Business

Overview

After more than a quarter century of reform and opening to the outside world, by 2005 China’s economy had become the second largest in the world after the United States when measured on a purchasing power parity (PPP) basis. The government has a goal of quadrupling the gross domestic product (GDP) by 2020 and more than doubling the per capita GDP. Central planning has been curtailed, and widespread market economy mechanisms and a reduced government role have prevailed since 1978. The government fosters a dual economic structure that has evolved from a socialist, centrally planned economy to a socialist market economic system, or a “market economy with socialist characteristics.” Industry is marked by increasing technological advancements and productivity. People’s communes were eliminated by 1984—after more than 25 years—and the system of township-collective-household production was introduced to the agricultural sector. Private ownership of production assets is legal, although some nonagricultural and industrial facilities are still state-owned and centrally planned. Restraints on foreign trade were relaxed when China acceded to the World Trade Organization in 2001. Joint ventures are encouraged, especially in the coastal special economic zones and open coastal cities. A sign of the affluence that the reformed economy has brought to China might be seen in the number of its millionaires (measured in U.S. dollars): a reported 236,000 millionaires in 2004, an increase of 12 percent over two years earlier.

Chinese officials cite two major trends that have an effect on China’s market economy and future development: world multipolarization and regional integration. In relation to these trends, they foresee the roles of China and the United States in world affairs and with one another as very important. Despite successes, China’s leaders face a variety of challenges to the nation’s future economic development. They have to maintain a high growth rate, deal effectively with the rural workforce, improve the financial system, continue to reform the state-owned enterprises, foster the productive private sector, establish a social security system, improve scientific and educational development, promote better international cooperation, and change the role of the government in the economic system. Despite constraints the international market has placed on China, it nevertheless became the world’s third largest trading nation in 2004 after only the United States and Germany.

The Fifth Plenum of the Sixteenth CCP Central Committee took place in October 2005. The Fifth Plenum approved the new Eleventh Five-Year Plan (2006–10), which emphasizes a shift from extensive to intensive growth in order to meet demands for improved economic returns; the conservation of resources to include a 20-percent reduction in energy consumption by 2010; and an effort to raise profitability. Better coordination of urban and rural development and of development between nearby regions also is emphasized in the new plan.

Gross Domestic Product (GDP)/Purchasing Power Parity (PPP)

In 2005 China had a GDP of US$2.2 trillion. China’s PPP was estimated for 2005 at nearly US$8.9 trillion. PPP per capita in 2005 was estimated at US$6,800. Based on official Chinese data, the estimated GDP growth rate for 2005 was 9.9 percent.

Government Budget

The state budget for 2004 was US$330.6 billion in revenue and US$356.8 billion in expenditures. In the revenue column, 95.5 percent was from taxes and tariffs, 54.9 percent of which was collected by the central government and 45 percent by local authorities. The expenditures were for culture, education, science, and health care (18 percent); capital construction (12 percent); administration (14 percent); national defense (7.7 percent); agriculture, forestry, and water conservancy (5.9 percent); subsidies to compensate for price increases (2.7 percent); pensions and social welfare (1.9 percent); promotion of innovation, science, and technology (4.3 percent); operating expenses of industry, transport, and commerce (1.2 percent); geological prospecting (0.4 percent), and other (31.9 percent). The overall budget deficit in 2004 was approximately US$26 billion, an amount equivalent to about 1.5 percent of gross domestic product (GDP).

Inflation

China’s annual rate of inflation averaged 6 percent per year during the 1990–2002 period. Although consumer prices declined by 0.8 percent in 2002, they increased by 1.2 percent in 2003. China’s estimated inflation rate in 2005 was 1.8 percent.

Special and Open Economic Zones

As part of its economic reforms and policy of opening to the world, between 1980 and 1984 China established special economic zones (SEZs) in Shantou, Shenzhen, and Zhuhai in Guangdong Province and Xiamen in Fujian Province and designated the entire island province of Hainan a special economic zone. In 1984 China opened 14 other coastal cities to overseas investment (listed north to south): Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihai. Then, beginning in 1985, the central government expanded the coastal area by establishing the following open economic zones (listed north to south): Liaodong Peninsula, Hebei Province (which surrounds Beijing and Tianjin), Shandong Peninsula, Yangzi River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in southern Fujian Province, Zhujiang (Pearl River) Delta, and Guangxi Zhuang Autonomous Region. In 1990 the Chinese government decided to open the Pudong New Zone in Shanghai to overseas investment, as well as more cities in the Yangzi River Valley. Since 1992 the State Council has opened a number of border cities and all the capital cities of inland provinces and autonomous regions. In addition, 15 free-trade zones, 32 state-level economic and technological development zones, and 53 new- and high-tech industrial development zones have been established in large and medium-sized cities. As a result, a multilevel diversified pattern of opening and integrating coastal areas with river, border, and inland areas has been formed in China.

