China is the most populous country and holds the fastest-growing consumer market in the world. Compared to other emerging countries, China has held a lower inflation rate. China has the world’s largest foreign-exchange reserves worth over three trillion U.S. dollars. The exchange rates between yuan and key world currencies remain stable, without significant disturbances over the last two decades.
China’s economy has benefited from its large labor force for decades. Due to rising labor costs and trade tensions, many local manufacturers are experiencing a tough winter. However, China is still the world’s largest manufacturing economy in which most of the labor force is involved and with well-developed supply chains and logistics operations.
Based on statistics from the United Nations about foreign direct investment flows in 2018, China had the second largest inward foreign direct investment as well as the second largest outward foreign direct investment. A large share of the outward direct investment was used for overseas mergers and acquisitions. While developed countries received most of the investment from China, many emerging countries are also benefiting from this investment due to the Belt and Road Initiative.
As the world’s largest exporter and second largest importer, the merchandise trade balance of China amounted to a surplus of over 351 billion U.S. dollars in 2018. In the past, the United States used to be China’s largest trade partner, but under the influence of the trade war, trade between these two countries decreased, and in 2018 the European Union became China’s largest export destination instead. Around 17 percent of goods exported from China went to the European Union in 2018. As for services, China is a net importer.
Today, China is continuing to open its financial market. Foreign investors are facing less restrictions in China’s financial market. More foreign financial institutions are allowed to conduct business in mainland China. Besides Hong Kong, Shanghai is also becoming an essential financial center connecting foreign financial institutions to the domestic market. Along with the Hong Kong Stock Exchange, the Shanghai Stock Exchange and Shenzhen Stock Exchange in mainland China are important entry points to invest in China’s listed companies.