, and the sharp decline has significantly impacted overall business activity. Fiscal expenditure grew 3.6% in 2024, slowing from 5.4% in 2023. Overall, the consolidated fiscal deficit was estimated at 7% in 2024, from 6.3% in the previous year, and is expected to increase to 7.4% in 2025 (IMF). Meanwhile, the debt-to-GDP ratio rose to 90.1%, up from 84.4% in 2023. The IMF expects the debt ratio to rise to 97.7% by 2026. In November 2024, China unveiled a CNY 10 trillion (USD 1.4 trillion) debt package to ease local government financing strains and stabilize economic growth. The special bond quota for local governments was increased by CNY 6 trillion (USD 836 billion) over the next three years, raising it to CNY 35.52 trillion and the overall debt ceiling to CNY 52.79 trillion. By the end of 2023, local government debt under official quotas stood at CNY 40.74 trillion. The new funds will help repay debt accumulated via local government financing vehicles (LGFVs), which Beijing classifies as "hidden debt." Local governments will also be allowed to use CNY 800 billion annually for the next five years for debt issuance already approved by Beijing to repay LGFV loans, bonds, and shadow credits. Over 2024, consumer price inflation has remained very low due to sluggish domestic demand (at 0.4%). The rate is expected to increase this year, to 1.7% (IMF).

According to the Ministry of Human Resources and Social Security, the low unemployment rate of these past years is largely due to the new digital economy and entrepreneurship. Many analysts say, however, that the government figure is an unreliable indicator of national employment levels, as it takes into account only employment in urban areas and does not measure the millions of migrant workers that arrive in the country every year. Despite the global context, the unemployment rate stood at 5.1% last year and should remain stable over the forecast horizon (IMF). Between 2010 and 2021, China's middle class grew rapidly, rising from 9.8% to 32.1% of the population, the fastest increase globally. While urban areas saw the most upward mobility, the secure middle class in rural areas rose from 13.7% to 26.2%, indicating broader prosperity. However, a significant portion of the population remains economically insecure: 17% live on less than USD 6.85/day, and 38.2% belong to the vulnerable middle class, at risk of falling back below the poverty line (World Bank).

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 17,758.0518,273.3619,534.8920,810.8822,050.81
GDP (Constant Prices, Annual % Change) 5.34.84.64.53.6
GDP per Capita (USD) 12,59712,96913,87314,79315,692
General Government Balance (in % of GDP) -6.3-7.0-7.4-7.7-7.9
General Government Gross Debt (in % of GDP) 84.490.193.897.7102.1
Inflation Rate (%) 0.20.41.72.02.0
Unemployment Rate (% of the Labour Force) 5.25.15.15.15.1
Current Account (billions USD) 252.99263.72316.98305.36299.84
Current Account (in % of GDP) 1.41.41.61.51.4

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

China has a highly diversified economy, dominated by the manufacturing and agricultural sectors. It is the second most populated country in the world and one of the largest producers and consumers of agricultural products. The agricultural sector is estimated to employ 22% of the active population and to account for 7.1% of GDP (World Bank, latest data available), although only 15% of the Chinese soil (about 1.2 M km²) is arable. China is the leading global producer of cereals, rice, cotton, potatoes and tea. In terms of livestock, it also dominates sheep and pork livestock farming as well as the world’s fish production. A series of plans have been aimed at transforming, modernising and diversifying agriculture to increase productivity. China's 2024 grain output hit a record 706.5 million tonnes, up 1.6 %, surpassing 700 million tonnes for the first time, per National Bureau of Statistics data. Cereal production grew 1.7 %, with rice, wheat, and corn increasing, while tubers rose 1.5 %. Soybean output fell 0.9 %. The bumper harvest was driven by a 0.3 % rise in grain planting areas to over 119 million hectares and a 1.3 % increase in yield per unit area.

The industry sector contributes to approximately 38.3% of China's GDP and employs 32% of the population (World Bank). China has become one of the main destinations for the outsourcing of global manufacturing units thanks to its cost-competitive labour market, despite an increase in labour costs in recent years. The country is a global leader in various manufacturing sectors like machinery manufacturing; electronics; textiles and garments; and steel and automobiles (the Chinese manufacturer BYD overtook Tesla to become the world's biggest electric car company in 2023). China’s economic growth has coincided primarily with the development of a competitive and outward-oriented manufacturing sector. More than half of the Chinese exports are made by companies with foreign capital. Their share in the sector's added value varies according to the industry: more than 60% for electronics and less than 20% for the majority of producer goods. The value-added industrial output went up 5.8% year on year in 2024 (data NBS). In the same year, value-added output rose by 3.1 % in mining, 6.1 % in manufacturing, and 5.3% in electricity, thermal power, gas, and water supply. Equipment and high-tech manufacturing grew faster than overall industrial production, up 7.7% and 8.9%, respectively. High-tech manufacturing accounted for 16.3% and equipment manufacturing for 34.6% of total industrial output, increasing by 0.6 and 1 percentage points from 2023.

