2004-06,
while Chile maintained a low rate of inflation. GDP growth benefited
from high copper prices, solid export earnings (particularly
forestry, fishing, and mining), and stepped-up foreign direct
investment. Unemployment has exhibited a downward trend over the
past year, but remains fairly high. Chile deepened its longstanding
commitment to trade liberalization with the signing of a free trade
agreement with the US, which took effect on 1 January 2004. Chile
signed a free trade agreement with China in November 2005, and it
already has several trade deals signed with other nations and blocs,
including the European Union, Mercosur, South Korea, and Mexico.
Record-high copper prices helped to strengthen the peso to a 6 1/2-year
high, as of December 2006, and added investment in the mining sector
will boost GDP in 2007.

China
China's economy during the last quarter century 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. China has generally implemented reforms in a gradualist
or piecemeal fashion, including the sale of equity in China's
largest state banks to foreign investors and refinements in foreign
exchange and bond markets in 2005. 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, China in 2006 stood as the second-largest
economy in the world after the US, although in per capita terms the
country is still lower middle-income and 130 million Chinese fall
below international poverty lines. Economic development has
generally been more rapid in coastal provinces than in the interior,
and there are large disparities in per capita income between
regions. The government has struggled to: (a) sustain adequate job
growth for tens of millions of workers laid off from state-owne