Yunnan is still one of the less-developed areas in China in terms of its overall economic power, due to its mountainous terrain and bad communications with the outside world. However, great progress has been made in the past decades of years.

Yunnan depends on agriculture. According to statistics, 87% of the inhabitants in Yunnan live in the countryside, and more than 80% of the government tax comes from the farmers. With the rich flora resources, Yunnan has become one of the main producers of tobacco, sugar, fresh flowers, and rubber in China.

The development of industry in Yunnan has been in a low level. Agriculture-related Industries, such as Tobacco processing and production of cigarettes are the backbones of Yunnan's industry. Many cigarette brands are well-known both at home and abroad. Meanwhile, nonferrous metal refining is also an important part of the industry. Yunnan has a rich deposit of copper, tin, lead, and zinc. Water resources and coal deposit are also abundant, which pushes ahead the development of electricity-generating industry. In 1912, the first hydropower plant of China was built in Yunnan.

Yunnan Society, Yunnan travel Guide, tour informationIn recent years, tourist industry has become a highlight in the economic development of Yunnan. The local governments at different levels attached great importance to tourism. Now more and more people get to know Yunnan and come to visit. Especially, since Yunnan held the World Horticultural Exposition in 1999, tourism has been growing at an unprecedented fast pace.

Yunnan's development of education lags behind the average level of China. Though the nine-year compulsory schooling program has been carried out decades of years ago, it has not progressed smoothly in many poor parts of Yunnan.

In terms of cultural field, Yunnan, however, is well-known for its distinctive and various forms. Local operas, folk songs, music, and dances are all popular around the province. Meanwhile, many troupes were set up, which enriched local people's lives and helped visitors have a better understanding of Yunnan.

As of the mid-19th century, Yunnan exported birds, brass, tin, gemstones, musk, nuts, and peacock feathers mainly to stores in Guangzhou. They imported silk, wool, and cotton cloth, tobacco and books.

Local traders in Lijiang City

Yunnan is one of China's relatively undeveloped provinces with more poverty-stricken counties than the other provinces. In 1994, about 7 million people lived below the poverty line of less than an annual average income of 300 yuan per capita. They were distributed in the province's 73 counties mainly and financially supported by the central government. With an input of 3.15 billion yuan in 2002, the absolutely poor rural population in the province has been reduced from 4.05 million in 2000 to 2.86 million. The poverty alleviation plan includes five large projects aimed at improving infrastructure facilities. They involve planned attempts at soil improvement, water conservation, electric power, roads, and "green belt" building. Upon the completion of the projects, the province hopes this will alleviate the shortages of grain, water, electric power and roads.

Yunnan lags behind the east coast of China in relation to socio-economic development. However, because of its geographic location the province has comparative advantages in regional and border trade with countries in southeast Asia. The Lancang River (upper reaches of Mekong River) is the waterway to southeast Asia. In recent years land transportation has been improved to strengthen economic and trade co-operation among countries in the Greater Mekong Subregion. Yunnan's abundance in resources determines that the province's pillar industries are: agriculture, tobacco, mining, hydro-electric power, and tourism. In general, the province still depends on the natural resources. Secondary industry is currently the largest industrial tier in Yunnan, contributing more than 45 percent of GDP. Tertiary industry contributes 40 percent and agriculture 15 percent. Investment is the key driver of Yunnan's economic growth, especially in construction.

The main challenge that Yunnan faces is its lack of major development. Its low productivity and competitiveness restrict the rapid development of the province. The province also faces great challenges in social issues such as environmental protection, poverty elimination, illegal migration, drug trafficking and HIV/AIDS.

Yunnan's four pillar industries include tobacco, agriculture/biology, mining, and tourism. The main manufacturing industries are iron and steel production and copper-smelting, commercial vehicles, chemicals, fertilizers, textiles, and optical instruments.[22] Yunnan has trade contacts with more than seventy countries and regions in the world. Yunnan established the Muse border trade zone (located in Ruili) along its border with Burma.[24] Yunnan mainly exports tobacco, machinery and electrical equipment, chemical and agricultural products, and non-ferrous metals. In 2008, its total two-way trade (imports and exports) reached US$9.6 billion. The province signed foreign direct investment contracts involving US$1.69 billion, of which US$777 million were actually utilized during the year. Yunnan's unemployment rate at the end of 2008 was 4.21%.

Yunnan's nominal GDP in 2011 was 875.1 billion yuan (US$138.92 billion), an annual growth rate of 13.7%. Its per capita GDP was 13,494 yuan (US$1,975). The share of GDP of Yunnan's primary, secondary, and tertiary industries were 17.9%, 43%, and 39.1% respectively.