The services sector in China has witnessed rapid expansion in the last decade, becoming the largest contributor to GDP (54.6%), surpassing manufacturing, and employing around 46% of the workforce (World Bank). Even though the sector's GDP share has been growing in recent years, the service sector as a whole, encumbered by public monopolies and restrictive regulations, has progressed at a slower pace. The development of the sector has been constrained by the country’s focus on manufactured exports and the substantial barriers to investment in the sector. However, the Chinese government has been focusing more on the services sectors lately, particularly in sub-sectors such as finance, logistics, education, and healthcare, as it is also aiming to rank among the top exporters for transport, tourism and construction. The trade sector is particularly strong and includes online giants like Alibaba and JD.com. China's value-added service output grew 4.7% year-on-year in the first three quarters of 2024, per NBS data. Information transmission, software, and IT services rose 11.3%, while catering and accommodation expanded 6.3%.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 22.3 31.8 45.8
Value Added (in % of GDP) 7.1 38.3 54.6
Value Added (Annual % Change) 4.1 4.7 5.8

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Chinese Yuan (Renminbi) (CNY) - Average Annual Exchange Rate For 1 USD 6.646.766.626.906.90

Source: World Bank - Latest available data.

 

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Foreign Trade

Thanks to its enormous trade surplus over the past decades, China has become the world's largest exporter and ranks second among the world’s largest importers. Despite its strict policies, the country is fairly open to foreign trade, which represented 37% of its GDP in 2023 (World Bank). In the same year, China's main exports comprised telephone sets, including cellular (7.6%), automatic data-processing machines and units (4.4%), electronic integrated circuits and parts (4.0%), motor vehicles (2.3%), electric accumulators and separators (2.1%), diodes, transistors, and semiconductors (1.8%). On the other hand, the country mainly imported electronic integrated circuits and parts (13.7%), petroleum oils (13.2%), iron ores and concentrates (5.3%), gold, including plated with platinum, unwrought (3.6%), petroleum gas and other gaseous hydrocarbons (3.3% - data Comtrade).

In 2023, exports were directed mostly towards the United States (14.8%), Hong Kong (8.1%), Japan (4.7%), South Korea (4.4%), Vietnam (4.1%), India (3.5%), and Germany (3.0%); whereas imports came chiefly from the U.S. (6.5%), South Korea (6.3%), Japan (6.3%), Australia (6.1%), and Brazil (4.8% - data Comtrade). China's trade partners diversified in 2023, with Belt and Road Initiative countries' share rising to 46.6% of total trade, up 1.2 percentage points. Trade with BRI nations grew 2.8% to CNY 19.47 trillion. Imports and exports with Latin America and Africa reached CNY 3.44 trillion (+6.8%) and CNY 1.98 trillion (+7.1%). In Q4, trade rebounded with the EU (CNY 5.51 trillion, 13.2% of total trade) and the U.S. (CNY 4.67 trillion, 11.2%). On the 15th of November 2020, China signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Indo-Pacific countries. This free trade agreement is the largest trade deal in history, covering 30 per cent of the global economy. It includes the Association of Southeast Asian Nations (ASEAN: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and ASEAN’s free trade agreement partners (Australia, China, India, Japan, New Zealand and the Republic of Korea). The RCEP covers goods, services, investment, economic and technical cooperation. It also creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium-sized enterprises. Less than a month after returning to the White House, U.S. President Trump announced 10% tariffs on all Chinese imports. In response, China imposed 15% duties on coal and liquefied natural gas, and 10% tariffs on U.S. crude oil, agricultural machinery, and large-engine cars. The uncertainty triggered by these tariffs can ripple through international markets, impacting not only direct trade flows but also broader supply chains and investment decisions.

Trade has become an increasingly important part of China’s overall economy, and it has been a significant tool used for economic modernisation. As reported by WTO, in 2023, exports of goods and services reached USD 3.38 trillion and USD 381.1 billion, respectively (-4.6% and -10.1% year-on-year). Imports of goods totalled USD 2.55 trillion, and those of services USD 552 billion (-5.5% and +18.7% year-on-year). According to the World Bank, the overall balance of trade was positive by 2.2% of GDP (from +3.2% one year earlier). According to preliminary figures from the General Administration of Customs (GAC), exports grew by 7.1% to CNY 25.45 trillion in 2024, while imports increased by 2.3% to CNY 8.39 trillion. The significant rise in exports of high-tech products like electric vehicles, industrial robots, and 3D printers underscores China’s shift to an innovation-driven trade model. Electromechanical goods accounted for 59.4% of total exports, with an 8.7% growth, while high-end equipment exports surged by over 40%. Cross-border e-commerce played a significant role, with trade in this sector reaching CNY 2.63 trillion (USD 359.04 billion), up CNY 1 trillion (USD 136.51 billion) since 2020.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 2,078,3862,065,9622,679,4122,706,5072,556,802
Exports of Goods (million USD) 2,499,4572,589,9523,316,0223,544,4343,380,024
Imports of Services (million USD) 500,680381,088426,998465,053551,995
Exports of Services (million USD) 283,192280,629394,273424,056381,121

