CHINA
GEOGRAPHY
China or in Chinese 中国 (pinyin: Zhōng guó, which literally means ‘Middle Kingdom’), officially known as the People’s Republic of China (PRC), with a surface of about 9,600,000 square kilometers is one of the largest country by area and the world’s most populous country, with a population of over 1.4 billion. China is divided in 22 provinces, five autonomous regions, four municipalities under the direct control of the government (Beijing, Tianjin, Shanghai, and Chongqing), and the two special administrative regions of Hong Kong and Macau. The capital city Beijing北京 is considered the nation’s cultural, educational and political center, meanwhile Shanghai 上海 is considered the nation’s financial center.
HISTORY
China is one of the most ancient civilization with more than 3000 years of history, which can be divided in three periods: Ancient China (1600 BC to 221 BC), Imperial China (221 BC to 1911 AD) and Modern China (1912 AD to present).
Ancient China
The Shang dynasty is the first Chinese dynasty to leave historical records, it is thought to have ruled from about 1600 to 1046 BC. After the Shang era, the larger Zhou era territory was divided by a network of feudal states and was ruled over by kings. The king of Zhou only had direct control over a small portion of the realm and received tributes from the feudal states. This era was divided into three periods: the Western Zhou Dynasty (1045–771 BC); the Spring and Autumn Period (770–476 BC), and the Warring States Period (475–221 BC). It marked the transition from tribal society to feudal society. The first part of the Zhou era was a fairly peaceful time but, after 770 BC, the Zhou king lost his authority and seven prominent states emerged.
Modern China
On 1 January 1912, the Republic of China was established, and Sun Yat-sen of the Kuomintang (Nationalist Party) was proclaimed provisional president. However, the presidency was later given to Yuan Shikai, a former Qing general. After Yuan Shikai’s death in 1916, China was politically fragmented, between the Kuomintang and the communist People’s Liberation Army (PLA). The Second Sino-Japanese War (1937–1945), a theater of World War II, forced an uneasy alliance between the Kuomintang and the PLA. Japanese forces committed numerous war atrocities against the civilian population; in all, as many as 20 million Chinese civilians died. During the war, China, along with the UK, the US and the Soviet Union were recognized as the Allied “Big Four” in the Declaration by United Nations. Along with the other three great powers, China was one of the four major Allies of World War II, and was later considered one of the primary victors in the war. After the surrender of Japan in 1945, Taiwan was returned to Chinese control. China emerged victorious but war-ravaged and financially drained. The continued distrust between the Kuomintang and the Communists led to the resumption of civil war. Constitutional rule was established in 1947, but because of the ongoing unrest, many provisions of the ROC constitution were never implemented in mainland China.
Major combat in the Chinese Civil War ended in 1949 with the Communist Party in control of most of mainland China, and the Kuomintang retreating offshore. On 21 September 1949, Communist Party Chairman Mao Zedong proclaimed the establishment of the People’s Republic of China.
This was followed by a mass celebration in Tiananmen Square on 1 October, at which the proclamation was made publicly by Mao at the Tiananmen Gate, the date becoming the new country’s first National Day. The regime consolidated its popularity among the peasants through land reform, which included the execution of between 1 and 2 million landlords. China developed an independent industrial system and its own nuclear weapons.
The Chinese population increased from 550 million in 1950 to 900 million in 1974. However, the Great Leap Forward, an idealistic massive reform project, resulted in an estimated 15 to 35 million deaths between 1958 and 1961, mostly from starvation. In 1966, Mao and his allies launched the Cultural Revolution, sparking a decade of political recrimination and social upheaval that lasted until Mao’s death in 1976.
Under the administration of different leaders in the 1990s, China’s economic performance pulled an estimated 150 million peasants out of poverty and sustained an average annual gross domestic product growth rate of 11.2%. However, the growth also severely impacted the country’s resources and environment, and caused major social displacement.
