Comprehensive Anatomy of China

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Comprehensive Anatomy of China

July 29, 2004


  1. Executive Summary
  2. Geography
  3. Key Historical Events
  4. Culture
  1. Population Distribution
  2. Ethnic Groups
  3. Language
  4. Religion & Philosophy
  5. Education
  1. Government
  1. Constitutional Framework
  2. Legislative Branch
  3. Executive Branch
  4. Judicial Branch
  5. Local Government
  6. Political System
  7. Defense
  1. Economy
  1. Labor
  2. Banking System & Monetary Policy
  3. Fiscal Policy & Taxation System
  4. Agriculture
  5. Manufacturing & Industry
  6. Services
  7. Trends and Outlook
  1. Trade
  1. Regulations and Standards
  2. Tariffs & Value Added Tax
  3. Imports & Exports
  4. Foreign Investment


China is a country rich in culture, people, and natural resources.  Throughout its long history, China has seen many transformations in its territory, leadership, religion, and philosophy.  Over the last half century, many changes have affected China for the better when considered in aggregate.  These changes have strengthened its foreign relations, economy, and outlook for the next century although China remains a poor country by world standards.  

When reviewing China’s recent history there are three periods of significance that should be considered: the rise of communism and the establishment of the People’s Republic of China in 1949, the modernization movement led by Deng Xiaoping in 1978, and in 2001 China’s accession into the WTO.  The rise of communism brought forth stability and moderate growth to the country, thereby fulfilling the Chinese people’s basic needs.  Under Deng Xiaoping, the country’s economy began to grow by opening up its doors to foreign investment and trade.  By the late 1990’s China’s economy had become much more liberal through the passage of reforms that changed China from a centrally planned to a socialist market economy.  China’s accession into the WTO in 2001 marked the next great step for China towards becoming further integrated into the world economy, which should ultimately lead to a better lifestyle for the Chinese people.

Today 1 out of every 5 persons on Earth is Chinese and this number is growing.  Given China’s immense population, it will be difficult for the state to ensure equal growth among its entire people.  Another challenge the state will face in the next century is social unrest.  As China’s economy becomes more open, its people will also seek greater freedoms which will be compounded by foreign influences.  Therefore, it will only become increasingly difficult for the socialist party to maintain its tight control over China in the ensuing years.


China is located in eastern Asia and covers 3.69 million square miles of the Earth’s surface compared to the United States at 3.67 million square miles.  Given China’s size, it shares borders with many other countries.  To the north, common borders include: Russia, Mongolia, North Korea; and to the west: Pakistan, Afghanistan, Tajikistan, Kyrgyzstan, Kazakhstan; and to the south: India, Nepal, Bhutan, Myanmar (Burma), Laos, Vietnam; and to the east the Pacific Ocean.  The Chinese territory is commonly divided into seven vast regions consisting of Northeast China, North China, Subtropical East Central China, Tropical South China, Inner Mongolian Grassland, Northwest China and the Tibetan Plateau.  The regions are defined by each one’s unique terrain and climate, which in turn has an effect on the commerce and businesses that can be supported.

The Northeast, for example, has forested mountains that are surrounded by extensive plains of lush land.  The provinces in this region include Heilongjiang, Jilin, and Liaoning.  Timber is a large industry within these provinces as a result of the heavily wooded mountains.  In addition, the “black soils” that cover a vast majority of the central plains in this region, is said to be the most fertile in all of China thereby sustaining a healthy agricultural industry.  Significant mineral deposits also play a large role in Northeast China’s economy, with petroleum, coal and iron being noteworthy.  In 1984, Dalian was the first state approved economic and technical development zone in China.  Since then it has become the regions principal seaport due to its numerous berths and booming industrial structure.  Today, Dalian’s business structure is comprised of relatively well-developed electronic, machinery, textile, chemical, and medical instrument industries.  The following figure shows the climate for all of China’s regions.

North China includes the Shandong and Shanxi provinces; most of Hebei, Henan, and Shaanxi provinces; and portions of Jiangsu, Anhui, and Gansu provinces plus part of the Ningxia Hui Autonomous Region.  Of most importance to this region would be the Beijing & Tianjin municipalities.  Beijing, otherwise known as Peking, is China’s capital and second largest city after Shanghai; plus, it’s the cultural, political, and intellectual center of the country, as well as a major industrial and commercial metropolis.  Tianjin, the gateway to Beijing, has an abundance of natural resources, vigorous industry and commerce with exceptional communication and transport services.  Thousands of years of cultivation in this region have created a land ripe with agricultural development due to the wind blown silt that has built up over the years creating fertile soil.  Also of importance in the North region are the immense coal supplies that are the largest in all of China.

