China — An Emerging Economy
China is all smiles and it is definitely causing some head ache to United States. It is an emerging global play which cannot be definitely ignored.
China has a population of 1.35 billion people and has a glorious history. With its hard working population the “Chinese dragon” was slowly rising in 1960’s and 1970’s. But the outside world didn’t feel the changes. After the coming to the power of Deng Xiaoping, major changes took place, the country made rapid leaps and the world wondered & watched. With industrialization, modernization and new marketing ideas all due to reforms, Chinese economy is growing globally at a rate close to 10 percent a year. Its growth- in 1978, its exports and imports together accounted for just 10 percent of in GDP (gross domestic product). By growing at a rate 10%, it shot up to 50% of GDP between 1995 and 2005 its GDP was similar to US. In 2004, it became the largest exporter in the world, next to only US and Germany Its foreign trade was five times larger than India and GDP was greater than US in 2005.
The main reason for the growth were favourable scene of investment and net export, a strong manufacturing sector, (where production is strongly focused on exports, and of course the modem and expanding infrastructure Apart from GDP, every factor like, foreign trade consumption of energy and raw materials, foreign currency reserve and tourism has contributed to its rise.
The foreign trade the growth of export and services from China were very high since 1990, outstanding in 2000- 04. Its shares in the international goods market was 7.5% in 2005 a great jump from 2.5% in 1993. Items in the main export category were office machinery, data processing equipment, clothing and garments, accessories, devices and equipments for sounds and telecom, electric machinery and toys. Its big leap was from selling garments to sophisticated machines. Major portion of Chinese exports went to the US in collaborations with the retailers and they are causing worry to the American manufactures.
China was responsible for the 2-3rd increase in the consumption of the metals and therefore, there is a relationship between increase in Chinese demand and price rise of these metals. At present, Chinese foreign investment is 40% in Asia, 30% in Europe, a few in Russia and Africa. Main investment sector involved are-information & communication technologies, heavy industry and electronics.
China became a major holder of foreign currency reserves in mid 2006. China held US dollar 943.6 billion putting it in the first position. The huge foreign reserves held by China and other Asian countries have helped finance the mighty US, its foreign trade. Even Australia, couldn’t resist China’s expanding economy. In 2007, it announced that China had over taken Japan as Australia’s top trading partner, ending the long run of Japan. Infact, according to study of Goldman Sachs (2003) China’s GDP will overtake Japan’s in 2016.
According analysis, everything indicates that China will continue to grow faster than the world average. for the next two decades. Looking at the future, if it grows at the present rate it will impose a strain on physical resources like oil which may limit the growth. However, the “advantages of growth outweighs the disadvantages”.
Thus China has definitely emerged as one of the economic power. According to the David Smith’s book on China & India — “A stylish view of the patterns of economic development would characterize the Pr century as European, the 20th century as American… and the 21° century as belonging to China and India”.