AROOJ FATIMA

ROLL NO: 21F1:136

SESSION: ADP (IT)
SEMESTER: 1ST
Table of Contents
History.........................................................................................................................................................3
Pakistan Economic Review..........................................................................................................................4
Factors that affect the economy of Pakistan...............................................................................................5
Growth and Investment...........................................................................................................................5
Agriculture...............................................................................................................................................6
Manufacturing and Mining......................................................................................................................6
Fiscal Development.................................................................................................................................7
Money and Credit....................................................................................................................................8
Inflation...................................................................................................................................................8
Education.................................................................................................................................................9
Health and Nutrition..............................................................................................................................10
Public Debt............................................................................................................................................11
Statically representation...........................................................................................................................12
Introduction...............................................................................................................................................13
Market size................................................................................................................................................13
Recent Developments...........................................................................................................................14
Government Initiatives..........................................................................................................................14
Road Ahead...........................................................................................................................................17
India Economic Growth.............................................................................................................................18
Economic Overview...................................................................................................................................18
Factors that affect the china economy......................................................................................................19
China’s Balance of payments.................................................................................................................19
Imports to China....................................................................................................................................21
GDP BY ADMINSTRATIVE DIVISION............................................................................................................24
Issues with over claiming...........................................................................................................................25
The China-Pakistan Economic Corridor.....................................................................................................26
 Economic system of Pakistan
History
Economy of Pakistan At the time of independence
Pakistan’s economy, which was having nothing to
survive, has made his way in the line of
developing country through many experiments in
political and economic history. The economy had
witnessed relatively free market system at one time
(mostly in democratic government periods like 1988
to 1999 and 2008 to on till now) and command at
the time of 1971 to 1977 and all dictatorship eras. For this reason, the economic history of Pakistan
becomes more interesting. Despite having so much turbulent time, Pakistan has witnessed the time of
fastest growth in South Asia region. But the inconsistent policies and narratives of every government
failed this state many times. These variable policies are still freezing the Pakistan to live among the
developing world. The capitalists and landlords, who emerged because of different economic follies, have
hijacked the economic development of country. This elite joined hands with military and bureaucratic
muscle of the country and remained a key player in ousting different democratic governments. Beside
this, the linkage with international monetary institutions during 80’s also started to engulf the economic
independence of the country and has trapped this country in to debt trap. Pakistan is rich in every type of
resources, but the situation is getting worse with every passing day. Despite of having vast reserves of
coal, oil, gold, gas and many other valuable minerals, Pakistan is depending on international aid for its
economic and social revival. Pakistan has vast fertile land which led it to self-sufficiency in food. The
share of different sectors in the economy has been changed much since independence. Pakistan has also a
large pool of human resource which can be turned into productive one by adopting a wise policy.

Now the agriculture is sharing almost 21% in GDP which was more than 50% at the time of creation of
this state in 1947. Whereas, the industrial and services sectors have gained in their share in GDP up to
20.9% and 57.7% respectively from 8.03% and 39.3% in 1947. The trade account remained in deficit
during most of the years in history and is still in the same condition due to more dependence on imports.
The excessive dependence on imports and shortage in energy sector has also disturbed our foreign
exchange reserves. The continuous devaluation of Pakistani rupee was also result of these economic
problems. Public debt, to manage the economy, is rising sharply as it reached more than 60% of GDP. It
is evident from the above discussion that Pakistan’s economy has a lot of problems, so an integrated
economic, social and political framework is needed to bring Pakistan out of this imbroglio. A brief
introduction of Pakistan’s economic structure is discussed below.

Pakistan Economic Review

Pakistan's economy already had volatile
growth pattern over the years, with regular
boom and bust cycles facing challenges in
achieving long-term and inclusive growth.
Unsustainable economic growth was caused by
unaddressed long-standing structural issues for
example, loss-making State-Owned Enterprises
(SOEs), weak external position due to insufficient export capacity and low FDI, under-reformed energy
sector, low savings and investment. In the backdrop of these challenges, the present government focused
on an economic vision of getting sustainable economic growth through improving efficiency, reducing
cost of doing business, improving regulatory environment, enhancing productivity and increasing
investment. Even before the COVID-19 pandemic hit Pakistan’s economy, the government started
implementing decisive and far-reaching reforms in every sector of the economy. The reforms started to
address the economic imbalances and laid the foundation for improved economic performance in terms of
strengthened fiscal and external accounts, exchange rate stability and improved investor’s confidence.
Moreover, inflation started to stabilize and market confidence gradually recovered. These reforms paved
the way for long-term growth and to end the unsustainable growth pattern that has plagued the economy
in the past. The FY2021 began in the midst of the most severe global health crisis experienced in modern
history. Pakistan's economy, like rest of the world, has struggled to combat the economic consequences of
COVID-19 shock through prompt measures for supporting the economy and saving the lives and
livelihoods. Besides, virus containment measures, the government has implemented a comprehensive set
of measures including the largest ever economic stimulus package of Rs 1,240 billion, a construction
package, an expansion of the social safety net to protect the vulnerable segments of the society and
supportive monetary policy stance along with targeted financial initiatives. These measures helped the
economy in lessening the negative impact of the pandemic. In contrast to other world economies, Pakistan
started witnessing recovery during the first half of FY2021 on the back of continued domestic economic
activity due to the above stated measures along with a smart lockdown policy. As Pakistan successfully
subsided the first wave of COVID-19 during the summer of 2020 through effective containment
measures, the country was hit by the second wave in the fall of 2020. However, smart lockdowns and
improved containment strategies aided in managing the reported cases and the resumption of economic
activities. However, Pakistan is currently experiencing the third and most virulent wave of pandemic.

Today, the economy is steadily progressing towards more sustainable and inclusive growth path. The
performance in agriculture, LSM, construction and exports sectors are amongst the key success stories.
The current account balance is in surplus, fiscal deficit is manageable with the primary balance in surplus,
the rupee is stable and foreign exchange reserves (SBP and commercial) have reached $ 23.2 billion (as
of 3rd June 2021). Most importantly, the government has effectively managed the pandemic through swift
policy measures. With current year performance, it is expected that the economy will grow by 5 percent
in FY2022 and will accelerate further over the medium term. The performance clearly shows that the
economy is improving in the post-COVID-19 era. The start of vaccination has raised hopes of a
turnaround in the pandemic later this year, however, the third wave with new variants of the virus has
posed concerns for the outlook. Nevertheless, the government is vigilant and responding efficiently to
restrain the surge of the COVID-19 virus. Social protection systems are also evolving especially to cover
all vulnerable segments. The government’s prompt
response eased the miseries of the most vulnerable
segments of society. The business confidence has
returned and economic activity is slowly getting back
to normal. It is expected that macroeconomic
stabilization measures and structural reforms
supported by international development partners will
help the economy to move on a higher and
sustainable growth trajectory.

