China is best known as the world’s most populous nation and second largest country by land area. Its 9.3 million square kilometre land dominate the map of eastern Asia. Since Deng Xiaoping led the epochal step into market reforms in 1978, China has graduated rapidly from a centrally planned to a market-based economy and experienced rapid economic and social development.

With its world-leading population of well over 1.3 billion, China has the world’s biggest domestic market in terms of the number of potential consumers. Its GDP is growing at around 6.6% per year. While China’s valuable advantages of low cost and high productivity of labour today are hared by other developing nations as well, it remains highly competitive economically. Within China, the development of the western provinces, particularly Sichuan (an agricultural production base with rising industrial strength and vast reserves of natural gas), offers new market-growth opportunities.

In 2014, China was the world’s largest recipient of FDI, with an inflow of USD 1.23 trillion. In 2016, it was third on the list, below the United States and Hong Kong. China was ranked as the world’s second most attractive economy to multinational companies for 2016–2018, after the US. Its top export partners are the US, the European Union, Hong Kong and the Association of Southeast Asian Nations (ASEAN).

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China’s 2017 Fact File

World Giving Index Rank

2016
140 144 in 2015
  • 6%giving money
  • 4%volunteering time
  • 24%helping a stranger

Population

2016
1.37 billion

GDP (PPP)

2016
USD 21.29 trillion World Rank 1

Poverty

2011
6.1%

Per capita GDP (PPP)

2016
USD 15,399 World Rank 78

Global Competitiveness Index

2016
28 28 in 2015

Number of Millionaires

2015
1,333,000 0.1% of population)

Source: CIA, Charities Aid Foundation (CAF, 2016), Credit Suisse (2016), OECD (2016), World Economic Forum (WEF, 2016), World Bank (2017)

Economic Context for Investors

  • Favourable
  • Moderately favourable
  • Unfavourable
Factors Index Score/Rank Description
GDP Growth 2016
Index Score/Rank
6.6%
The economy grew 6.6% in 2016, slightly lower than the 2015 rate of 6.9%. For 2017 GDP growth is projected to be between 6–6.5%.
Governance 2015
Index Score/Rank
-0.4
China ranked above 36% of all the countries in the 2015 World Bank’s Worldwide Governance Indicators.
Consumer Market 2015
Index Score/Rank
USD 6.9 trillion
Consumer spending increased 8% from 2014 to 2015. China’s strong retail growth has been driven by population growth, increasing disposable income and an expanding economy.
Labour Force 2016
Index Score/Rank
806 million
The national workforce increased slightly by 0.2% from 2015 to 2016. Nonetheless, China’s working age population saw its biggest decline by a record 4.87 million in 2015.
Infrastructure 2016
Index Score/Rank
4.7
China ranked 39 among 138 countries, in terms of infrastructure, in the WEF’s 2016 Global Competitiveness ranking. Infrastructure development has been one of the top priorities for the government.
Financial Access 2014
Index Score/Rank
79% of the population
Access to finance increased by 24% from 2011 to 2014.11 The rural population, which includes most of the poor in China, saw their access to finance increase 20 percentage points during the period. By 2014, 74% of rural adults were formally banked.
Digital Access 2015
Index Score/Rank
50% of the population
Internet penetration increased from 47.9% in 2014 to 50.3% in 2015. There are 92 mobile-cellular subscriptions per 100 inhabitants.
Ease of Doing Business 2016
Index Score/Rank
78/190
China’s Ease of Doing Business rank improved from 80 in 2015 to 78 in 2016. However, China’s business environment generally lacks predictability, and its legal and regulatory system is described as opaque.
  • Favourable
  • Moderately favourable
  • Unfavourable

SDG Dashboard

While China has made great strides in economic development since 1978 and lifted millions of people out of poverty, its economic gains have not been broad-based and equitably shared. Although China’s official Gini coefficient, a commonly used measure of income inequality, registered a dip from 0.49 in 2008 to 0.46 in 2015, it is still a remarkable increase from less than 0.3 in the 1980s.

The country’s 13th Five-Year Plan (2016–2020) aims to address environmental and social imbalances, setting national targets for reducing pollution, increasing energy efficiency, improving healthcare, and expanding social protection. The Plan’s annual growth target is 6.5%, a number that reflects the rebalancing of the economy and growing focus on quality of growth — while staying on course to achieve a doubling of GDP during 2010–2020.

  • No Poverty
  • Zero Hunger
  • Good Health and Well-Being
  • Quality Education
  • Gender Equality
  • Clean Water and Sanitation
  • Affordable and Clean Energy
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
  • Reduced Inequalities
  • Sustainable Cities and Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life Below Water
  • Life On Land
  • Peace, Justice and Strong Institutions
  • Partnerships for the Goals
  • Sustainable Development Goals

Source: sdgindex.org (2016)