Yunnan is one of the major production bases of copper, lead, zinc, tin and aluminum in China. Gejiu is well known as "the Kingdom of Zinc" with the reserves ranked first in the country. The Yunxi brand refined tin is one of the main products in Gejiu, which is registered on the London Metal Exchange (LME). Besides, reserves of germanium, indium, zirconium, platinum, rock salt, sylvite, nickel, phosphate, mirabilite, arsenic and blue asbestos are also high. Significant copper deposits are found at Dongchuan, iron ore at Wuding, and coal at Xuanwei and Kaiyuan. Economic policy to locate new industry in interior areas with substantial mineral wealth, led to major industrial development in Yunnan, especially in the Kunming area.

The electricity industry is another important economic pillar of Yunnan, which plays a key role in the "West-East Electricity Transmission Project". The electricity produced in Yunnan is mainly transported to Guangdong.

Economic and Technological Development Zones

Kunming Economic and Technological Development Zone

First established in 1992, Kunming Economic & Technology Development Zone is a national-level zone approved by State Council. Kunming is located in east-central Yunnan province with preferential location. After several years' development, the zone has formed its pillar industries, which include tobacco processing, machinery manufacturing, electronic information, and biotechnology.

The Kunming High-tech Industrial Development Zone (KMHNZ), is a state-level high-tech industrial zone established in 1992 in Northwest Kunming. It is administratively under Kunming Prefecture. It has covers an area of 9 km2 (3.5 sq mi). KMHNZ is located in the northwest part of Kunming city, 4 kilometers from Kunming Railway Station, 5 kilometers from Kunming International Airport.

Kunming Dianchi Tourism & Vacation Zone

Kunming Airport Economic Zone

Ruili Border Trade Economic Cooperation Zone

Ruili Border Economic Cooperation Zone (RLBECZ) is a Chinese State Council-approved Industrial Park based in Ruili, Dehong Prefecture, founded in 1992 and was established to promote trade between China and Burma. The area's import and export trade include the processing industry, local agriculture and biological resources are very promising. Sino-Burmese business is growing fast. Burma is now one of Yunnan's biggest foreign trade partners. In 1999, Sino-Burmese trade accounted for 77.4% of Yunnan's foreign trade. In the same year, exports for electromechanical equipments came up to US$55.28 million. Main exports here include fiber cloth, cotton yarn, ceresin wax, mechanical equipments, fruits, rice seeds, fiber yarn and tobacco.[27]

Wanding Border Economic Cooperation Zone

Wanding Border Economic Cooperation Zone (WTBECZ) is a Chinese State Council-approved Industrial Park based in Wanding Town, Ruili, Dehong, founded in 1992 and was established to promote trade between China and Burma. The zone spans 6 km2 (2.3 sq mi) and is focuses on developing trading, processing, agriculture resources and tourism.[28]

Qujing Economic and Technological Development Zone

Qujing Economic and Technological Development Zone (QETDZ) is a provincial development zone approved by Yunnan Provincial Government in August 1992. It is located in the east of urban Qujing, the second largest city in Yunnan in terms of economic strengths. The location of the development zone is the economic, political and cultural center of Qujing. As an agency under Qujing municipal Party committee and municipal government, the administrative commission of QETDZ functions as an economy supervising body at the prefecture level and an administration body at the county level. It has 106 km2 (41 sq mi) under its jurisdiction. It shoulders the task of building a new 40-square-kilometer city area and providing service for a population of 400,000 in the upcoming 10 years.[29]

Yuxi Economic and Technological Development Zone

Dali Economic and Technological Development Zone

Chuxiong Economic and Technological Development Zone

Chuxiong Economic Development Zone is an important zone in Yunnan. Now the zone has attracted a number of investment projects. It is an important industry for the development of new-type industry platform. The zone covers an area of 12 km2, composed of four parks.[30]

Songming Yanglin Experimental Zone for County & Township Industries

Hekou Border Economic Cooperation Zone

First established in 1992, Hekou Border Economic Cooperation Zone is a border zone approved by State Council to promote Sino-Vietnamese trade. It has a planned area of 4.02 km2 (1.55 sq mi). The zone implemented several policies to serve its clients in China from various industries and sectors including investment, trade, finance, taxation, immigration, etc.

Jiegao Border Trade Economic Zone

Lijiang Yulong Snow Mountain Tourism Zone

Cang Mountain & Erhai Lake Tourism and Vacation Zone at Dali

Xishuangbanna Tourism and Vacation Zone

Tengchong Tourism and Vacation Zone

Yangzonghai Lake Tourism and Vacation Zone

Fuxian Lake Tourism and Vacation Zone