Factors that affect the economy of Pakistan

Growth and Investment
The economy of Pakistan rebounded strongly in FY2021 and posted growth of 3.94 percent which is not
only substantially higher than the previous two years (-0.47 and 2.08 percent in FY2020 and FY2019
respectively) but also surpassed the target (2.1 percent for FY2021). Despite strict fiscal constraints,
timely and appropriate policy measures taken by the government resulted in a V-Shaped economic
recovery. The beginning of FY2021 was better in terms of containment of pandemic and economic
recovery; however the second wave in late October 2020 and the third wave in March 2021 made
government efforts more challenging for containing the pandemic and keeping the economic activities to
continue. Regardless of fiscal constraints, relief provision to vulnerable segments and growth support was
the government’s utmost priority. According to the World Bank report on “Social Protection and Jobs
Responses to COVID-19: A Real-Time Review of Country Measures” published on May 14, 2021,
Pakistan was ranked Fourth in terms of a number of people covered while Third in terms of the
percentage of population covered. Pakistan’s economy is now on course towards strong and sustained
recovery. The pandemic resulted in lockdown and depressed demand. Adequate government policies
were implemented to keep economy moving. Utilization of unused industrial capacities during the
pandemic also helped in economic recovery. On the basis of a rebound in almost all sectors, for FY2021,
the provisional GDP growth rate is estimated at 3.9 percent on account of 2.8 percent growth in
Agriculture, 3.6 percent in the Industrial sector and 4.4 percent growth in the Services sector. Moreover,
GDP at current market prices stood at Rs 47,709 billion, showing a growth of 14.8 percent during
FY2021 over last year (Rs 41,556 billion). While in the dollar term, it remained $ 299 billion which is
higher than its value recorded last year ($ 263 billion).

Agriculture
The agriculture sector’s performance during 2020-21 broadly stands encouraging as it grows by 2.77
percent against the target of 2.8 percent. The growth of important crops (wheat, rice, sugarcane, maize
and cotton) during the year is 4.65 percent. The production of major Kharif crops 2020, such as
sugarcane, maize and rice indicated considerable improvement compared to last year and surpassed the
production targets. The production of sugarcane increased by 22.0 percent to 81.009 million tons from
66.380 million tones, rice by 13.6 percent to 8.419 million tons from 7.414 million tons and maize by 7.4
percent to 8.465 million tons from 7.883 million tones. However, the cotton crop suffered mainly due to
decline in area sown, heavy monsoon rains and pest attacks. The cotton production reduced by 22.8
percent to 7.064 million bales from 9.148 million bales last year. Wheat is the most important crop of
“Rabi”, which showed growth of 8.1 percent and reached record high production level of 27.293 million
tons compared to 25.248 million tons last year. For the Rabi crops 2020-21, the government provided a
comprehensive “Rabi Package” comprising of subsidies on fertilizer, fungicides and weedicides, together
with an increase in the Minimum Support Price (MSP) of wheat to Rs 1,800 per 40 Kg. Other crops
having a share of 11.69 percent in agriculture value addition and 2.24 percent in GDP, showed growth of
1.41 percent because of increase in production of fodder, vegetables and fruits. Cotton ginning declined
by 15.58 percent due to fall in the production of cotton crop. The overall crops sector, having a share of
35.81 percent in agriculture value addition and 6.87 percent in GDP, witnessed a growth of 2.47 percent.
Water availability during Kharif 2020 remained at 65.1 million acre feet (MAF) showing a slight decrease
of 0.2 percent compared to 65.2 MAF of Kharif 2019. Rabi season 2020-21 received 31.2 MAF, showing
an increase of 6.9 percent over Rabi 2019-20.
Manufacturing and Mining
The Large-Scale Manufacturing (LSM) performance has been much favorable during July-March
FY2021 and witnessed 8.99 percent growth as compared to 5.1 percent decline during the same period
last year. The government’s thoughtful decision to resume the business activities and adoption of smart
lockdown boosted the business sentiments and the economy gained traction after witnessing a hefty
decline in FY2020. Targeted fiscal and monetary incentives accompanied by related support packages
helped speed up the economic recovery. Out of 15 subsectors, nine posted growth during July-March
FY2021. Textile and Food Beverages & Tobacco, the top two sectors of LSM, grew by 5.9 and 11.7
percent, respectively. Coke & Petroleum Products, Non-metallic Mineral Products, Automobile and
Pharmaceuticals also grew by 12.71, 24.31, 23.38 and 12.57 percent, respectively. The Mining and
Quarrying sector declined by 6.49 percent during FY2021, against 8.28 percent contraction last year. This
sector is lagging behind despite huge potential due to interconnected and cross-cutting issues like poor
regulatory framework, insufficient infrastructure at mines sites, outdated technology installed, semi-
skilled labor, low financial support and lack of marketing. During July-March FY2021, production of
major minerals plunged such as Coal, Natural Gas and Crude Oil declined by 5.97, 4.70 and 6.72 percent,
respectively. However, some minerals witnessed positive growth during the period under review such as
Chromate 28.28 percent, Magnetite 6.17 percent, Rock Salt 5.44 percent and Iron Ore 26.23 percent.

Fiscal Development
The fiscal sector has witnessed significant challenges due to additional expenditures made to lessen the
negative impact of COVID-19. However, the government's fiscal consolidation efforts provided
significant support in maintaining fiscal discipline, increasing revenues and controlling expenditures, thus
the fiscal sector continued to perform better. The fiscal deficit was contained at 3.5 percent of GDP
during July-March FY2021 against 4.1 percent of GDP in the same period of last year. The primary
balance posted a surplus of Rs 451.8 billion during July-March, FY2021 against the surplus of Rs 193.5
billion in same period last year. The FBR tax collection witnessed a significant rise in ten months. During
July-April, FY2021 the total collection grew by 14.4 percent to stand at Rs 3,780.3 billion against Rs
3,303.4 billion in the same period of FY2020. Encouragingly, the tax collection surpassed the target by
more than Rs 100 billion during the period under review. The revenue performance is not only a
reflection of growing economic activities without any disruption even in the wake of the third wave of
COVID-19, but it also suggests that the efforts to improve the tax collection through various policy and
administrative reforms are bearing the fruits. The non-tax revenues stood at Rs 1,227.6 billion during
July-March FY2021 against Rs 1,324.4 billion in the same period of last year, showing a decline of 7.3
percent. The decline is mainly attributed to the absence of a one-off renewal fee for GSM licenses from
telecommunication companies. The efficient expenditure management effectively curtailed the overall
expenditures during the current fiscal year. Total expenditures grew by 4.2 percent during July-March
FY2021 as compared with the growth of 15.8 percent observed in the same period of FY2020.