During the 18th National Communist Party Congress in November 2012, Hu Jintao was replaced as General Secretary of the Communist Party by Xi Jinping. Under Xi, the Chinese government began large-scale efforts to reform its economy, which has suffered from structural instabilities and slowing growth. The Xi–Li Administration also announced major reforms to the one-child policy and prison system.
SOCIAL CULTURE AND RELIGION
The government of China officially espouses state atheism, though Chinese civilization has historically long been a cradle and host to a variety of the most enduring religious-philosophical traditions of the world. Confucianism and Taoism (Daoism), later joined by Buddhism, constitute the “three teachings” that have shaped Chinese culture.
Since 1949, China has been governed by the Communist Party of China, an atheist institution that prohibits party members from practicing religion while in office. The government formally recognizes five religions: Buddhism, Taoism, Catholicism, Protestantism, and Islam.
National surveys conducted in 2010 estimated that that more than 50% of the population of China is atheist or non-religious, a fifth is adherent to various indigenous folk religions, 18% are Buddhists, 5% are Christians and almost 2% are Muslims.
POLITICS
The politics of the People’s Republic of China takes place in a framework of a socialist republic run by a single party, the Communist Party of China, headed by the General Secretary. State power within the People’s Republic of China (PRC) is exercised through the Communist Party, the Central People’s Government (State Council) and their provincial and local representation.
People’s Congress members at the county level are elected by voters. These county-level People’s Congresses have the responsibility of oversight of local government and elect members to the Provincial (or Municipal in the case of independent municipalities) People’s Congress. The Provincial People’s Congress, in turn, elects members to the National People’s Congress that meets each year in March in Beijing. The ruling Communist Party committee at each level plays a large role in the selection of appropriate candidates for election to the local congress and to the higher levels.
The President of China is the head of state, serving as the ceremonial figurehead under National People’s Congress. The Premier of China is the head of government, presiding over the State Council composed of four vice premiers and the heads of ministries and commissions. As a one-party state, the General Secretary of the Communist Party of China holds ultimate power and authority over state and government. The offices of President, General Secretary, and Chairman of the Central Military Commission have been held simultaneously by one individual since 1993, granting the individual de jure and de facto power over the country.
Political power has become much less personal and more institutionally based than it was during the first forty years of the PRC. For example, Deng Xiaoping was never the General Secretary of the Communist Party of China, President, or Premier of China, but was the leader of China for a decade. Today the authority of China’s leaders is much more tied to their institutional base.
Central government leaders must, in practice, build consensus for new policies among party members, local and regional leaders, influential non-party members, and the population at large. However, control is often maintained over the larger group through control of information.
ECONOMY
The economy of China is a socialist market economy that ranks as the second largest in the world by nominal GDP, the country also has the world’s largest natural resources worth $23 trillion, 90% of which are coal and rare earth metals. Of the world’s 500 largest companies, 129 are headquartered in China. It is the world’s largest manufacturing economy and exporter of goods. It is also the world’s fastest-growing consumer market and second-largest importer of goods.
China has a highly diversified economy, dominated by the manufacturing and agricultural sectors. China is the most populated country in the world and one of the largest producers and consumers of agricultural products. The agricultural sector is estimated to employ 16% of the active population and accounts for about 8% of GDP, although only 15% of the Chinese soil 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 and the world’s fish production.
A series of plans have been aimed at transforming, modernising and diversifying agriculture to increase productivity. Additionally, the country is rich in natural resources, and has significant coal reserves (the country’s primary energy source), which account for two-thirds of the total primary energy consumption. China is the world leader in the production of certain ores (tin, iron, gold, phosphates, zinc and titanium) and has significant petrol and natural gas reserves, making the country the fifth biggest oil producer in the world.