The largest and most heavily populated natural region of the country is contained within Subtropical East Central China.  Due to the regions size, many provinces are enclosed within its boundaries including: Hunan, Hubei, Jiangxi, Zhejiang, Sichuan, and Guizhou; plus parts of the Jiangsu, Anhui, Henan, Fujian, Guangdong, and Yunnan provinces.  This region is host to the Shanghai and Chongqing municipalities; Hong Kong and Macau Special Administrative Regions (SAR) and a majority of the Guangxi Zhuang Autonomous Region as well.  Hong Kong, classified as the freest economy in the world, has an extremely busy seaport in addition to a vibrant stock exchange.  Macau is well known for the bustling service and tourism sectors with some indicators that the banking and insurance sectors will be the next to boom for this SAR.  Shanghai is home to China’s largest foreign trade port due to its geographic location.  It also has a multitude of supporting industries with a rapidly expanding financial market.  Chongqing has an abundant supply of natural resources and is recognized as an integrated industrial city.  The municipalities and SAR’s of Subtropical East Central China region are peppered with a multitude of lakes, natural and artificial waterways, and a series of lowland basins and terraced hills for farming.

Tropical South China is the smallest of all the natural regions.  This region includes  Province, Hainan Island and the southernmost parts of Guangdong and Yunnan Province, as well as the southern Guangxi Zhuang Autonomous Region.  Hainan, a special economic zone, is on track to be the national center for pharmacy and is currently expanding into the tourism and tropical research markets.  Mountains, hills and flourishing tropical vegetation due to its warm humid climate, cover the South China region.

The Inner Mongolian Grassland includes a majority of the Inner Mongolia Autonomous Region, the Ningxia Hui Autonomous Region and northern sections of the Hebei Province.  Virtually no vegetation exists in this area due to the desert terrain that is marked with sand and rocks; thus the Chinese term for this land is gobi, or stony desert.  There are considerable supplies of coal reserves in this region, not to mention its reserves of rare-earth elements, which account for 80 percent of the world’s total resources.

Northwest China includes, administratively, a significant portion of the Xinjiang Uygur Autonomous Region, small sections of the Gansu Province and Inner Mongolia Autonomous Region.  Xinjiang is quickly becoming China’s main source of cotton and hops, of which 33 percent and 80 percent of the country’s supply was respectively reported for in 2001.  Similar to the Inner Mongolian Grassland region, there are areas of stony and sandy desert although the region is primarily landscaped with fertile steppe soils that support an array of irrigated agriculture.

The Tibetan Plateau region is host to the entire Tibet Autonomous Region and Qinghai Province in addition to sections of Sichuan Province, Yunnan Province, Gansu Province, and Xinjiang Uygur Autonomous Region.  The Tibetan Plateau is commonly referred to as the “Roof of the World” because it’s the world’s highest plateau region.  Although the landscape is mostly bleak, infertile and rock covered, the environmental value is priceless because many of the country’s main rivers originate in this region.  Therefore, the environmental well being of the Tibetan Plateau is very important to the ecological balance of many other regions and the commerce that is supported by these waterways.


Throughout the countries early history, a series of dynasties ruled larger and larger territories to what has now become known as the People’s Republic of China.  All through the 19th century China faced European powers that were militarily stronger than they were.  The humiliation brought on by the imperialist powers during the previous century sparked an early revolution in the 20th century against the dynastic regime that had ruled for so long.  By 1911 the revolutionist won the battle and the first elected president (Yuan Shikai) of the Republic of China was named thereby putting an end to the monarchies that had ruled for so long.  Although officially titled the Republic of China, it wasn’t truly a republic until 1949.

In 1948 the prevailing Chinese Communist Party (CCP) defeated the then ruling Nationalist Party.  The current government was established in October 1949 after CCP chairman Mao Zedong declared the formation of the People’s Republic of China (PRC).  This effectively brought an end to Western imperialist involvement in China because the communist government set up a one-party state that was to be ruled by the CCP.

Under Zedong’s leadership, China began down the long road of economic recovery.  In 1953, with the assistance of the Soviet model of central planning, the Communist set forth a series of Five-Year Plans to dramatically reorganize essentially all aspects of Chinese life.  This involved a focus on the development of basic heavy industry, a progressive socialization of Chinese agriculture and the suppression of non-communist ideals within the country’s religion, press and schools.  Although the plan reduced inflation, restored communications and reestablished domestic order, the Chinese began to back off from their original dedication to heavy industry, which was a mainstay of the Soviet model.  By the end of the 1950’s China began to focus on the agricultural sector again and eventually broke their ties with the Soviets in 1960.

In 1966 Zedong launched the Great Proletarian Cultural Revolution, which was a back-to-the-basics movement.  The intentions with the Cultural Revolution were to stamp out the heavy industrialization and the “bourgeois” ideas and customs presented with the Soviet’s central planning model.  The movement lasted for a decade and severely set back China’s economy.  