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 35.934.837.338.437.3
Trade Balance (million USD) 392,993511,103562,706665,049593,896
Trade Balance (Including Service) (million USD) 131,844358,573461,494577,609386,063
Imports of Goods and Services (in % of GDP) 17.516.217.417.617.6
Exports of Goods and Services (in % of GDP) 18.418.619.920.819.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 8.43.73.03.03.0
Volume of imports of goods and services (Annual % change) 7.04.43.93.73.6

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
China is a member of the following international economic organisations: Asia-Pacific Economic Cooperation (APEC), Association of Southeast Asian Nations (dialogue partner of ASEAN Plus Three), G-20, G-24 (observer), G-5, G-77, IMF, Pacific Alliance (observer), WTO, among others. For the full list of economic and other international organisations in which participates China click here. International organisation membership of China is also outlined here.
Free Trade Agreements
China is a member of Regional Comprehensive Economic Partnership (RCEP) signed on 15 November 2020. The complete and up-to-date list of Free Trade Agreements signed by China can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
United States 14.8%
Hong Kong SAR, China 8.1%
Japan 4.7%
South Korea 4.4%
Vietnam 4.1%
See More Countries 63.9%
Main Suppliers
(% of Imports)		 2023
United States 6.5%
South Korea 6.3%
Japan 6.3%
Australia 6.1%
Brazil 4.8%
See More Countries 70.1%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
General Secretary of the Communist Party: Xi Jinping
President: Xi Jinping (since 14 March 2013)
Vice President: Han Zheng (since 10 March 2023)
Head of government and leader of the State Council: Li Qiang (since 11 March 2023)
Next Election Dates
Presidential: March 2028
National People's Congress: March 2028
Current Political Context

China's current leader, Xi Jinping, holds a triple title as CCP general secretary, Central Military Commission chairman and state president. After assuming these functions in 2012-13, he was reappointed in 2017-18 and then again in 2022.
To strengthen technological export controls and safeguard important industries, the government unveiled new rules in March 2024. Following a string of data breaches that affected state-owned businesses, the National People's Congress authorized modifications to the cybersecurity law in April, indicating a more stringent regulatory approach. Moreover, a comprehensive multi-year strategy to promote sustainable growth in rural areas was launched by Premier Li Qiang in May, while high-profile investigations of former executives followed the Ministry of Public Security's announcement in August 2024 of a major crackdown on financial wrongdoing among state-owned banks.

Internationally, Beijing signed a bilateral agreement with Russia to expand cooperation on renewable energy and military technology transfers, attracting international attention. China increased its local production and tightened regulations after the U.S. placed export limits on key semiconductor technology in early 2024. Activities in the South China Sea and close to Taiwan escalated military tensions, and both sides engaged in acrimonious rhetoric over governance and human rights. Beijing's primary security concerns were further heightened by U.S. congressional actions to support Taiwan's defence. With planned high-level conferences in early 2025 failing to produce meaningful advances, diplomatic channels remained tense.
Main Political Parties
The only political party in the country is the CCP (Chinese Communist Party). There are eight other registered small parties, but they remain under control of the CCP.
Executive Power
The Chinese executive is supervised by the State Council (a collegial body with important powers and formally appointed by the National People's Congress) under which are government commissions, ministries, and other organizations with the rank of a ministry. According to the Constitution, the Council is 'the Supreme Administrative Body' of the Chinese Government, though in practice, the majority of important measures are decided by the Political Bureau of the Chinese Communist Party (CCP), particularly its Standing Committee. The Council plays an important role in the economic domain. The president is the head of state and is elected by the National People's Congress. In practice, he is generally also the general secretary of the Communist Party and chairman of the Central Military Commission, representing China in international institutions. The premier directs and controls government action, assisted by four vice-premiers. The State Council also includes five state councillors, who, like vice-premiers, have jurisdiction over several ministerial departments or commissions. The Secretary-General of the Government is also a member of the State Council.
Legislative Power
The legislature is unicameral, composed of the National People's Congress (NPC). It is defined as the 'highest organ of state power' and meets once per year in a plenary session. Approximately 3,000 deputies are elected to the NPC every five years by indirect vote through local bodies. Since the 1980s, it has been influenced by local and sectional interests. Deputies represent 23 provinces, five autonomous regions, and four centrally-administered municipalities. The NPC also includes a delegation from the People's Liberation Army. The Standing Committee of the National People's Congress, formally elected by the NPC itself, functions in its place during recesses and exercises its powers. It is composed of a chairperson, vice-chairpersons, and several permanent members (currently 176). The Standing Committee meets regularly, but the NPC Presidium typically coordinates its daily functions during plenary sessions. Eligibility for deputies is controlled by the CCP, which supervises the appointment of executives and senior officials across different administrative units.
 

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