Money and Credit

After the COVID-19 outbreak, the State Bank of Pakistan proactively reduced the policy rate by a
cumulative 625 bps from 13.25 percent to 7.0 percent, within almost 3 months between March and June
2020. The target of monetary policy was shifted towards supporting growth and employment during the
pandemic. During FY2021, SBP has continued with an accommodative monetary policy stance with 7.0
percent policy rate which has supported the economic recovery while keeping inflation expectations
under control and safeguarding financial stability. Besides sharply lowering the borrowing cost, SBP
introduced a host of measures aimed at supporting the businesses and households during the challenging
time. These measures, along with a fiscal stimulus package especially for revival of construction, led to a
quick turnaround in economic activity in the country during FY2021. During the period 1st July-
30thApril, FY2021 Broad money witnessed an expansion of Rs 1,664.8 billion (growth of 8.0 percent)
against Rs 1,698.1 billion (growth of 9.5 percent) during the same period last year. Growth in money
supply mainly contributed by Net Foreign Assets (NFA) of the banking system, which increased by Rs
950.2 billion against an expansion of Rs 931.1 billion last year, reflecting an improved balance of
payment position. Whereas, Net Domestic Assets (NDA) of the banking system observed an expansion of
Rs 714.6 billion during the period under review compared to an expansion of Rs 767.0 billion during
same period last year. During the period 1st July-30th April, FY2021, overall private sector credit
witnessed an expansion of Rs 454.5 billion against Rs 318.5 billion last year. On a positive note, fixed
investment loans increased significantly by Rs 140.4 billion during July-April, FY2021 against the
borrowing of Rs 0.4 billion same period last year, which augurs well for the industrial sector and overall
economic growth in the coming years. The government has borrowed Rs 675.9 billion for budgetary
support during 1st July-30th April, FY2021 compared to Rs 1,171.3 billion in the same period last year.
Within budgetary support, the government has borrowed Rs 1,840.6 billion from scheduled banks as
compared to the borrowing of Rs 1,813.4 billion in a comparable period last year. On the other hand, the
government has retired Rs 1,164.7 billion to SBP as compared to the retirement of Rs 642.2 billion during
the same period last year. This shows a continuation of government adherence to zero borrowing from the
central bank.

Inflation
The Consumer Price Index (CPI) inflation for the period July-May FY2021 was recorded at 8.8 percent
against 10.9 percent during the same period last year. The other inflationary indicators like the Sensitive
Price Indicator (SPI) were recorded at 13.5 percent against 14.0 percent last year. Wholesale Price Index
(WPI) was recorded at 8.4 percent in July-May FY2021 compared to 11.1 percent last year. During July-
May FY2021, National CPI inflation for FY2021 remained lower than same period last year.
Administrative measures including a crackdown on speculative elements and resumption of seasonal
supplies of perishables helped to minimize the inflationary pressures. Furthermore, tax relief measures in
Budget FY2021 in response to COVID-19 also provided relief in terms of stable prices of various goods.
At the beginning of FY2021, a major contribution to increase in inflation in both urban and rural baskets
came from food groups mainly due to the extended monsoon season. The government realizing the
significance of supply disruption started establishing Sahulat/Bachat Bazar in all parts of the country. The
rise in the prices of global agrarian products and other commodities especially oil contributed to domestic
inflation as well. As far as oil prices are concerned, the government did not pass on the burden of price
increase to the general public proportionately in order to maintain price stability Trade and Payments
Amidst the uncertain and precarious global economic environment, where the global economy was
lurching under the impact of the unprecedented COVID-19 shock, Pakistan’s external sector has appeared
as a key buffer for resilience. The comfortable external balance position of Pakistan has been supported
by surplus current account balance on the back of robust flow of remittances and a sustained recovery in
exports. Furthermore, improvements in the services and primary income account also provided a cushion
to turn the current account deficit of $ 4.7 billion in FY2020 into a surplus of $ 773 million during July-
April FY2021. The inflow of workers’ remittances in Pakistan has been rising consistently since FY2018
and the trend continued in FY2021 with a meritorious growth of 29.0 percent and reached $ 24.2 billion
during July-April FY2021. Export of goods grew by 6.5 percent during July-April FY2021 and stood at $
21 billion as compared to $ 19.7 billion in the same period last year. Import of goods grew by 13.5
percent to $ 42.3 billion as compared to $ 37.3 billion last year. Consequently, the trade deficit increased
by 21.3 percent to $ 21.3 billion as compared to $ 17.6 billion last year. Pakistan’s total liquid foreign
exchange reserves increased to $ 22.7 billion by the end of April 2021, up by $ 3.8 billion, indicating a
growth of 20.1 percent over the end-June 2020. On account of increased foreign exchange reserves,
supported by remittances, exports and financial support from International Financial Institutions, the
Pakistani Rupee started to appreciate. The introduction of a market-based exchange rate regime also
helped to stabilize the Rupee and the exchange rate reached Rs 153.5 per $ by the end of April 2021,
effectively appreciating by 9.5 percent over end-June 2020.

Education
Present government is committed to achieve Goal 4 of SDGs i.e., “Quality Education”; which stipulates
equitable education, removal of discrimination, provision and up-gradation of infrastructure, skill
development for sustainable progress, universal literacy, numeracy and enhancement of professional
capacity of teachers. A Single National Curriculum (SNC) has been designed with the vision of one
system of education for all, in terms of curriculum, medium of instruction and a common platform of
assessment, so that all children have a fair and equal opportunity to receive high quality education. The
total number of enrolment during 2018-19 was recorded at 52.5 million as compared to 51.0 million
during 2017-18, which shows an increase of 2.9 percent. The enrolment is estimated to increase to 55.0
million during 2019-20. The number of institutes (both public and private) reached to 273.4 thousand
during 2018-19 as compared to 262.0 thousand during 2017-18. However, the number of institutes is
estimated to increase to 279.4 thousand in 2019-20. The number of teachers during 2018-19 was 1.76
million as compared to 1.77 million during the last year. The number of teachers is estimated to increase
to 1.80 million during 2019-20. According to the PSLM, District Level Survey 2019-20, the literacy rate
of population (10 years and above) is stagnant at 60 percent in 2019-20 as compared to 2014-15. Province
wise analysis suggests that Punjab has the highest literacy rate, with 64 percent followed by Sindh with
58 percent, Khyber Pakhtunkhwa (Excluding Merged Areas) with 55 percent, Khyber Pakhtunkhwa
(Including Merged Areas) with 53 percent and Baluchistan with 46 percent. Public expenditures (federal
& provincial governments) on education were estimated at 1.5 percent of GDP in 2019-20, as compared
to 2.3 percent in 2018-19. The education related expenditures decreased by 29.6 percent i.e., from Rs
868.0 billion to Rs 611.0 billion due to closure of educational institutes, amid country-wide lockdown and
decrease in current expenditures (other than salaries) due to COVID-19 pandemic. The COVID-19
pandemic has not only created a health crisis in the country but also adversely affected other sectors
including education sector. In order to mitigate the learning losses of students during the closure of
educational institutes, the government has launched initiatives like Tele School and Radio School to
provide distance learning and addressed provision of education to the children of far flung and remote
areas during the pandemic.

Health and Nutrition

The COVID-19 pandemic has tested the country’s health infrastructure and identified the need for more
investment in the health sector especially for diagnostic facilities, disease surveillance, disease prevention
and spread, training of health personnel and their protection from the pandemic, vaccine development, up-
grading health care infrastructure, emergency rooms, intensive care units, isolation wards and public
awareness. In order to make substantial progress on Goal 3 of SDGs (Good Health and Wellbeing), the
Government of Pakistan has given priority to strengthen the health sector to further resolve and address
the outbreak of the COVID-19 pandemic. The health-related expenditure increased by 14.3 percent from
Rs 421.8 billion (1.1 percent of GDP) in 2018-19 to Rs 482.3 billion (1.2 percent of GDP) in 2019-20. In
Pakistan, the first case of COVID-19 was confirmed on 26 February 2020, when the first patient in
Karachi tested positive. The first wave of COVID-19 claimed 6,795 lives, infected 332,186 and left
behind 632 on ventilators. The government announced the second wave of COVID-19 on 28 October
2020, when there was a sudden increase in active cases from 6,000 to 11,000 and 93 hospitalized patients
were put on ventilators. The third wave of COVID-19 in Pakistan started on 17 March 2021, when daily
cases reached 3,000 with a positivity rate of 10 percent. Pakistan formally launched the corona virus
vaccination drive on 03 February 2021. China has donated 1.5 million doses of the Sinopharm vaccine,
which has an efficacy of 79 percent. Till 2nd June, 2021, a total of 13.0 million doses of vaccine have
been received by the Government of Pakistan and 8.3 million doses have been administered as on 5th
June, 2021. The government is fully committed to increase the health coverage and provision of good
nutrition to meet the emerging demand and to develop the effective human capital.