Agriculture, Forestry, and Fishing

China traditionally has struggled to feed its large population. Even in the twentieth century, famines periodically ravaged China’s population. Great emphasis has always been put on agricultural production, but weather, wars, and politics often mitigated good intentions. With the onset of reforms in the late 1970s, the relative share of agriculture in the gross domestic product (GDP) began to increase annually. Driven by sharp rises in prices paid for crops and a trend toward privatization in agriculture, agricultural output increased from 30 percent of GDP in 1980 to 33 percent of GDP by 1983. Since then, however, agriculture has decreased its share in the economy at the same time that the services sector has increased. By 2004 agriculture (including forestry and fishing) produced only 15.2 percent of China’s GDP but still is huge by any measure. Some 46.9 percent of the total national workforce was engaged in agriculture, forestry, and fishing in 2004.

According to United Nations statistics, China’s cereal production is the largest in the world. In 2003 China produced 377 million tons, or 18.1 percent of total world production. Its plant oil crops—at 15 million tons in 2003—are a close second to those of the United States and amounted to 12.6 percent of total world production. More specifically, China’s principal crops in 2004 were rice (176 million tons), corn (132 million tons), sweet potatoes (105 million tons), wheat (91 million tons), sugarcane (89 million tons), and potatoes (70 million tons). Other grains, such as barley, buckwheat, millet, oats, rye, sorghum, and tritcale (a wheat-rye hybrid), added substantially to overall grain production. Crops of peanuts, rapeseed, soybeans, and sugar beets also were significant, as was vegetable production in 2004. Among the highest levels of production were cabbages, tomatoes, cucumbers, and dry onions. In 2004 fruit production also became a significant aspect of the agricultural market. China produced large crops of watermelons, cantaloupes, and other melons that year. Other significant orchard products were apples, citrus fruits, bananas, and mangoes. China, a nation of numerous cigarette smokers, also produced 2.4 million tons of tobacco leaves.

Fertilizer use was a major contributor to these abundant harvests. In 2002 China consumed 25.4 million tons of nitrogenous fertilizers, or 30 percent of total world consumption and more than double the consumption of other major users such as India and the United States in the same period. Among the less used fertilizers, China also was a leader. It consumed 9.9 million tons of phosphate fertilizers (29.5 percent of the world total) and 4.2 million tons of potash fertilizers (18.2 percent of the world total).

With China’s accession to the World Trade Organization (WTO) in 2001, food export opportunities have developed that have brought about still more efficient farming techniques. As a result, traditional areas such as grain production have decreased in favor of cash crops of vegetables and fruit for domestic and export trade.

China’s livestock herds are the largest in the world, far outstripping all of Europe combined and about comparable in size to all African nations combined. For example, in 2003 China had 49.1 percent of the world’s pigs, 22.5 percent of the world’s goats, and 7.5 percent of the world’s cattle. Converted into food production, China’s major livestock products in 2004 were pork (47.2 million tons), poultry eggs (28.0 million tons), cow’s milk (18.5 million tons), poultry meat (13.4 million tons), and beef and veal (6.4 million tons). Other meats of significant amounts were mutton, lamb, and goat. Major by-products were cattle hides (1.6 million tons), sheepskins (321,000 tons), and goatskins (375,000 tons). Honey (300,000 tons) and raw silk (95,000 tons) also were major products destined for the commercial market.

Forestry products, measured in annual roundwood production, also abound. In 2004 China produced an estimated 284 million cubic meters of roundwood, the world’s third largest supplier after the United States and India, or about 8.5 percent of total world production. From the roundwood, some 11.3 million cubic meters of sawnwood are produced annually.

