The PRC Economy

China experienced rapid economic growth from 1997 to 2007, resulting in China's gross domestic product increasing from approximately RMB7.9 trillion in 1997 to RMB25.0 trillion (US$3.6 trillion) in 2007 and representing a compound annual growth rate of approximately 12.2%, according to the National Bureau of Statistics of China ("NBSC"). Due in part to the global financial crisis, however, the PRC economy has slowed down significantly since the second half of 2008.  According to the NBSC, China's GDP growth was 6.8% on a quarter-to-quarter basis for the fourth quarter of 2008, the lowest growth rate since the first quarter of 2002.

In November 2008, the PRC government announced a three-year economic rescue package worth RMB4.0trillion to boost domestic demand amid concerns of a worsening global financial crisis.  By introducing this package, the PRC government targets to achieve an 8% GDP growth in 2009.  The stimulus package will increase funding in ten areas, which aims, among others, to improve the availability of affordable housing, raise income levels in rural communities, support rural and key infrastructure construction, overhaul the medical system and improve industrial innovation and environmental protection.
According to the NBSC, there are signs that the stimulus measures are already making a positive impact on the economy: the growth of energy supply and consumption picked up in the first quarter of 2009, along with a better-than-expected real GDP growth of 6.1% year-on-year, reflecting a sharp sequential rebound in economic activity.
Although the global financial crisis will continue to impact the PRC economy, the government is putting in place measures to help it sustain positive growth in 2009.  China, having the third largest economy in the world after the United States and Japan, is expected to maintain solid and stable growth in the long-run.

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