The People’s Republic of China has a developing market-oriented economy that incorporates economic planning through industrial policies and strategic five-year plans. The economy consists of state-owned enterprises (SOEs) and mixed-ownership enterprises, as well as a large domestic private sector and openness to foreign businesses in a system officially described as a socialist market economy.
State-owned enterprises accounted for over 60% of China’s market capitalization in 2019 and generated 40% of China’s GDP of US$15.97 trillion dollars (101.36 trillion yuan) in 2020, with domestic and foreign private businesses and investment accounting for the remaining 60%. As of the end of 2019, the total assets of all China’s SOEs, including those operating in the financial sector, reached US$78.08 trillion. Ninety-one of these SOEs belong to the 2020 Fortune Global 500 companies.
China has the world’s second largest economy when measured by nominal GDP, and the world’s largest economy since 2014 when measured by Purchasing Power Parity (PPP). It has been the second largest by nominal GDP since 2010, with data relying on fluctuating market exchange rates. It recently overtook the economy of the European Union in 2021.
The government began its economic reforms in 1978 under the leadership of Deng Xiaoping. As a result, China has the world’s fastest-growing major economy, with growth rates averaging 10% over 30 years. China has four of the world’s top ten most competitive financial centers (Shanghai, Hong Kong, Beijing, and Shenzhen), more than any other country. China also has three of the world’s ten largest stock exchanges (Shanghai, Hong Kong, and Shenzhen), both by market capitalization and by trade volume.