Government Focus on Development Gaps

Focus Area SDG Goals Gap Government Focus
Agriculture
SDG Goals
  • No Poverty
  • Zero Hunger
  • Decent Work and Economic Growth
Gap
The agriculture sector contributed 8.83% of China’s GDP in 2015 while employing 28% of the workforce. In 2013, 86% of farms were 1.6 acres in size, compared to the average size of 441 acres in the US. Increasing number of elderly farmers and low yields are posing formidable threats to the country’s food security.
Government Focus
The government has encouraged private investment in large-scale farming, and will itself invest USD 450 million in the sector by 2020 to improve agricultural technology,reform agricultural management and promote sustainable agricultural practices.
Climate action
SDG Goals
  • Climate Action
  • Life On Land
Gap
In 2016, China ranked 85 out of 171 countries on the World Risk Index, placing it in the high- to medium-risk category.22 China emitted 8,948 million metric tonnes of carbon dioxide equivalent, making it the largest carbon dioxide emitter in the world in 2015.
Government Focus
The 2015 National Climate Change Adaptation Plan focuses on improving disaster risk warning systems, introducing higher engineering standards for new infrastructure, and arriving at comprehensive climate risk assessments. China’s Intended Nationally Determined Contribution (INDC) seeks to reduce its CO2 emissions by 60–65% from the 2005 levels by 2030. The forest carbon goal aims at increasing forest carbon stocks to create a roughly 1 gigatonne carbon sink, equivalent to taking 770 million cars off the road.
Energy access
SDG Goals
  • Affordable and Clean Energy
Gap
In 2015, China consumed 3,101 Mtoe, more energy than any other country. In 2014, 87% of China’s energy came from fossil fuel.
Government Focus
The 13th Five-Year Plan focuses on curbing coal consumption, increasing the share of non-fossilbased energy in the country’s energy mix as well as wind and solar capacity. The share of renewables in China’s total energy production increased from 16.6% in 2000 to 24% in 2015.
Small and medium-sized enterprise (SME) growth
SDG Goals
  • Decent Work and Economic Growth
Gap
SMEs accounted for 60% of China’s GDP and provided 80% of urban employment in 2013. In 2013, only 23.2% of bank loans were extended to SMEs, and SMEs only had access to 4.7% of short-term loans for working capital.
Government Focus
In August 2014, the State Council released a 10-point statement on reducing financing costs for enterprises including SMEs and guidelines on Accelerating the Development of Modern Insurance Industry to encourage the development of credit guarantees and insurance for SME loans and to build a more accessible SME financing environment.
Social security
SDG Goals
  • Good Health and Well-Being
  • Decent Work and Economic Growth
  • Reduced Inequalities
Gap
The number of Chinese aged above 65 is expected to rise from roughly 100 million in 2005 to more than 329 million in 2050 — more than the combined populations of Germany, Japan, France, and Britain.
Government Focus
The 13th Five-Year Plan of the Ministry of Human Resources and Social Security focuses on promoting adequate and high quality employment, establishing a more equitable society, reforming the wage income distribution system, and strengthening basic public services.30 China aims to increase basic old-age insurance coverage to 90% from the current 82% and lift about 56 million of the rural population out of poverty by 2020.

Social Economy

The social economy in China is growing rapidly, driven by social investors, municipal governments and enablers.

There are 3200 NGOs and 542 SEs in China.

Category Factor Rating Description
SPOs
Factor
Legislative environment
half SEs can adopt for-profit or non-profit legal structures. The 2013 and 2016 laws have paved the way for easier registration, operations and tax concessions for SPOs.
SPOs
Factor
Government support for SEs
three-quarter Municipal governments in Shanghai, Shenzhen, Dongguan, Nanjing, Suzhou, Ningbo, among others, have played an important role in fostering social entrepreneurship by setting up venture philanthropy funds and/or SE incubators.
SPOs
Factor
SEs across sectors
half Social entrepreneurs in China are active primarily in the fields of education, economic development through fair trade and social inclusion of the disadvantaged.
SPOs
Factor
Presence, size, and maturity of SEs
half Despite the rapid growth of SEs in China to about 3,200, few have managed to scale.
Investors
Factor
Philanthropic contributions
half China has seen significant contributions from philanthropists and private foundations. In 2015, the top 100 philanthropists contributed USD 3.8 billion to causes. However, China has consistently ranked among the lowest in the CAF World Giving Index.
Investors
Factor
Presence of social investors
three-quarter China has experienced a rapid growth in homegrown social investors such as Narada Foundation, YouChange Foundation, Leping Social Entrepreneur Foundation, Yifang Foundation, Yu Venture Philanthropy, Transist, Lanshan Social Investment, China Impact Fund, SA Capital, Advantage Ventures, Xinh-Yu Fund and Tsing Capital. International investors active in China include the Ford Foundation, SOW Asia and LGT Impact Ventures.
Investors
Factor
Corporate sector
quarter Implementation of integrated CSR remains limited to MNCs, major SOEs and leading private corporates.
Enablers
Factor
Incubators, accelerators, and capacity-builders
three-quarter Notable enablers including NPI, CSEIF, YouChange, Leping Social Entrepreneur Foundation offer incubation and acceleration services, mentoring, training and access to resources.
Enablers
Factor
Networks and platforms
three-quarter AVPN, CSEIF, Narada Foundation, YouChange, Asia Environment Innovation Forum, British Council, China Foundation Centre are among the most active networks and platforms.
Enablers
Factor
Knowledge and research
three-quarter Research in the field of philanthropy and social entrepreneurship is growing, with publications by Peking University, China Global Philanthropy Institute, the Beijing Normal University One Foundation Philanthropy Research Institute, Social Enterprise Research Centre, FYSE and NGO Research Centre of Tsing Hua University.
Enablers
Factor
Partnerships
quarter NPI and CSEIF have partnered with corporates and municipal governments. Stakeholders work predominantly alone and there is not much evidence of multi-stakeholder partnerships in China.
Enablers
Factor
Impact Measurement
quarter Most enterprises tend to following internal practices of impact measurement.

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