China’s Economic Indicators, Impact On Markets

China is the world’s second-largest economy behind the United States. Its gross domestic product (GDP) has seen double-digit growth over the last three and a half decades (although it has begun to slow down). China’s economy has a profound impact on the global economy and markets. Understanding and keeping tabs on its economy is not as straightforward as it is with other economic heavyweights.

Some Background

Since the late 1970s China has transitioned from Communism to a centrally controlled capitalist market. Its economic transformation began in 1978 when capitalist market reforms were introduced. In the decades that have followed China has transitioned from a rural agricultural economy to a manufacturing or industrial and consumer or service-oriented economy. It's the largest agricultural and manufacturing economy in the world.

China continues to rebalance its economy. The focus now is more on domestic consumption versus industry and exports. (For more, see: China's GDP Examined: A Service-Sector Surge.)

As the world’s most populous country, with 1.4 billion people, its consumer purchasing power is widely watched. The initial public offering earlier this year of Hangzhou-based e-commerce company Alibaba Group (BABA) the largest in history. It raised $25 billion on the New York Stock Exchange. Alibaba’s version of Cyber Monday or Black Friday, called Singles’ Day, resulted in $9 billion in sales in November 2014. (For more, see: Alibaba's Top Competitors.)

Economic Indicators

While there are a variety of economic indicators for China its rapidly changing economy is not easy to understand and assess, often lacks transparency and leaves economists, analysts, bankers and investors alike scratching their heads. Legendary fixed-income fund manager Bill Gross once called China “the mystery meat of emerging-market countries,” in an interview with Bloomberg Television. (For more, see: China's Economic Indicators.)