The industry sector contributes to approximately 40% of China’s GDP and employs 26% of the population. China has become one of the most preferred destinations for the outsourcing of global manufacturing units thanks to its cheap labour market, despite an increase in labour costs in recent years. China’s economic development 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. Between the years 2011 and 2013, China used more cement than the United States consumed during the entire 20th century. In 2009 around 8% of the total manufacturing output in the world came from China itself and China ranked third worldwide in industrial output that year (first was EU and second United States). Research by IHS Global Insight states that in 2010 China contributed to 19.8% of world’s manufacturing output and became the largest manufacturer in the world that year, after the US had held that position for about 110 years.
The services sector‘s share in the GDP is approximately 51% and it employs around 56% of the workforce. 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 not progressed. 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, healthcare and it is also aiming to rank among the top exporters for transport, tourism and construction.
Moreover, China also has free trade agreements with several nations, including ASEAN, Australia, New Zealand, Pakistan, South Korea and Switzerland. China’s largest trading partners are the US, EU, Japan, Hong Kong, South Korea, India, Taiwan, Australia, Vietnam, Malaysia, and Brazil.
Most of China’s financial institutions are state owned and governed. The chief instruments of financial and fiscal control are the People’s Bank of China (PBC) and the Ministry of Finance, both under the authority of the State Council.
The People’s Bank of China replaced the Central Bank of China in 1950 and gradually took over private banks. It issues the currency, controls circulation, and plays an important role in disbursing budgetary expenditures. Additionally, it administers the accounts, payments, and receipts of government organizations and other bodies. The PBC is also responsible for international trade and other overseas transactions.
IMPORT/EXPORT OPPORTUNITIES
The import opportunities are also unlimited thanks to the lower production costs and labour costs. Inside the Chinese market the diversity of products that one can find is enormous, but the great opportunities are also related to some risks. The products’ quality is not always high so before buying goods in stock, is always recommended to ask the suppliers to provide samples to test the quality.
- Taxes and Barriers
Each country has their own taxes and tariffs imposed upon imports and exports. China tariff barriers, generally distinguishes, between three main tax categories: a value-added tax (VAT), a consumption tax and general custom duties. These tariffs can range from anywhere from 0% all the way up to 100%. Non-tariff barriers include complex regulation, quotas, licenses and other means. Over time countries have been slowly withdrawing the amount of taxes and tariffs as they increasingly viewed as detrimental to free trade objectives. If you compare the average tariff rate applied in China against manufactured products, you can see a drop from 40.75% tariff rate applied in 1992, to 7.69% in 2010.
All goods imported into China are subject to a VAT and is required to be paid prior to being cleared by customs. The VAT is determined by the tax rate currently applied to the same goods produced in the domestic Chinese market. The current VAT is on most goods is 17% but can be as low as 13% for some items.
While VAT is applied to all products, the consumption tax focuses on imported products, not exported ones. In particular, high-end luxury, non-renewable petroleum, and high energy consumptions products are all subject to this tax: Jewellery (high-end luxury), automobiles (high-energy consumption) and gasoline and diesel (non-renewable petroleum) products are prime examples.
The consumption tax rates vary greatly (ranging from 1% to 45%) and necessitate the importer to review which rate applies to the imported goods.
Custom duties can apply to both imported and exported products, and currently there are 8,238 goods subject to these taxes as set out in China’s 2013 Customs Tariff Implementation Plan. They are a common example for China tariff barriers.
There are several different types of customs duties, and all apply in their own unique circumstances. These consist of the following:
- General duty rates
- Temporary duty rates
- Tariff rate quotas
- Conventional duty rates
- Most-favoured-nation duty
- Special preferential duty rates
It is recommended to thoroughly research exactly which rates will apply to your product to avoid any unexpected charges arising post order.
The export opportunities for “Made in Italy” in China are actually infinite, because “made in Italy” is well-known all around the globe and has always been a synonym of quality and luxury.
In China in particular there is a good perception for Made in Italy furniture, fashion and Eno gastronomy.