China also leads the world in fish production. In 2003 it caught 16.7 million tons of fish, far outcatching the second-ranked nation, the United States, with its 4.9 million tons. Aquaculture also was substantial in world terms. In the same year, China harvested 28.8 million tons of fish, an amount more than 10 times that of the second-ranked nation, India, which produced 2.2 million tons. The total fish production in 2003 was 45.6 million tons. Of this total, 63.2 percent was from aquaculture, an increasing sector, and 36.7 percent from fish caught in rivers, lakes, and the sea.

Mining and Minerals

Mineral resources include large reserves of coal and iron ore, plus adequate to abundant supplies of nearly all other industrial minerals. Besides being a major coal producer, China is the world’s fifth largest producer of gold and in the early twenty-first century became an important producer and exporter of rare metals needed in high-technology industries. The rare earth reserves at the Bayan Obi mine in Inner Mongolia are thought to be the largest in any single location in the world. Outdated mining and ore-processing technologies are being replaced with modern techniques, but China’s rapid industrialization requires imports of minerals from abroad. In particular, iron ore imports from Australia and the United States have soared in the early 2000s as steel production rapidly outstripped domestic iron ore production.

The major areas of production in 2004 were coal (nearly 2 billion tons), iron ore (310 million tons), crude petroleum (175 million tons), natural gas (41 million cubic meters), antimony ore (110,000 tons), tin concentrates (110,000 tons), nickel ore (64,000 tons), tungsten concentrates (67,000 tons), unrefined salt (37 million tons), vanadium (40,000 tons), and molybdenum ore (29,000 tons). In order of magnitude, bauxite, gypsum, barite, magnesite, talc and related minerals, manganese ore, fluorspar, and zinc also were important. In addition, China produced 2,450 tons of silver and 215 tons of gold in 2004. The mining sector accounted for less than 0.9 percent of total employment in 2002 but produced about 5.3 percent of total industrial production.

Industry and Manufacturing

Industry and construction produced 53.1 percent of China’s gross domestic product (GDP) in 2005. Industry (including mining, manufacturing, construction, and power) contributed 52.9 percent of GDP in 2004 and occupied 22.5 percent of the workforce. The manufacturing sector produced 44.1 percent of GDP in 2004 and accounted for 11.3 percent of total employment in 2002. China is the world’s leading manufacturer of chemical fertilizers, cement, and steel. Prior to 1978, most output was produced by state-owned enterprises. As a result of the economic reforms that followed, there was a significant increase in production by enterprises sponsored by local governments, especially townships and villages, and, increasingly, by private entrepreneurs and foreign investors. By 2002 the share in gross industrial output by state-owned and state-holding industries had decreased to 41 percent, and the state-owned companies themselves contributed only 16 percent of China’s industrial output.

An example of an emerging heavy industry is automobile manufacture, which has soared during the reform period. In 1975 only 139,800 automobiles were produced annually, but by 1985 production had reached 443,377, then jumped to nearly 1.1 million by 1992 and increased fairly evenly each year up until 2001, when it reached 2.3 million. In 2002 production rose to nearly 3.3 million and then jumped again the next year to 4.4 million. Domestic sales have kept pace with production. After respectable annual increases in the mid- and late 1990s, sales soared in the early 2000s, reaching 3 million automobiles sold in 2003. With some governmental controls in place, sales dipped to 2.4 million sold in 2004. Some forecasters expect sales to reach 6.9 million by 2015. By 2010 China’s automobile production is projected to reach 9.4 million, and the country could become the number-one automaker in the world by 2020. So successful has China’s automotive industry been that it began exporting car parts in 1999. China began to plan major moves into the automobile and components export business starting in 2005. A new Honda factory in Guangzhou was being built in 2004 solely for the export market and was expected to ship 30,000 passenger vehicles to Europe in 2005. By 2004, 12 major foreign automotive manufacturers had joint-venture plants in China. They produced a wide range of automobiles, minivans, sport utility vehicles, buses, and trucks. In 2003 China exported US$4.7 billion worth of vehicles and components, an increase of 34.4 percent over 2002. By 2004 China had become the world’s fourth largest automotive vehicle manufacturer.

Concomitant with automotive production and other steel-consuming industries, China has been rapidly increasing its steel production. Iron ore production kept pace with steel production in the early 1990s but was soon outpaced by imported iron ore and other metals in the early 2000s. Steel production, an estimated 140 million tons in 2000, was expected to reach more than 350 million tons a year by 2010.

