Employing in China

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.

China is the wealthiest nation in the world. As of 2018, China was first in the world in total number of billionaires and second in millionaires – there were 658 Chinese billionaires and 3.5 million millionaires. According to the 2019 Global Wealth Report by Credit Suisse Group, China surpassed the US in the wealth of the top ten percent of the world’s population.

China 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’s largest trading partners are the United States, the European Union, Japan, Hong Kong, South Korea, India, Taiwan, Australia, Vietnam, Malaysia, and Brazil. With 778 million workers, the Chinese labor force was the world’s largest as of 2020.

It ranks 31st among the “very easy” countries in the Ease of doing business index and 28th on the Global Competitiveness Report. China ranks No.1 globally in patents, utility models, trademarks, industrial designs, and creative goods exports. It also has two (Shenzhen-Hong Kong-Guangzhou and Beijing in the 2nd and 3rd spots respectively) of the global top 5 science and technology clusters, which is more than any other country. As of March 2022, China has over 500 million 5G users and 1.45 million base stations installed.

Small and Medium Enterprises (SMEs) are the driving force behind the economic growth of China, making up about 97% of all enterprises in the country. They play a vital role in providing employment opportunities, keeping the market active through enticing fresh business while maintaining competitiveness against larger firms.

In China, the definition of an SME is quite complex and different to what other countries may classify it as. Compared to most countries that look at a company’s number of employees to qualify it as an SME, China uses the SME Promotion Law to categorize which businesses are SMEs. Under this law, the classification depends on the industry, assets, number of employees, and sales.

Since 2019, small businesses have been responsible for employing 80% of the non-government workforce.

In China, small firms with fewer than 300 employees make up most of the economy. These enterprises contribute to almost 75% of all job creation and 68% of exports. New business creation reached a record-high in 2018, with an average of 18,000 companies being created on a daily basis. The major leap in growth in SMEs is due to the government’s continuous improvements in the commercial registration system. Aside from employment, SMEs are the key players in the technology sector. In the past few years, hundreds of thousands of technology SMEs have been registered, contributing to the continuous growth of the hi-tech manufacturing sector.