Public Debt
Total public debt was recorded at Rs 38,006 billion at end March 2021. Domestic debt was recorded at Rs
25,552 billion while external public debt was recorded at Rs 12,454 billion or $ 81.6 billion at end March
2021. Pakistan has been able to contain the growth in its public debt portfolio despite a very challenging
macroeconomic situation around the globe due to the pandemic. In fact, Pakistan witnessed one of the
smallest increases in its public debt. Global public debt to GDP Ratio increased by 13 percentage points,
from 84 percent in 2019 to 97 percent in 2020, whereas, Pakistan’s Debt-to-GDP ratio witnessed minimal
increase of 1.7 percentage points and stood at 87.6 percent at end June 2020 compared with 85.9 percent
at end June 2019. The Debt-to-GDP ratio of Pakistan is expected to reduce and will remain below 84
percent at the end of current fiscal year.

Public debt portfolio witnessed various positive developments during ongoing fiscal year, some of them
are highlighted as follows:

 Over 80 percent of the net borrowing from domestic sources was through medium to-long-term
domestic debt instruments
 In-line with the government’s commitment, no new borrowing was made from State Bank of
Pakistan (SBP). In fact, government repaid Rs 569 billion during the ongoing fiscal year against
its debt owed to SBP. The cumulative debt retirement against SBP debt stood over Rs 1.1 trillion
during last two fiscal years.
 Refinancing risk of debt portfolio reduced significantly during the tenure of the present
government. Short-term debt as percentage of total domestic debt has decreased to around 23
percent at end March 2021 compared with 54 percent at end June 2018.
 The Rs 25,000, Rs 15,000 and Rs 7,500 denominations prize bonds were withdrawn from
circulation in order to improve the documentation of the economy. The holders have been given
 options to (i) convert to premium prize bonds; or (ii) replace them with eligible National Savings
Certificates; or (iii) Ancash at face value into their bank accounts.
 Pakistan entered the international capital market after a gap of over three years by successfully
raising $ 2.5 billion through a multi-tranche transaction of 5-, 10- and 30-year Eurobonds under
its first-ever Global Medium Term Note Programmed
 Pakistan is availing the G-20 Debt Service Suspension Initiative (DSSI) for a period of 20-
months (May 2020 - December 2021) which will help to defer the debt servicing impact to the
tune of around $ 3.7 billion during this period.

Statically representation

FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY
List 200 200 200 200 200 201 201 201 201 201 201 201 201 20 201 20 202
5 6 7 8 9 0 1 2 3 4 5 6 7 18 9 20 1

Total  9  1  1  1  1  2  2  2  2  3  3  4  4 5  4 6  6
Reve 00. 076 298 499 850 077 252 566 982 637 931 447 936 22 900 27 903
nue 0 .6 .0 .4 .9 .8 .9 .5 .4 .3 .0 .0 .7 8.0 .7 2.2 .4

Tax  6  7  9  1  1  1  1  2  2  2  3  3  3 4 4 4  5
reven 32. 53. 19. 065 316 472 699 052 199 564 017 660 969 46 473 74 272
ue 6 0 3 .2 .7 .5 .3 .9 .2 .5 .6 .4 .2 7.2 .4 7.8 .7

1 1 1 1 1 1 2 2 3 3 3 3 3  4
FBR
taxes
– – – 008 161 327 558 882 946 254 590 112 367 84 829 99 764
.1 .2 .4 .0 .7 .4 .5 .0 .5 .9 2.1 .5 7.9 .3

Total  1  1  1  2  2  3  3  3  4  5  5  5  6 7 8 9 1
Expe
nditur 117 401 675 276 531 007 447 936 816 026 387 796 800 48 345 64 030
e .0 .8 .5 .5 .3 .2 .3 .2 .3 .0 .8 .3 .5 8.4 .6 8.5 6.7

Fiscal 2 3 3 7 6 9 1 1 1 1 1 1 1 2 3 3  3
Defici 17. 25. 77. 77. 80. 29. 194 369 833 388 456 349 863 26 444 37 403
t 0 2 5 2 4 4 .4 .7 .9 .7 .7 .3 .8 0.4 .9 6.3 .3

As % of GDP
 Total  1  1  1  1  1  1  1  1  1  1  1  1  1 1  1 1  1
reven
ue 3.8 3.1 4.0 4.1 4.0 4.0 2.3 2.8 3.3 4.5 4.3 5.3 5.5 5.1 2.9 5.1 4.5

Tax    
 1  9  9  9  9  9  9  1  9  1  1  1  1  1  1
reven 12. 11.
ue 0.1 .8 .6 .9 .1 .9 .3 0.2 .8 0.2 1.0 2.6 2.4 1.7 1.1
9 4

Total    
 1  1  1  2  1  2  1  2  2  2  1  1  2  2  2
expen 21. 23.
diture 7.2 7.1 8.1 1.4 9.2 0.2 8.9 1.4 1.5 0.0 9.6 9.9 1.3 1.9 1.6
6 2

Fiscal  3  4  4  7  5  6  6  8  8  5  5  4  5    9    7
deficit .3 .0 .1 .3 .2 .2 .5 .8 .2 .5 .3 .6 .8 6.5 .0 8.1 .1

Indian economy
Introduction
India has emerged as the fastest growing major economy in the world and is expected to be one of the top
three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong
partnerships.

Market size
India’s gross domestic product (GDP) at current prices
stood at Rs. 51.23 lakh crore (US$ 694.93 billion) in
the first quarter of FY22, as per the provisional
estimates of gross domestic product for the first
quarter of 2021-22. India is the fourth-largest unicorn
base in the world with over 21 unicorns collectively
valued at US$ 73.2 billion, as per the Huron Global Unicorn List. By 2025, India is expected to have
~100 unicorns by 2025 and will create ~1.1 million direct jobs according to the Nasscom-Zinnov report
‘Indian Tech Start-up’. India needs to increase its rate of employment growth and create 90 million non-
farm jobs between 2023 and 2030's, for productivity and economic growth according to McKinsey Global
Institute. Net employment rate needs to grow by 1.5% per year from 2023 to 2030 to achieve 8-8.5%
GDP growth between 2023 and 2030. According to data from the Department of Economic Affairs, as of
August 27, 2021, foreign exchange reserves in India reached US$ 633.5 billion mark.