Energy

As with other economic categories, China is a major producer and consumer of energy resources. In 2002, the most recent year available for United Nations statistics, China produced 934.2 million tons of oil equivalent and consumed 889.6 million tons. Per capita consumption was 687 kilograms, only a quarter of North Korea’s estimated consumption, a third of that in Hong Kong, and well below the average for Asia. China’s energy consumption has risen dramatically since the inception of its economic reform program in the late 1970s. Electric power generation—mostly by coal-burning plants—has been in particular demand; China’s electricity use in the 1990s increased by between 3 percent and 7 percent per year. In 2003 electricity use increased by 15 percent over the previous year, and supplies could not keep up with demand, thus slowing economic development. Government statistics indicate that the overall demand for electric power for 2004 was projected to be around 2 trillion kilowatt-hours, but by June of that year a 60-billion kilowatt-hour shortfall had been projected. Energy production failed to keep up with industrial demand, resulting in power cutoffs throughout most of the country. In 2005 the Chinese Communist Party expressed the determination to reduce energy consumption by 20 percent per capita of the gross domestic product (GDP) by 2010.

China is largely self-sufficient in all energy forms. Its coal production is the highest in the world. Some 75.6 percent of China’s energy was produced from coal in 2004. The coal reserves are among the world’s largest, and mining technology has been improving since the 1990s. Coal has even been exported since the early 1970s.

Petroleum fulfilled 13.5 percent and natural gas 3.0 percent of China’s energy requirements in 2004. The petroleum reserves are large, of varying quality, and in disparate locations. There are oil deposit blocks in the northwest and offshore tracts believed to be among the world’s largest. In December 2004, it was reported that some 20.5 billion tons of oil reserves had been discovered in North China’s Bohai Bay and more than 20 billion tons in Xinjiang’s Tarim Basin. There also are an estimated 28 billion cubic meters of natural gas in Xinjiang, 100 billion cubic meters in Sichuan, and 200 million cubic meters in Inner Mongolia, as well as substantial natural gas reserves offshore. Even though it has exported petroleum since the early 1970s, China, nevertheless, is a net importer of crude petroleum because the required high grades of petroleum are not available domestically. Imports of mineral fuels totaled 6.6 percent of the cost of total imports in 2002. In 2004 Russia agreed to expand its oil exports to China. With deliveries sent by railroad, the two countries expected oil deliveries to China to reach 10 million tons in 2005 and 15 million tons in 2006. However, China’s total petroleum imports were expected to exceed 100 million tons in 2005.

China’s hydroelectric potential is the greatest in the world and the sixth largest in capacity. However, in 2004 hydroelectric power produced only 7.9 percent of China’s energy needs. The Three Gorges hydropower project in Hubei Province on the Yangzi River started delivering power to eastern and central provinces in July 2003 and is expected to produce 84.7 billion kilowatt-hours per year when the project is completed by 2009. The main wall of the dam was completed in 2006, two years ahead of schedule.

Construction

As might be expected in a rapidly developing nation, China’s construction sector has grown substantially since the early 1980s. In the twenty-first century, investment in capital construction has experienced major annual increases. In 2001 investments increased 8.5 percent over the previous year. In 2002 there was a 16.4 percent increase, followed by a 30 percent increase in 2003.

Services

In 2005 the services sector produced 40.3 percent of China’s gross domestic product. Prior to the onset of economic reforms in 1978, China’s services sector was characterized by state-operated shops, rationing, and regulated prices. With reform came private markets and individual entrepreneurs and a comparatively free-wheeling commercial sector. Urban areas now are filled with shopping malls and dotted with Western-style retail shops and fast-food chains. An array of Western-style fast-food chains, trendy restaurants, night clubs, and consumer shops of all kinds operate within close proximity to Mao Zedong’s mausoleum in Beijing. Other east coast cities have followed suit, and several cities in the interior are not far behind. If anything, as the Economist Intelligence Unit points out, the retail sector “suffers from oversupply.” Joint-venture hotels abound in China’s major cities.