China’s foreign relations were strained early on in the Cultural Revolution; although, in 1970 things began to take a turn for the better.  By 1971 the United Nation’s China seat that had been held by the nationalist government of Taiwan, was given to the People’s Republic of China.  In 1976 after Zedong’s death, a group of old-guard radicals known as the Gang of Four were arrested and charged with the crimes of the Cultural Revolution thereby signifying the formal conclusion of the crusade and a new beginning for China’s economy.

By 1978 moderate reformer Deng Xiaoping obtained control of the Chinese government after being removed from the vice premier public office by the Gang of Four in 1976.  This marked a significant turnaround for China because Xiaoping believed in the idea of alleviating poverty via economic development.  He led the economic reform with a simple slogan that promoted the “Four Modernizations” of agriculture, industry, technology and national defense.

Xiaoping backed up his ideals by initiating a reform of the old communal agricultural system.  The reform promoted land privatization and gave an incentive for people to work efficiently and sell their surplus.  In addition he rejuvenated the military academies that had been neglected during the Cultural Revolution and he sanctioned an Open Door policy with foreign nations.  The policy reversed the long lasting self-sufficiency and isolationist viewpoints held in previous decades, thus fostering the foreign relationships necessary to adopt new technology, which has assisted with the modernization of China’s industry.  

The reforms set in motion by Deng Xiaoping significantly improved the standard of living for many of the Chinese people.  His modernization movement was so successful that by the early 1990’s, figures that indicated the people’s average incomes had tripled since he took control of the country.  The modernization didn’t come easily though.  For example, after people began have a better understanding of the individual freedoms and rights enjoyed by Western culture, student protest became commonplace throughout the 1980’s as the Chinese people struggled for further reforms to add more choice in their daily lives.  The unrest came to a head in 1989 when students and others joined together for a demonstration in Tiananmen Square, Beijing.  Eventually armored troops stormed the city center killing numerous defenseless civilians to put an end to the demonstration.  Although the Tiananmen Square incident hurt the country’s foreign relations to some degree with time, ties were mended.

Throughout the 1990’s China’s international reputation greatly improved.  In fact, the United Kingdom and Portugal, respectively, handed over control of Hong Kong in 1997 and Macao in 1999 to the People’s Republic of China.  This was a tremendous accomplishment for the then newly elected president, Jiang Zemin.  

Zemin continued to pursue the economic liberalization started by Deng Xiaoping.  In addition to the transfer of power in Hong Kong and Macao, he also successfully negotiated a trade agreement with the United States that reduced barriers to commerce between the two countries.  The world over took this as the next step in China’s Open Door policy.  This in turn resulted in bilateral trade agreements with many other nations.  By December 2001, China was formally admitted into the World Trade Organization marking what will become the rebirth of the Chinese economy.


Over 20 percent of the world’s population lives in the PRC.  Most of the country’s inhabitants (92 percent) are considered ethnic Han Chinese.  Approximately 5,000 years ago people began settling the plains and plateaus of northern and central China.  These people eventually absorbed the residents of southern China 2,000 years ago, which spawned a shared culture and the people known today as Han.  Minority nationalities make up the remaining 8 percent of the population that include ethnicities such as Mongols and Tibetans.  The scarcely settled regions of western and southwestern China are home to most of the minorities.

In 1982 China became the first nation with a population that just exceeded 1 billion.  By 2004 China’s estimated population has grown to 1,294,629,600.  The country is showing signs of decreased population growth rates in conjunction with declining fertility and birth rates.  Since the Chinese Communist Party came into rule in 1950, the average number of children born per woman during their lifetime (fertility rate) declined from 6.2 to 1.7 in 2004.  Over the same period, the birth rate dropped from an average of 45 births per 1,000 people to an approximated 13.  This in turn has had a dramatic affect on the population’s growth rate, which was reduced from 2.25 percent in the early 1950’s to .59 percent in 2004.  Even with these reductions, China’s population still increases by the millions each year.  Although the nation’s economy grew significantly during this time period, China continually faces the problem of gainfully employing the millions of new workers entering the workforce each year.

The fertility rate has dropped primarily because of government intervention.  For example, couples have been encouraged to marry at an older age than what was previously common.  In addition, the state began a campaign in 1979 to prevent couples from having more than one child.  To assist with the one-child policy, abortion has remained legal and more public health facilities were created to distribute birth-control devices and information.  Beyond these measures, women who become pregnant that already have a child will often be coerced to terminate their pregnancy due to social and administrative forces.

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Although the one-child policy still remains active, there are times when it’s not strictly enforced.  This is often the case for females whom are considered minorities.  Due to the high mortality rate among minorities, non-Han people have typically been granted more cultural freedom by the government to have larger families.  This stance also serves the government who wishes to appear to be sympathetic towards the desires of the various ethnic groups within China.

The one-child policy has led to an uncommonly high ratio of males to females.  The preferences for males are due in part to a complicated set of ...

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