sibility in agriculture in place of the old collectivization,
increased the authority of local officials and plant managers in
industry, permitted a wide variety of small-scale enterprise in
services and light manufacturing, and opened the economy to
increased foreign trade and investment. The result has been a
quadrupling of GDP since 1978. In 2000, with its 1.26 billion people
but a GDP of just $3,600 per capita, China stood as the second
largest economy in the world after the US (measured on a purchasing
power parity basis). Agricultural output doubled in the 1980s, and
industry also posted major gains, especially in coastal areas near
Hong Kong and opposite Taiwan, where foreign investment helped spur
output of both domestic and export goods. On the darker side, the
leadership has often experienced in its hybrid system the worst
results of socialism (bureaucracy and lassitude) and of capitalism
(windfall gains and stepped-up inflation). Beijing thus has
periodically backtracked, retightening central controls at
intervals. The government has struggled to (a) collect revenues due
from provinces, businesses, and individuals; (b) reduce corruption
and other economic crimes; and (c) keep afloat the large state-owned
enterprises many of which had been shielded from competition by
subsides and had been losing the ability to pay full wages and
pensions. From 80 to 120 million surplus rural workers are adrift
between the villages and the cities, many subsisting through
part-time low-paying jobs. Popular resistance, changes in central
policy, and loss of authority by rural cadres have weakened China's
population control program, which is essential to maintaining growth
in living standards. Another long-term threat to continued rapid
economic growth is the deterioration in the environment, notably air
pollution, soil erosion, and the steady fall of the water table
especially in the north. China continues to lose arable land because
of erosion and economic development. Weakness in the global economy
in 2001 could hamper growth in exports. Beijing will intensify
efforts to stimulate growth through spending on infrastructure--such
as water control and power grids--and poverty relief and through
rural tax reform aimed at eliminating arbitrary local levies on
farmers.

Christmas Island:
Phosphate mining had been the only significant
economic activity, but i