During the Belt and Road Summit organized in Shenzhen by The European House Ambrosetti and the China Development Institute, Silvana Ballotta, the CEO of Business Strategies, said that the Chinese turnaround on imports announced by President Xi Jinping starts from its upper middle class. The survey we carried out on the Chinese upper class shows how Made in Italy is well positioned compared to the main competitors, in particular on furniture and design, with 41% of the preferences against the 21% Made in Japan and the 16% of Made in France.
INTERNATIONAL RELATIONS
The foreign relations of the People’s Republic of China guides the way in which the Country interacts with foreign nations and expresses its political, economic and cultural strengths, weaknesses and values. As a great power and emerging superpower, China’s foreign policy and strategic thinking are highly influential. China officially claims it “unswervingly pursues an independent foreign policy of peace. The fundamental goals of this policy are to preserve China’s independence, sovereignty and territorial integrity. An example of a foreign policy decision guided by “sovereignty and territorial integrity” is not engaging in diplomatic relations with any country that recognizes the Republic of China (Taiwan), which the PRC does not recognise as a separate nation. In addition, China is a member of many international organizations, holding key positions such as a permanent membership on the United Nations Security Council. With China’s growing influence around the world, Beijing has now set its efforts on Africa. China’s focus in Africa is not a recent occurrence. In the 1960s and 1970s, Beijing’s interest centered on building ideological solidarity. Following the Cold War, Chinese interests evolved into more pragmatic pursuits such as trade, investment, and energy. Sino-African trade quadrupled between 2000 and 2006. China is Africa’s largest commercial partner and largest exporter to Africa. It is notably ahead of former colonial power Britain in both categories. Some western nations’ hesitance to become closely involved with countries they believe to be poor in the human rights field, such as Sudan, have allowed China an opportunity for economic cooperation. Recent years have seen Beijing’s growing economic and political influence in South America and the Caribbean. During a visit to Brazil, Argentina, Chile, and Cuba in November 2004, Chinese leader Hu Jintao announced $100 billion worth of investment over the next decade.
For instance, Cuba is turning to Chinese companies rather than Western ones to modernize its crippled transportation system at a cost of more than $1 billion, continuing a trend of favoring the fellow communist country that has made Beijing Cuba’s second-largest trading partner after Venezuela in 2005. The history of the relationship between China and United States can be traced back to when the US first gained independence. The relationship between the two countries have been, until the last years, quite strong, complex and even somewhat positive in various aspects. Both countries used to have an extremely extensive economic partnership, and the great amount of trade between the two countries necessitated for constructive political relations, yet significant issues do exist.
It is a relationship of economic cooperation, hegemonic rivalry in the Pacific, and mutual suspicion over the other’s intentions. Therefore, each nation has adopted a wary attitude regarding the other as a potential adversary; whilst maintaining an extremely strong economic partnership at the same time. It has been described by world leaders and academics as the world’s most important bilateral relationship of the 21st century.
Historically, relations between the two countries have generally been stable with some periods of open conflict, most notably during the Korean War and the Vietnam War. Currently, China and the United States have mutual political, economic, and security interests, including but not limited to the proliferation of nuclear weapons, although there are unresolved concerns relating to the role of democracy in government in China and human rights in both respective countries. China is the second largest foreign creditor of the United States after Japan.
The relations deteriorated sharply under President Donald Trump, whose administration launched a trade war against China, banned US companies from selling equipment to Huawei, increased visa restrictions on Chinese nationality students and scholars and designated China as a “currency manipulator”. Relations between the European Union (EU) and China, are bilateral relations that were established in 1975 between the PRC and the European Community. According to the European External Action Service, the EU and China relations aim for cooperation in the areas of “peace, prosperity, sustainable development and people-to-people exchanges.” The EU is the PRC’s largest trading partner, and the PRC is the EU’s second largest trade partners after the United States, while the EU has put an arms embargo and numerous anti-dumping measures against the PRC in place. An annual EU-China Summit is being held each year to discuss political and economic relations as well as global and regional issues.