China: Socio-economic overview

The Peoples' Republic of China (hereinafter "China") is one of the world's and Pacific Rim's most dynamic economies, and a new major player in the global economy. China's economy during the last quarter-century has changed from a centrally planned system, largely closed to international trade, to a market-oriented economy with a rapidly growing private sector.

During the last quarter century, China has evolved into a major economic player, with an estimated 2005 gross domestic product (GDP) of $1.833 trillion. China's economy has enjoyed average annual growth rates in excess of 9% over the past two decades, and, after decades of rapid economic development, overall GDP ranks sixth in the world.

The country also has the world's second-largest foreign exchange reserve. From 1999 to 2004, the China economy, as measured by GDP, grew at an average rate of 8%. In 2005, China's real GDP grew at a rate of 9.3%. The Development Research Center of China's State Council (DRCSC) issued a report predicting that China will maintain an 8% annual GDP growth rate from 2006 to 2010- meaning that China's GDP would reach around $2.3 trillion by the end of 2010. The same report projects that China's GDP will reach $4.7 trillion, or $3,200 per-capita, by 2020.

This DRCCSC report mentions five major factors supporting China's future economic growth:

Hong Kong: Socio-economic overview

Pursuant to an agreement signed by China and the UK on December 19, 1984, Hong Kong became the Special Administrative Region of China on July 1, 1997. In this agreement, China has promised that under its ?one country, two systems? formula, China's socialist economic system will not be imposed on Hong Kong and that Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for 50 years following the signing of the agreement.

Hong Kong has a free market economy, highly dependent on international trade. Natural resources are limited, and food and raw materials must be imported. Even before Hong Kong reverted to Chinese administration on July 1, 1997, it had extensive trade and investment ties with China. Hong Kong has been further integrating its economy with China, because China's growing openness to the world economy has made manufacturing in China much more cost effective. Per-capita, GDP is comparable to that of the four largest economies in the European Union. GDP growth averaged a strong 5% from 1989 to 2005, but Hong Kong suffered two recessions in the past eight years because of the Asian financial crisis in 1997-98 and the global downturn in 2001-02. Although the Severe Acute Respiratory Syndrome (SARS) outbreak also battered Hong Kong's economy, a solid rise in exports, a boom in tourism from the mainland because of China's easing of travel restrictions, and a return of consumer confidence resulted in the resumption of strong growth from late 2003 through 2005. In 2005, GDP was estimated at $181.6 billion with estimate growth rate of 7%. The GDP per-capita was $36,800. In 2005, the population was 6,898,686 persons with annual growth rate of only 0.65%.

Japan: Socio-economic overview

After 1945, Japan recovered to become a dynamic economic power and a staunch ally of the US. Government/industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) have helped Japan's economy advance at an extraordinary pace, to become the third largest economy in the world (after the US and China).

For three decades, overall real economic growth had been spectacular - a 10% average in the 1960-s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after-effects of overinvestment during the late 1980s, combined with domestic policies intended to wring speculative excesses from the stock and real estate markets and force a restructuring of the economy. From 2000 to 2003, government efforts to revive economic growth met with little success and were further hampered by the slowing of the US, European, and Asian economies. In 2004 and 2005, growth improved and the lingering fears of deflation in prices and economic activity lessened Japan?s huge government debt (which totals 170% of GDP) and the aging population are two major long-running issues.

In 2005, the estimated GDP was $4.955 trillion.

Korea: Socio-economic overview

Korea was an independent kingdom for much of the past millennium. After World War II, a republic was set up in the southern half of the Korean Peninsula while a Communist-style government was installed in the north. During the Korean War (1950-53), U.S. and other U.N. forces intervened to defend South Korea from North Korean attacks supported by the Chinese. Thereafter, South Korea achieved rapid economic growth with per-capita income rising to roughly 14 times greater than the level of North Korea. South Korea today is a fully functioning modern democracy.

Since the early 1960s, South Korea has achieved an incredible record of growth and integration into the high-tech modern world economy. Four decades ago, GDP per-capita was comparable with levels in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion-dollar club of world economies, with a current per-capita GDP equal to some European Union economies. This success was achieved by a system of close government/business ties, including directed credit, import restrictions, sponsorship of specific industries, and a strong labor effort. The government has promoted the import of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption.

In 2005, South Korea had an estimated population of 48,422,644 persons with a low population growth-rate similar to China of only 0.38%.

Taiwan: Socio-economic overview

The dominant political issues continue to be the relationship between Taiwan and China - specifically the question of eventual unification - as well as domestic political and economic reform.

Taiwan has a dynamic capitalist economy with gradually decreasing guidance of investment and foreign trade by government authorities. In keeping with this trend, some large government-owned banks and industrial firms are being privatized. Exports have provided the primary impetus for industrialization. The trade surplus is substantial and foreign reserves are the world's third largest. Taiwan is a major investor throughout Southeast Asia.

China has overtaken the US to become Taiwan's largest export market. Growing economic ties with China are a dominant long-term factor, e.g., exports to China of parts and equipment for the assembly of goods for export to developed countries.

In 2005, GDP was $334.4 billion with 3.6% annual growth rate. The population was 22,894,384 with estimated population growth rate of only 0.63%.