Financial Paper on China
CHINA
Economic Freedom Score
25
Least free 0
50
75 100 free
Most
World Rank:
136
Regional Rank:
29
51.9
freedom score is 51.9, making its economy C hina’s economiclast the 2013 Index.modest improvements the 136th freest in Its overall score is 0.7 point higher than year, reflecting
Freedom Trend
55 54 53 52 51 50
in four of the 10 economic freedoms. China is ranked 29th out of 41 countries in the Asia–Pacific region, and its overall score continues to be lower than the global and regional averages. China’s economy remains “mostly unfree.” The legal and regulatory system is vulnerable to political influence and Communist Party directives. The party’s ultimate authority throughout the economic system undermines the rule of law and respect for contracts. Corruption is widespread, and cronyism is institutionalized and pervasive. Although leaders occasionally embrace market principles that could enhance efficiency and ensure long-term competitiveness, genuinely liberalizing economic reform has largely stalled. The absence of political will to undertake more fundamental restructuring of the economy has led to continued overreliance on public investment. Productivity growth is undermined by state regulation and ownership of many enterprises, and the financial sector is primarily an instrument of state control through subsidies and credit manipulation. In the face of the economic slowdown, the government has tried expansionary fiscal and monetary interventions to little effect.
2009
2010
2011
2012
2013
Country Comparisons
Country World Average Regional Average Free Economies
0 20 40 60 80
51.9 59.6 57.4 84.5
100
backgRound: China’s Communist Party maintains tight control of political expression, speech, religion, and assembly. There is hope for economic reform from the incoming government of Communist Party General Secretary Xi Jinping, but political reform is unlikely. Environmental degradation and fiscal
Economic Freedom Score
25
Least free 0
50
75 100 free
Most
World Rank:
136
Regional Rank:
29
51.9
freedom score is 51.9, making its economy C hina’s economiclast the 2013 Index.modest improvements the 136th freest in Its overall score is 0.7 point higher than year, reflecting
Freedom Trend
55 54 53 52 51 50
in four of the 10 economic freedoms. China is ranked 29th out of 41 countries in the Asia–Pacific region, and its overall score continues to be lower than the global and regional averages. China’s economy remains “mostly unfree.” The legal and regulatory system is vulnerable to political influence and Communist Party directives. The party’s ultimate authority throughout the economic system undermines the rule of law and respect for contracts. Corruption is widespread, and cronyism is institutionalized and pervasive. Although leaders occasionally embrace market principles that could enhance efficiency and ensure long-term competitiveness, genuinely liberalizing economic reform has largely stalled. The absence of political will to undertake more fundamental restructuring of the economy has led to continued overreliance on public investment. Productivity growth is undermined by state regulation and ownership of many enterprises, and the financial sector is primarily an instrument of state control through subsidies and credit manipulation. In the face of the economic slowdown, the government has tried expansionary fiscal and monetary interventions to little effect.
2009
2010
2011
2012
2013
Country Comparisons
Country World Average Regional Average Free Economies
0 20 40 60 80
51.9 59.6 57.4 84.5
100
backgRound: China’s Communist Party maintains tight control of political expression, speech, religion, and assembly. There is hope for economic reform from the incoming government of Communist Party General Secretary Xi Jinping, but political reform is unlikely. Environmental degradation and fiscal