China’s economy has grown steadily over the past decades, becoming the world’s largest economy in terms of purchasing power parity (PPP). As of 2019, the estimated GDP of China stood at $14.2 trillion, with a nominal GDP of $14.14 trillion. Over the years, China has emerged as a leading global industrial powerhouse, with a wide range of industries dominating the global market. With such a wide range of industries, there is widespread speculation on the state of the Chinese economy and the role each sector plays.

In this article, we will take an in-depth sector-wise look at China’s industries and analyse the current state of affairs.

Overview of China’s Economic Output

In 2019, the tertiary sector, which includes services, made up for 57.4% of China’s economic output. It was followed by the secondary sector, which includes industry, with 38.2%. The primary sector, which includes agriculture, lags far behind with a mere 4.4%.

Industrial Production Data

Industrial production data provides crucial insights on China’s economic performance and can help investors and analysts further evaluate the state of China’s industries. In 2019, the overall industrial production growth rate dropped to 5.8%, compared to the 8.5% growth rate in 2018.

The manufacturing industry has been on the decrease, experiencing a -2.8% in 2019. This decrease can largely be attributed to the restrictions placed on production as a result of Chinese New Year, plus an overall balanced growth rate as a result of reduced government spending.

The mining industry experienced an increase of 6.3%, while the electricity and gas industry experienced an increase of 6.8%.

Key Sectors in China’s Economy

Agriculture

China’s agricultural industry has been an essential part of China’s economy. With a population of over 1.4 billion people, the agricultural sector has been a major employment provider and continues to be a major driving force for China’s economy.

China’s agricultural production has been trending upwards for years, with land area and yield increasing steadily. As of 2019, China had over 128.38 million hectares of arable land, and a total grain output of over 600 million metric tons.

Industry

The industrial sector is one of the most important components of China’s economy and accounts for 38.2% of the total economic output in 2019. This sector consists of a wide range of industries, including electronics, information technology, automotive, and manufacturing.

Industrial growth has been on the decline since 2018, with industrial production decreasing by 2.8%. This can largely be attributed to reduced government spending, restrictions caused by Chinese New Year, and overcapacity in certain industries.

Service

The service sector is the largest component of China’s economy and accounts for 57.4% of its total economic output. It included industries such as wholesale and retail trade, education, IT, finance, real estate and hospitality.

In 2019, the service sector experienced a growth rate of 6.4%, which is slightly higher than what was witnessed in 2018. This growth can largely be attributed to increased consumer spending in areas such as technology, services and real estate.

Tertiary industries such as healthcare and education are projected to experience rapid growth in the near future.

Technology

Technology has been touted as one of the most important sectors in the Chinese economy, with technology services making up a key area of focus. With its focus on innovation and technology-driven growth, Chinese players have been able to capitalize on opportunities in the global market and make their mark.

In 2019, China’s technology sector enjoyed a 7.4% increase in production, surpassing its 6.3% growth rate in 2018. The increase in production can largely be attributed to improved consumer spending and a focus on tech-driven growth.

Emerging Sectors

The Chinese economy is an ever-evolving entity, which is seeing the emergence of a new set of industries.

Renewable energy is one such sector which is experiencing rapid growth in China. With an estimated investment of $252 billion in 2019, China has emerged as one of the largest green energy investment destinations in the world.

Online retailing is another sector that is experiencing increased investment and spending. China is experiencing a significant shift towards the online platform, with online retail sales accounting for over 15% of the total sales in 2019.

Tourism is yet another sector that is experiencing exponential growth in China. According to 2019 figures, over 6 million foreigners visited China.

China’s industries have undergone tremendous growth over the past decades, with a wide range of sectors driving China’s economy. From agriculture, industry and services to technology, renewable energy and online retail, the Chinese economy is now more diversified than ever. As China looks to continue on its growth trajectory, each of these sectors will hold crucial importance in the coming years.