Banking and Finance

Banking reform was initiated in China in 1994, and the Commercial Banking Law took effect in July 1995. The aims of these actions were to strengthen the role of the central bank—the People’s Bank of China—and to allow private banks to be established. The People’s Bank of China was established in 1948. It issues China’s currency and implements the nation’s monetary policies. China’s oldest bank, founded in 1908, is the Bank of Communications Limited, a commercial enterprise located in Shanghai. China’s second oldest bank was established in 1912 as the Bank of China. Since 2004 it has become a shareholding company known as the Bank of China Limited and handles foreign exchange and international financial settlements. The Agricultural Bank of China, founded in 1951, is mainly involved in rural financing and the provision of services to agricultural, industrial, commercial, and transportation enterprises in rural areas. Other major banks include the China Construction Bank; established in 1954 as the People’s Construction Bank of China, it has been a state-owned commercial bank since 1994 and maintains some 15,400 business outlets inside and outside China, including six overseas branches and two overseas representative offices. The China Construction Bank was restructured in 2003 into a shareholding bank called the China Construction Bank Corporation, with the state holding the controlling shares. The China International Trust and Investment Corporation was founded in 1979 to assist economic and technological cooperation, finance, banking, investment, and trade. The Industrial and Commercial Bank of China was founded in 1984 to handle industrial and commercial credits and international business. The Agricultural Development Bank of China, Export and Import Bank of China, and State Development Bank all were founded in 1994. China’s first private commercial national bank, the China Minsheng Banking Corporation, was opened in 1996. Commercial banks are supervised by the China Banking Regulatory Commission, which was established in 2003. In 2005 the commission announced the launching of a new postal savings bank to replace the old system and its more than 36,000 outdated outlets nationwide.

When first permitted in the mid-1980s, foreign banks were restricted to designated cities and could deal only with transactions by foreign companies in China. After those restrictions were loosened following China’s accession to the World Trade Organization in 2001, some foreign banks have been allowed to provide services to local residents and businesses. In 2004 there were some 70 foreign banks with more than 150 branches in China.

There are stock exchanges in Beijing, Shanghai (the third largest in the world), and Shenzhen and futures exchanges in Shanghai, Dalian, and Zhengzhou. They are regulated by the China Securities Regulatory Commission.

Tourism

China has become a major tourist destination, especially since its opening to the world in the late 1970s. By 2003 China had some 9,751 tourist hotels and a burgeoning hospitality industry, much of it joint ventures with foreign partners. In 2004 China received some 109 million tourists and visitors. However, 88.4 million (80.7 percent of the total) visits were made by individuals arriving via the Hong Kong and Macau special administrative regions, including those who made multiple and often same-day trips to China. Others came from Taiwan (3.3 percent), Japan (3.0 percent), South Korea (2.6 percent), Russia, (1.6 percent), and the United States (nearly 1.1 percent). In 2004 visitors to China spent some US$25.7 billion. At the same time, China increased its own tourism; travelers from China spent more than US$15 billion on tourism in other countries in 2002.

Labor

China’s estimated employed labor force in 2005 totaled 791.4 million persons. During 2003, 49 percent of the labor force worked in agriculture, forestry, and fishing; 22 percent in mining, manufacturing, energy, and construction industries; and 29 percent in the services sector and other categories. In 2004 some 25 million persons were employed by 743,000 private enterprises. The All-China Federation of Trade Unions (ACFTU) is the state-sanctioned labor organization with which other official labor organizations affiliate. The ACFTU was established in 1925 to represent the interests of national and local trade unions and trade union councils. The ACFTU reported a membership of 130 million, out of an estimated 248 million urban workers, at the end of 2002. An independent trade union group, the Workers’ Autonomous Federation, was founded in 1989 but fell short of its goal of establishing a separate trade union movement when many of its leaders were arrested during the June 1989 Tiananmen incident. Official Chinese statistics reveal that 4.2 percent of the total urban workforce was unemployed in 2004, although the true figure was believed by outside observers to be 10 percent. As part of its newly developing social security legislation, China has an unemployment insurance system. At the end of 2003, more than 103.7 million people were participating in the plan, and 7.4 million laid-off employees had received benefits.

Foreign Economic Relations

The government traditionally has decided the composition of China’s foreign trade. However, since the initiation of reforms in 1978, increasing numbers of private partnerships have developed, and trade is primarily dictated by the marketplace. After years of disagreement over trade practices with its largest export partner, the United States, China agreed to a range of economic reforms designed to open Chinese markets to private and foreign investment. Subsequently, the U.S. Congress granted China permanent most-favored-nation status in 2000. In 2001 China acceded to the World Trade Organization. As a result of its efforts in the global marketplace, by 2004 China had become the world’s third largest trading power behind the United States and Germany.