Recent Developments 
With an improvement in the economic scenario, there have been investments across various sectors of the
economy. The private equity - venture capital (PE-VC) sector recorded investments worth US$ 10.7
billion across 137 deals in August 2021, registering a 5x YoY growth. Some of the important recent
developments in Indian economy are as follows:

 India’s merchandise exports between April 2021 and August 2021 were estimated at US$
164.10 billion (a 67.33% YoY increase). Merchandise imports between April 2021 and
August 2021 were estimated at US$ 219.63 billion (an 80.89% YoY growth).
 In August 2021, the Manufacturing Purchasing Managers' Index (PMI) in India stood at 52.3.
 The gross GST (Goods and Services Tax) revenue collection stood at Rs. 112,020 crore (US$
15.21 billion) in August 2021.
 According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDI
equity inflow in India stood at US$ 547.2 billion between April 2000 and June 2021.
 India’s Index of Industrial Production (IIP) for July 2021 stood at 131.4 against 122.6 for
June 2021.
 Consumer Food Price Index (CFPI) – Combined inflation was 3.11 in August 2021 against
3.96 in July 2021.
 Consumer Price Index (CPI) – Combined inflation was 5.30 in August 2021 against 5.59 in
July 2021.
 Foreign portfolio investors (FPIs) invested US$ 2.5 billion in India in August 2021.

Government Initiatives
The first Union Budget of the third decade of 21st century
was presented by Minister for Finance & Corporate Affairs,
Ms. Nirmala Sitharaman in the Parliament on February 1,
2020. The budget aimed at energizing the Indian economy
through a combination of short-term, medium-term and
long-term measures. In the Union Budget 2021-22, capital
expenditure for FY22 is likely to increase to increase by
34.5% at Rs. 5.5 lakh crore (US$ 75.81 billion) over FY21
(BE) to boost the economy. Increased government expenditure is expected to attract private investments,
with production-linked incentive scheme providing excellent opportunities. Consistently proactive,
graded and measured policy support is anticipated to boost the Indian economy.

1) In September 2021, Prime Minister Mr. Narendra Modi approved the production-linked incentive
(PLI) scheme in the textiles sector—for man-made fiber (MMF) apparel, MMF fabrics and 10
segments/products of technical textiles—at an estimated outlay of Rs. 10,683 crore (US$ 1.45
billion). In September 2021, the government approved a production-linked incentive (PLI)
scheme for automobile and drone industries with an outlay of Rs. 26,058 crore (US$ 3.54 billion)
to boost the country’s manufacturing capabilities.
2) In September 2021, Union Cabinet approved major reforms in the telecom sector, which is
expected to boost employment, growth, competition and consumer interests. Key reforms include
rationalization of adjusted gross revenue, rationalization of bank guarantees (BGs) and
encouragement to spectrum sharing.
3) In September 2021, the government announced plans to release Rs. 56,027 crore (US$ 7.62
billion) under various export promotion schemes to boost exports.
4) In August 2021, the Indian government approved Deep Ocean Mission (DOM) with a budget
outlay of Rs. 4,077 crore (US$ 553.82 million) over the next five years.
5) In May 2021, the government approved the production linked incentive (PLI) scheme for
manufacturing advanced chemistry cell (ACC) batteries at an estimated outlay of Rs. 18,100
crore (US$ 2.44 billion); this move is expected to attract domestic and foreign investments worth
Rs. 45,000 crore (US$ 6.07 billion).
6) The Union Cabinet approved the production linked incentive (PLI) scheme for white goods (air
conditioners and LED lights) with a budgetary outlay of Rs. 6,238 crore (US$ 848.96 million)
and the 'National Programmed on High Efficiency Solar PV (Photo Voltic) Modules' with an
outlay of Rs. 4,500 crore US$ 612.43 million).
7) In June 2021, the RBI (Reserve Bank of India) announced that the investment limit for FPI
(foreign portfolio investors) in the State Development Loans (SDLs) and government securities
(G-secs) would persist unaffected at 2% and 6%, respectively, in FY22.
8) To boost the overall audit quality, transparency and add value to businesses, in April 2021, the
RBI issued a notice on new norms to appoint statutory and central auditors for commercial banks,
large urban co-operatives and large non-banks and housing finance firms.
9) In May 2021, the Government of India has allocated Rs. 2,250 crore (US$ 306.80 million) for
development of the horticulture sector in 2021-22.
10) In November 2020, the Government of India announced Rs. 2.65 lakh crore (US$ 36 billion)
stimulus package to generate job opportunities and provide liquidity support to various sectors
 such as tourism, aviation, construction and housing. Also, India's cabinet approved the
production-linked incentives (PLI) scheme to provide ~Rs. 2 trillion (US$ 27 billion) over five
years to create jobs and boost production in the country.

Numerous foreign companies are setting up their facilities in India on account of various Government
initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, launched
Make in India initiative with an aim to boost country’s manufacturing sector and increase purchasing
power of an average Indian consumer, which would further drive demand and spur development, thus
benefiting investors. The Government of India, under its Make in India initiative, is trying to boost the
contribution made by the manufacturing sector with an aim to take it to 25% of the GDP from the current
17%. Besides, the Government has also come up with Digital India initiative, which focuses on three core
components: creation of digital infrastructure, delivering services digitally and to increase the digital
literacy.

Some of the recent initiatives and developments undertaken by the Government are listed below:

 By November 1, 2021, India and the United Kingdom hope to begin negotiations on a free
trade agreement. The proposed FTA between these two countries is likely to unlock business
opportunities and generate jobs. Both sides have renewed their commitment to boost trade in
a manner that benefits all.

 In August 2021, NITI Aayog and Cisco collaborated to encourage women's entrepreneurship
in India.

 In August 2021, Prime Minister Mr. Narendra Modi announced an initiative to start a national
mission to reach the US$ 400 billion merchandise export target by FY22.

 In August 2021, Prime Minister Mr. Narendra Modi launched digital payment solution, e-
RUPI, a contactless and cashless instrument for digital payments.

 In June 2021, RBI Governor, Mr. Shaktikanta Das announced the policy repo rate unchanged
at 4%. He also announced various measures including Rs. 15,000 crore (US$ 2.05 billion)
liquidity support to contact-intensive sectors such as tourism and hospitality.

 In June 2021, Finance Ministers of G-7 countries, including the US, the UK, Japan, Italy,
Germany, France and Canada, attained a historic contract on taxing multinational firms as per
which the minimum global tax rate would be at least 15%. The move is expected to benefit
India to increase foreign direct investments in the country.
  In June 2021, the Indian government signed a US$ 32 million loan with World Bank for
improving healthcare services in Mizoram.

 In May 2021, the Government of India (GoI) and European Investment Bank (EIB) signed
the finance contract for second tranche of EUR 150 million (US$ 182.30 million) for Pune
Metro Rail project.

 According to an official source, as of September 15, 2021, 52 companies have filed

applications under the Rs. 5,866 crore (US$ 796.19 million) production-linked incentive
scheme for the white goods (air conditioners and LED lights) sector.

 In May 2021, Union Cabinet has approved the signing of memorandum of understanding
(MoU) on migration and mobility partnership between the Government of India, the United
Kingdom of Great Britain and Northern Ireland.

 In April 2021, Minister for Railways and Commerce & Industry and Consumer Affairs, Food
& Public Distribution, Mr. Piyush Goyal, launched ‘DGFT Trade Facilitation’ app to provide
instant access to exporters/importers anytime and anywhere.

