China China's economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. Annual inflows of foreign direct investment rose to nearly $84 billion in 2007. China has generally implemented reforms in a gradualist or piecemeal fashion. In recent years, China has re-invigorated its support for leading state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg was more than 20% by late 2008, but the exchange rate has changed little since the onset of the global financial crisis. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2008 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. The Chinese government faces numerous economic development challenges, including: (a) strengthening its social safety net, including pension and health system reform, to counteract a high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants, new entrants to the work force, and workers laid off from state-owned enterprises deemed not worth saving; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work - in recent years many have returned to their villages. One demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the north - is another long-term problem. China continues to lose arable land because of erosion and economic development. In 2007 China intensified government efforts to improve environmental conditions, tying the evaluation of local officials to environmental targets, publishing a national climate change policy, and establishing a high level leading group on climate change, headed by Premier WEN Jiabao. The Chinese government seeks to add energy production capacity from sources other than coal and oil. In late 2008, as China commemorated the 30th anniversary of its historic economic reforms, the global economic downturn began to slow foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.
Christmas Island
Phosphate mining had been the only significant
economic activity, but in December 1987 the Australian government
closed the mine. In 1991, the mine was reopened. With the support of
the government, a $34 million casino opened in 1993, but closed in
1998. The Australian government in 2001 agreed to support the
creation of a commercial space-launching site on the island expected
to begin operations in the near future.
Clipperton Island
Although 115 species of fish have been identified
in the territorial waters of Clipperton Island, the only economic
activity is tuna fishing.
Cocos (Keeling) Islands
Grown throughout the islands, coconuts are
the sole cash crop. Small local gardens and fishing contribute to
the food supply, but additional food and most other necessities must
be imported from Australia. There is a small tourist industry.
Colombia
Colombia has experienced accelerating growth between 2002
and 2007, with expansion above 7% in 2007, chiefly due to
advancements in domestic security, to rising commodity prices, and
to President URIBE's promarket economic policies. Colombia's
sustained growth helped reduce poverty by 20% and cut unemployment
by 25% since 2002. Additionally, investor friendly reforms to
Colombia's hydrocarbon sector and the US-Colombia Trade Promotion
Agreement (CTPA) negotiations have attracted record levels of
foreign investment. Inequality, underemployment,and narcotrafficking
remain significant challenges, and Colombia's infrastructure
requires significant updating in order to sustain expansion.
Economic growth slipped in 2008 as a result of the global financial
crisis and weakening demand for Colombia's exports. In response,
URIBE's administration has cut capital controls, arranged for
emergency credit lines from multilateral institutions, and promoted
investment incentives such as Colombia's modernized free trade zone
mechanism, legal stability contracts, and new bilateral investment
treaties and trade agreements. The government has also encouraged
exporters to diversify their customer base away from the United
States and Venezuela, Colombia's largest trading partners.
Nevertheless, the business sector continues to be concerned about
the impact of a global recession on Colombia's exports, as well as
the approval of the CTPA, which is stalled in the US Congress.
Comoros
One of the world's poorest countries, Comoros is made up of
three islands that have inadequate transportation links, a young and
rapidly increasing population, and few natural resources. The low
educational level of the labor force contributes to a subsistence
level of economic activity, high unemployment, and a heavy
dependence on foreign grants and technical assistance. Agriculture,
including fishing, hunting, and forestry, contributes 40% to GDP,
employs 80% of the labor force, and provides most of the exports.
The country is not self-sufficient in food production; rice, the
main staple, accounts for the bulk of imports. The government -
which is hampered by internal political disputes - is struggling to
upgrade education and technical training, privatize commercial and
industrial enterprises, improve health services, diversify exports,
promote tourism, and reduce the high population growth rate. The
political problems have inhibited growth, which has averaged only
about 1% in 2006-08. Remittances from 150,000 Comorans abroad help
supplement GDP.
Congo, Democratic Republic of the
The economy of the Democratic
Republic of the Congo - a nation endowed with vast potential wealth
- is slowly recovering from two decades of decline. Conflict that
began in August 1998 has dramatically reduced national output and
government revenue, increased external debt, and resulted in the
deaths of more than 5 million people from violence, famine, and
disease. Foreign businesses curtailed operations due to uncertainty
about the outcome of the conflict, lack of infrastructure, and the
difficult operating environment. Conditions began to improve in late
2002 with the withdrawal of a large portion of the invading foreign
troops. The transitional government reopened relations with
international financial institutions and international donors, and
President KABILA began implementing reforms, although progress has
been slow and the International Monetary Fund curtailed their
program for the DRC at the end of March 2006 because of fiscal
overruns. Much economic activity still occurs in the informal
sector, and is not reflected in GDP data. Renewed activity in the
mining sector, the source of most export income, boosted Kinshasa's
fiscal position and GDP growth from 2006-2008, however, renewed
strife in the second half of 2008, combined with a fall in world
market prices for the DRC's key mineral exports inflicted major
damage on the economy and halted growth. Government reforms may lead
to increased government revenues, outside budget assistance, and
foreign direct investment, although an uncertain legal framework,
corruption, a lack of transparency in government policy are
long-term problems. The DRC government has applied to the IMF for an
Exogenous Shock Facility in the amount of $200 million to help it
deal with its deteriorating financial situation, and the World Bank
will consider a separate $100 million in emergency funding. The
global recession probably will cut economic growth in 2009 to half
its 2008 level.
Congo, Republic of the
The economy is a mixture of subsistence
agriculture, an industrial sector based largely on oil, and support
services, and a government characterized by budget problems and
overstaffing. Oil has supplanted forestry as the mainstay of the
economy, providing a major share of government revenues and exports.
In the early 1980s, rapidly rising oil revenues enabled the
government to finance large-scale development projects with GDP
growth averaging 5% annually, one of the highest rates in Africa.
The government has mortgaged a substantial portion of its oil
earnings through oil-backed loans that have contributed to a growing
debt burden and chronic revenue shortfalls. Economic reform efforts
have been undertaken with the support of international
organizations, notably the World Bank and the IMF. However, the
reform program came to a halt in June 1997 when civil war erupted.
Denis SASSOU-NGUESSO, who returned to power when the war ended in
October 1997, publicly expressed interest in moving forward on
economic reforms and privatization and in renewing cooperation with
international financial institutions. Economic progress was badly
hurt by slumping oil prices and the resumption of armed conflict in
December 1998, which worsened the republic's budget deficit. The
current administration presides over an uneasy internal peace and
faces difficult economic challenges of stimulating recovery and
reducing poverty. Recovery of oil prices has boosted the economy's
GDP and near-term prospects. In March 2006, the World Bank and the
International Monetary Fund (IMF) approved Heavily Indebted Poor
Countries (HIPC) treatment for Congo.
Cook Islands
Like many other South Pacific island nations, the Cook
Islands' economic development is hindered by the isolation of the
country from foreign markets, the limited size of domestic markets,
lack of natural resources, periodic devastation from natural
disasters, and inadequate infrastructure. Agriculture, employing
more than one-quarter of the working population, provides the
economic base with major exports made up of copra and citrus fruit.
Black pearls are the Cook Islands' leading export. Manufacturing
activities are limited to fruit processing, clothing, and
handicrafts. Trade deficits are offset by remittances from emigrants
and by foreign aid overwhelmingly from New Zealand. In the 1980s and
1990s, the country lived beyond its means, maintaining a bloated
public service and accumulating a large foreign debt. Subsequent
reforms, including the sale of state assets, the strengthening of
economic management, the encouragement of tourism, and a debt
restructuring agreement, have rekindled investment and growth.
Coral Sea Islands
no economic activity