Imports

China’s imports rose by 36 percent in 2004, totaling US$561.4 billion. Of these imports, the major components were machinery and equipment, mineral fuels, plastics, and iron and steel. The major trading partners were Japan (16.8 percent), Taiwan (11.4 percent), South Korea (11.1 percent), and the United States (8 percent). The 2004 amount reflected the rising trend in imports during the pervious seven years. In 1996 China’s imports totaled US$138.8 billion and reached US$225 billion by 2000.

Exports

China’s exports rose by 35.4 percent in 2004, totaling US$593.4 billion and favoring machinery and equipment, textiles and clothing, footwear, toys, and mineral fuels as the major commodities. The primary trading partners were the United States (21.1percent), Hong Kong (trading as a separate economy, mostly for re-export purposes, 17 percent), Japan (12.4 percent), and South Korea (4.7 percent). One of the burgeoning exports, toys (both unsophisticated and high-tech, of which China provides about 75 percent of the total worldwide), also has a growing domestic market (US$6 billion a year). The 2004 total reflected the rising trend in exports during the previous seven years, increasing from US$151 billion in 1996 and reaching US$249.2 billion by 2000.

Trade Balance

China had a favorable trade balance of US$32 billion in 2004 and US$38.7 billion in 2003. These amounts reflect the general course of a favorable trade balance during the pervious eight years. In 1996 China’s trade balance was US$12.2 billion, peaking at US$43.4 billion in 1998 but declining to US$24.1 billion by 2000 before starting its new increase.

Balance of Payments

China’s current account balance in 2004 was nearly US$68.7 billion. Added to this total was US$54.9 billion in foreign direct investment (exceeding that invested in the United States). When other investments, assets, and liabilities are brought into the calculation, the overall balance of payments was US$206.1 billion in 2004, compared with US$75.2 billion in 2002 and US$116.5 billion in 2003.

External Debt

According to United Nations statistics for 2001, China’s external and public, or publicly guaranteed, long-term debt had reached US$91.7 billion. China’s debt had grown steadily during the 1990s, peaked at US$112.8 billion in 1997, and then declined annually thereafter. By 2004 China had US$618.5 billion in its international reserve account, 98.6 percent of which was from foreign exchange, not including the Bank of China’s foreign exchange holdings.

Foreign Aid and Foreign Investment

China is the recipient of bilateral and multilateral official development assistance and official aid to individual recipients. In 2003 it received US$1.3 billion in such disbursements, or about US$1 per capita. This total was down from the 1999 figures of US$2.4 billion and US$1.90 per capita. Some of this aid comes to China in the form of socioeconomic development assistance through the United Nations (UN) system. China received US$112 million in such UN assistance annually in 2001 and 2002, the largest portion coming from the UN Development Programme (UNDP).

China also obtains foreign capital through foreign loans, direct foreign investment (FDI), and other investment by foreign businesses. Since 1980 foreign businesses from more than 170 countries and regions have invested in Chinese joint-venture enterprises. Most joint-venture activities are located in coastal cities and increasing numbers in inland cities as well. Some 300 of the 500 top transnational companies in the world have invested in China, and foreign investments have become an important capital source for China’s economic development. In 1999 FDI totaled US$40.3 billion. Between 1979 and 1999, cumulative FDI totaled US$305.9 billion, US$40.3 billion of which was invested in 1999 alone. In that year, China had approved the establishment of 342,000 foreign-funded enterprises, more than 100,000 of which have gone into operation. Contracted FDI reached nearly US$82.8 billion in 2002, US$115 billion in 2003, US$153.48 in 2004, and US$130.33 billion in the first nine months of 2005.

Currency and Exchange Rate

China’s currency is the renminbi (RMB, people’s currency) or yuan. The interbank exchange rate on August 1, 2006, was US$1=RMB7.98. The RMB is made up of 100 fen or 10 jiao. Coins are issued in denominations of one, two, and five fen; one and five jiao, and one RMB. Banknotes are issued in denominations of one, two, and five jiao; and one, two, five, 10, 50, and 100 RMB.

Fiscal Year

Calendar Year.

Source: Library of Congress – Federal Research Division Country Profile