 In April 2021, Dr. Ahmed Abdul Rahman AlBanna, Ambassador of the UAE to India and
Founding Patron of IFIICC, stated that trilateral trade between India, the UAE and Israel is
expected to reach US$ 110 billion by 2030.

 India is expected to attract investment of around US$ 100 billion in developing the oil and
gas infrastructure during 2019-23.

 The Government of India is going to increase public health spending to 2.5% of the GDP by
2025.

 For implementation of Agriculture Export Policy, Government approved an outlay Rs. 2.068
billion (US$ 29.59 million) for 2019, aimed at doubling farmers income by 2022.

Road Ahead
As per the data published in a Department of Economic Affairs report, in the first quarter of FY22,
India’s output recorded a 20.1% YoY growth, recovering >90% of the pre-pandemic output in the first
quarter of FY20. India’s real gross value added (GVA) also recorded an 18.8% YoY increase in the first
quarter of FY22, posting a recovery of >92% of its corresponding pre-pandemic level (in the first quarter
of FY20). Also, in FY21, India recorded a current account surplus at 0.9% of the GDP. The growth in the
economic recovery is due to the government’s continued efforts to accelerate vaccination coverage among
citizens. This also provided an optimistic outlook to further revive industrial activities. As per RBI’s
revised estimates of July 2021, the real GDP growth of the country is estimated at 21.4% for the first
quarter of FY22. The increase in the tax collection, along with government’s budget support to states,
strengthened the overall growth of the Indian economy. India is focusing on renewable sources to
generate energy. It is planning to achieve 40% of its energy from non-fossil sources by 2030, which is
currently 30% and have plans to increase its renewable energy capacity from to 175 gigawatt (GW) by
2022. In line with this, in May 2021, India, along with the UK, jointly launched a ‘Roadmap 2030’ to
collaborate and combat climate change by 2030. India is expected to be the third largest consumer
economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior
and expenditure pattern, according to a Boston Consulting Group (BCG) report. It is estimated to surpass
USA to become the second largest economy in terms of purchasing power parity (PPP) by 2040 as per a
report by PricewaterhouseCoopers.

India Economic Growth

GDP is expected to increase robustly in FY 2021 (April 2021–March 2022) as domestic demand
rebounds. In FY 2022, economic growth should moderate but remain upbeat, supported by firm
household spending and fixed investment growth. Uncertainty around the virus and frail fiscal metrics
pose risks to the outlook. Focus Economics panelists project GDP to expand 8.8% in FY 2021, which is
unchanged from the previous month’s forecast. In FY 2022, our panel expects growth of 7.7%.

Economic system of china

Economic Overview

The Chinese economy experienced astonishing growth in the last few decades that catapulted the country
to become the world's second largest economy. In 1978—when China started the program of economic
reforms—the country ranked ninth in nominal gross domestic product (GDP) with USD 214 billion; 35
years later it jumped up to second place with a nominal GDP of USD 9.2 trillion.

Since the introduction of the economic reforms in 1978, China has become the world’s manufacturing
hub, where the secondary sector (comprising industry and construction) represented the largest share of
GDP. However, in recent years, China’s modernization propelled the tertiary sector and, in 2013, it
became the largest category of GDP with a share of 46.1%, while the secondary sector still accounted for
a sizeable 45.0% of the country’s total output. Meanwhile, the primary sector’s weight in GDP has shrunk
dramatically since the country opened to the world.

China weathered the global economic crisis better than most other countries. In November 2008, the State
Council unveiled a CNY 4.0 trillion (USD 585 billion) stimulus package in an attempt to shield the
country from the worst effects of the financial crisis. The massive stimulus program fueled economic
growth mostly through massive investment projects, which triggered concerns that the country could have
been building up asset bubbles, overinvestment and excess capacity in some industries. Given the solid
fiscal position of the government, the stimulus measures did not derail China’s public finances. The
global downturn and the subsequent slowdown in demand did, however, severely affect the external
sector and the current account surplus has continuously diminished since the financial crisis. China exited
the financial crisis in good shape, with GDP growing above 9%, low inflation and a sound fiscal position.
However, the policies implemented during the crisis to foster economic growth exacerbated the country’s
macroeconomic imbalances. Particularly, the stimulus program bolstered investment, while households’
consumption remained relatively low. In order to tackle these imbalances, the new administration of
President Xi Jinping and Premier Li Keqiang, beginning in 2012, have unveiled economic measures
aimed at promoting a more balanced economic model at the expense of the once-sacred rapid economic
growth.

Factors that affect the china economy

China’s Balance of payments
China’s external position is extremely solid. The current
account has recorded a surplus in every year since 1994.
The capital account followed suit and only recorded two
deficits in the last 20 years. This situation of surpluses in
the both the current and the capital put pressure on the
national currency and prompted the Central Bank to
sterilize most of the foreign currency that entered the
country. As a result, China’s foreign exchange reserves
skyrocketed to almost USD 4.0 trillion in 2014. The
current account surplus reached its peak in 2007, when it
represented 10.1% of GDP. Since then, however, the
surplus has since narrowed as the currency strengthened and domestic demand increased. China’s capital
account has bold controls, which implies that the country lacks the freedom to convert local financial
assets into foreign financial assets at a market-determined exchange rate and vice versa. The new Xi-Li
administration and the People’s Bank of China vowed to accelerate interest rate liberalization and capital
account convertibility. In this regard, Chinese authorities have started to implement some measures, such
as removing a cap on foreign-currency deposit rates in Shanghai and releasing some controls on the
currency. The capital account benefited from strong inflows of Foreign Direct Investment (FDI). FDI has
performed strongly in the last decade, with record inflows of USD 118 billion in 2013, thereby becoming
the second largest recipient of foreign investment. Among the countries that invest more in China are
Hong Kong, Singapore, Japan, Taiwan, and the United States. In addition, China’s outward investment
soared in recent years and, according to some analysts, the country could become a net exporter of capital
in the coming years.

China’s Trade Structure

China has experienced uninterrupted trade surpluses since 1993. Total trade multiplied by nearly 100 to
USD 4.2 trillion in only three decades and, in 2013, China surpassed the United States as the world’s
biggest trading nation. The opening of the country and the government’s massive investment programs
have prompted the country to become a major manufacturing hub. This situation fostered trade growth,
particularly after China joined the World Trade Organization in 2001. As an economy highly integrated
into the global trade system, the country benefited from a steady improvement in its terms of trade since
2000. However, the global economic downturn in 2008-2009 led the country to reduce manufacturing
output, thus dragging on China’s trading sector. Moreover, the country has engaged in several bilateral
and multilateral trade agreements that have opened new markets for its products. In 2003, China signed
the Closer Economic Partnership Arrangement with Hong Kong and Macau. A Free Trade Agreement
(FTA) between China and the ASEAN nations came into effect on January 2010, which created the
world’s third largest free trade area in terms of nominal GDP. China also established, among others, FTA
with countries such as, Australia, Chile, Costa Rica, Korea, Pakistan, Peru, New Zealand, and Singapore.
Moreover, there are other FTAs under negotiation with the Gulf Cooperation Council, Japan, Norway and
Sri Lanka.

Exports from China

Electronics and machinery make up around 55% of total exports, garments account for 13% and
construction material and equipment represent 7%. Sales to Asia represent over 40% of total shipments,
while North America and Europe have an export share of 24% and 23%, respectively. Although exports
to Africa and South America expanded rapidly, they only account for 8% of total shipments. Due to
favorable global trade conditions and China’s accession to the World Trade Organization in December
2001, the country has experienced an astonishing growth of 26.9% annually in real goods and services
exports during the 2002-2008 period.

 Imports to China
In order to supply factories and support China’s rapid development, the country’s imports are mostly
dominated by intermediate goods and a wide range of commodities, including oil, iron ore, copper and
cereals. China’s soaring demand for raw materials pushed global commodity prices up leading up to
2015, thereby boosting the coffers of many developing nations and commodity-exporting economies.
However, since the end of the commodities super cycle at the end of 2014, global commodities prices
have fallen partially due to a decrease in demand from China. The acceleration that many of those same
developing and commodity-exporting economies experienced has dramatically decreased since the end of
2015. Supply of imports into China is mostly dominated by Asian countries, with a combined share of
around 30% of total imports. Purchases from Europe and the U.S. account for 12% and 8%, respectively.
As a major global buyer of commodities, imports from Africa, Australia, the Middle East and South
America have increased strongly in the last decade to represent a combined share of around 50%. In
parallel with skyrocketing exports, growth in imports of real goods and services soared in the 2002-2008
period, recording an annual average expansion of 24.4%. Imports experienced a contraction in 2009 due
to the global crisis, but recovered quickly in 2010 and 2011. In the 2012-2013 period, imports recorded a
modest increase of 7.2%. As the construction boom fades in China, fewer natural resources are
demanded. This has pulled down global prices for base metals, energy products, as well as other
resources. Imports contracted a sharp 14.3% in 2015 as the Chinese economy adjusted to its new growth
dynamics.

China’s Economic Policy

Economic growth soared in the last few decades mainly due to the country’s increasing integration into
the global economy and the government’s bold support for economic activity. However, the successful
economic model that lifted hundreds of millions out of poverty and fueled the country’s astonishing
economic and social development has also brought many challenges. Severe economic imbalances,
mounting environmental issues, rising economic inequality and an aging population are the key questions
that the new administration lead by President Xi Jinping will have to tackle in the near future in order to
ensure the country’s sustainability.

China’s Fiscal Policy

Before 1978, China had a highly centralized fiscal system, which mainly reflected the country’s planned
economic system. The central government collected all revenues and allocated all the spending of the
administration and public institutions. In parallel with the reforms implemented in the country for Deng
Xiaoping, the government started to decentralize the fiscal system. In 1994, the government launched a
bold fiscal reform in order to struggle against a rapid decline in the tax/GDP ratio, which dampened the
government’s ability to conduct macroeconomic and redistribution policies. The flagship of the reform
was a new taxation system and the adoption of a tax-sharing scheme, where the most lucrative sources of
tax revenues, such as the Value-Added Tax and the Enterprise Income Tax, were administered by the
central government. The result of this reform was a steady increase in revenues, which jumped from
10.8% of GDP in 1994 to 22.7% of GDP in 2013. While expenditures followed suit and increased at a
double-digit rate in the same period, the fiscal deficit was kept in check. In the 1994-2013 period, the
government’s fiscal deficit averaged 1.4% of GDP. The new system, however, left local governments
with fewer sources of revenue. As a result they had to rely on land sales and indirect borrowing (mostly
so-called “shadow banking”) to finance their activity. In addition, local governments put in place off-
budget local government financing vehicles to raise funds and finance investment projects. Although debt
is still at manageable levels, an increase in the reliance on shadow banking and the rapid pace of debt
accumulation is worrisome. In an effort to increase revenue sources for local governments, in August
2014, the National People’s Congress passed amendments to the budget law, allowing provincial
government to issue bonds directly and increase transparency. This move paves the way for local
governments to raise debt in the bond market. China’s government debt is almost entirely denominated in
local currency and owned by domestic institutions. In addition, the government has cash savings
equivalent to 6% of GDP in the People’s Bank of China. This situation shields the economy against
government debt crises. In 2015, public debt amounted to 15.6% of GDP.

China’s Monetary Policy

Under the guidance of the State Council, the People’s Bank of China (PBOC) formulates and implements
monetary policy, prevents and resolves financial risks, and safeguards financial stability. The PBOC’s
main objectives are: ensuring domestic price stability, managing the exchange rate and promoting
economic growth. At the beginning of each year, the State Council establishes guiding targets for GDP,
the Consumer Price Index (CPI), money supply (M2) and credit growth. The PBOC’s policy rate is the
one-year lending rate. The Central Bank recently vowed to maintain a “prudent” monetary policy while
conducting policy fine-tuning at an appropriate time during the National People’s Congress (NPC) in
March of 2016. The Central Bank manages money supply through Open Market Operations (OMO),
which is conducted with both domestic and foreign currencies and comprises repo and reverse repo,
government securities and PBOC bills. The Bank also uses the reserve requirement ratio to influence
lending and liquidity. Other instruments that the Central Bank uses to manage and adjust liquidity in the
banking system are short-term loans, short-term liquidity and standing lending facility operations. The
agenda of China’s top authorities include bold reforms on interest rate and monetary policy management
in order to adopt a more market-driven approach.

China’s Exchange Rate Policy

The IMF labels China’s exchange rate regime as a crawl-like arrangement. The speed and direction of the
crawling peg is decided by Chinese authorities according to domestic and international economic
developments. The PBOC classifies its regime as a managed floating exchange rate regime based on
market supply and demand with reference to an undisclosed basket of currencies. The U.S. dollar is likely
to represent a large stake of the basket. The Yuan fluctuates in an intraday trading band around an official
midpoint rate. On 15 March 2014, the PBOC widened the trading band from +/-1 to +/-2. From 1995 to
2005, China kept its currency fixed versus the U.S. dollar at around 8.28 CNY per USD. This was the
case until 2005, when it switched to a managed float of the currency to facilitate a controlled appreciation
of the CNY. However, in the wake of the global financial crisis, China pegged its currency to the USD at
6.82 CNY per USD from June 2008 to June 2010.Since then, the PBOC has made a number of
revaluations to the currency in order to bring it closer to it market value. While the Chinese Yuan is freely
convertible under the current account, it remains strictly regulated in the capital account. Chinese
authorities expressed their willingness to allow the Yuan to be fully convertible in the near future.
Chinese authorities are gradually enhancing the use of the currency in other parts of the world in order to
promote the Yuan as a global reserve currency. Although the process is far from being completed, China
has already established trade settlements with selected countries and launched a series of currency swap
agreements with more than 20 central banks. In addition, China is rapidly expanding the yuan’s offshore
market. The opening up of the country’s capital market will be a crucial step in the yuan’s journey to
becoming a major reserve currency.
GDP BY ADMINSTRATIVE DIVISION

PPP: abbreviation of purchasing power parity;

Nominal: CNY 6.7518 per U.S. dollar; PPP: CNY 3.5063 per Intl. dollar
(based on IMF WEO April 2018)[112]

GDP (in billions) GDP per capita

Mid-
year
Re popul
provi No al S No PP S
R PP R ation
nces min gr ha C min P ha
a CN P a (give
al ow re N al (in re n*100
n ¥ (int n
(US th ( ¥ (US tl$ (% 0)
k l$.) k
$) (% %) $) .) )
)

Chin 82,71 12,25 23,58 59,6 17,0 1,386,3

6.9 100 8,836 100
a 2.20 0.39 9.60 60 15 95

Guan
8,987 1,331. 2,563 10.8 81,0 12,01 23,1
gdon 1 7.5 8 136 109,240
.92 19 .36 7 89 0 27
g

Jiang 8,590 1,272. 2,449 10.3 107, 17,17 32,5

2 7.2 4 180 79,875
su .09 27 .90 9 189 6 70

Shan 7,267 1,076. 2,072 72,8 10,79 20,7

3 7.4 8.79 9 122 99,470
dong .82 43 .79 51 0 77

Zheji 5,176 766.7 1,476 92,0 13,63 26,2

4 7.8 6.26 5 154 55,645
ang .83 3 .44 57 4 55

Hena 4,498 666.3 1,283 47,1 13,4

5 7.8 5.44 19 6,980 79 95,062
n .82 1 .07 29 41

Sichu 3,698 547.7 1,054 44,6 12,7

6 8.1 4.47 22 6,613 75 82,330
an .02 1 .68 51 35

Hube 7 3,652 540.9 1,041 7.8 4.42 11 61,9 9,179 17,6 104 58,685
i
 PPP: abbreviation of purchasing power parity;
Nominal: CNY 6.7518 per U.S. dollar; PPP: CNY 3.5063 per Intl. dollar
(based on IMF WEO April 2018)[112]

GDP (in billions) GDP per capita

Mid-
year
Re popul
provi No al S No PP S
R PP R ation
nces min gr ha C min P ha
a CN P a (give
al ow re N al (in re n*100
n ¥ (int n
(US th ( ¥ (US tl$ (% 0)
k l$.) k
$) (% %) $) .) )
)

.30 4 .64 71 74

Hebe 3,596 532.6 1,025 47,9 13,6

8 6.7 4.35 18 7,107 80 74,475
i .40 6 .70 85 85

Huna 3,459 512.3 986.5 50,5 14,4

9 8.0 4.18 16 7,489 85 68,025
n .06 2 3 63 21

Fujia 3,229 478.3 921.1 82,9 12,28 23,6

10 8.1 3.90 6 139 38,565
n .83 7 5 76 9 65

Issues with over claiming

Chinese provinces and cities have long been suspected of
cooking their numbers, with the focus on local government
officials, whose performance are often assessed based on
how well their respective economies have performed. In
recent years, China claimed growth numbers have come
under increased scrutiny, with both domestic and
international observers alleging the government has been
inflating its economic output. Instances of over claiming
officially came to light when:
Binhai New Area in the northern Chinese city of Tianjin. Tianjin's trillion-Yuan GDP claim for 2016 was
in fact a third lower, at 665 billion ($103 billion). Inner Mongolia's government also stated that about
40% of the region's reported industrial output in 2016, as well as 26% of reported fiscal revenues, did not
exist. Liaoning, frequently called China's rust belt, admitted in 2017, that local GDP numbers from 2011
to 2014 had been inflated artificially by about 20%. A survey by The Wall Street Journal of 64 select
economists found that 96% of respondents think China's GDP estimates don't "accurately reflect the state
of the Chinese economy. However, more than half the economists in the survey estimated that China's
annual growth was somewhere in the 5% to 7% range, which represents robust growth. Chinese premier
Li Keqiang has said he is far from confident in the country's GDP estimates, calling them "man-made"
and unreliable, according to a leaked document from 2007 obtained by Wiki Leaks. He said government
data releases, especially the GDP numbers, should be used "for reference only". Analysts like Wilbur
Ross and Donald Straszheim believe China's recent economic growth has been overstated, and estimate a
growth rate at around 4% or less. According to Chang-Tai Hsieh, an economist at the University of
Chicago Booth School of Business and research associate at the National Bureau of Economic Research,
Michael Zheng Song, an economics professor at the Chinese University of Hong Kong, and coauthors,
China's economy was smaller than what the Chinese government stated in 2016. In their research paper,
published by the Brookings Institution, they adjusted the historical GDP time series using value-added tax
data, which they said are "highly resistant to fraud and tampering". They found that China's economic
growth may have been overstated by 1.7 percent each year between 2008 and 2016, meaning that the
government may have been overstating the size of the Chinese economy by 12-16 percent in 2016.

The China-Pakistan Economic Corridor

China and Pakistan have a long-established history of economic links. Bilateral trade and commercial
ties were established in January 1963 with the signing of the first long-
term trade agreement. In November 2006, China and Pakistan signed a
free-trade agreement which was extended to services in 2009. China-
Pakistan trade increased from a little over US$4 billion in 2006-07 to
US$9.2 billion in 2012-13 (Sial, 2017). These trade policy agreements
have recently been supplemented by a renewed emphasis on
improving infrastructure. The construction of a nearly 3,000 km (1,800
mile) infrastructure link from Kashgar in Western China to the deep
sea port of Gwadar in southern Pakistan was discussed during the visit to Pakistan of Chinese Premier Li
Keqiang in 2013. The link became known as CPEC and includes oil and gas pipelines, railways,
highways, special economic zones and fiber optic networks (Sial, 2017). CPEC is part of a huge
infrastructure project that will involve more than sixty countries known as the One Belt One Road
(OBOR). OBOR has become an integral part of Chinese foreign policy under President Xi Jiping (Boyce,
2017). There are deeper historical precedents for the construction of transport linkages in Pakistan
motivated in part by the geopolitical economic interests of external powers. The British constructed a
railway to the Khunjerab Pass in Gilgit-Baltistan where it crosses into China. This renewed emphasis on
railways linked up the border of Afghanistan in 1926. The Chinese constructed the 1300 km Karakoram
Highway in the 1960s to connect Hasan Abdal in the Punjab region to the Khunjerab Pass in Gilgit-
Baltistan where it crosses into China. The renewed emphasis on CPEC dates back to policy decisions in
2010 China to develop the western parts of China to close the gap in economic development with eastern
and coastal China. The CPEC project has emphasized extending infrastructure and energy projects into
Pakistan to link up western China with the rest of the world (summers, 2016). There is clear and
widespread support for CPEC in Pakistan that was sustained through the change of government in
Pakistan in the 2014 national election. The military have also confirmed their enthusiastic backing. To
date the main exception has come from some minor regional nationalist parties in Balochistan (Sial,
2017). There is enormous and widespread optimism about CPEC; it “will be a harbinger of economic
prosperity and well-being for Pakistan, China and the neighboring states” (Hali et al., 2015). CPEC is
clearly in tune with the well-established government policy of giving priority to infrastructure, especially
energy. There is good evidence that the provision of infrastructure in Pakistan is poor relative to large
comparator developing countries and has become a significant constraint on economic growth (Loayza &
Wada, 2012). CPEC is projected to cost US$46 billion, of which 71 percent is to be invested in energy, 4
percent in the Gwadar port, 8 percent in rail and 13 percent in road links (Boyce, 2017). The link to the
port is likely to be highly significant, as in 2014-15 95 percent of Pakistan’s foreign trade (US$46 billion
of imports and US$23.7 billion of exports) transited through the three ports of Karachi, Qasim and
Gwadar (Boyce, 2017).