China's Economy

China's economy

What capacity does China have in order to gain the position of an "economic giant" and to become almost equal to the USA. "As a first step toward understanding China, one can hardly do better than to spend some time with a good atlas. It is vital to understand China's diversity. And a key element in that diversity is its geography...1"[Starr, 3]. China's power is growing every day but still this is not the main factor indicating its potential as an economic giant. The reason that makes the USA pay a lot of attention toward the economical and political development of China is very important: "China's rise has more in common with the rise of the United States a century earlier"[Shenkar, 1]. This similarity of the economic processes makes a solid base for all the "giant" predictions that China gets. For 26 years of reforms the annual increase of the Chinese economy made 9,4% at the average. This numeral exceeds the economic increase of the developed countries in 4 times, the rate of growth of world economy in 3 times and the economic growth of the developing countries in 2 times. Almost every country in the world gets the products, which claim: "Made in China". China shows its "increased dominance in many product markets"[Shenkar, 18]. According to the information of the World bank throughout the period from 1980 till 2000, China's impact into the world's economy made 14%2. The primary reasons for the growing economy of China are the strong increase of investments and growing amount of export.

The industrial production index has grown for 16%[Burstein, 54]. The main problem that China is facing is the constantly growing amount of foreign investments, which the government constantly needs to control and sometimes to suspend. "China ranks as the second largest economy in terms of GPD in PPP dollars3"[3]. According to the World Bank China's poverty has dropped from 280 million to 120 million starting in 1997 and it was a big step towards the stabilization of the economy. As China deals with foreign companies working on its territory and finances this companies million of people living in China get jobs and therefore increase their incomes, stabilizing the economy, too. China has also all the possibilities to control the "energetic flow" of the planet as it is especially interested in natural gas and oil. As it is also known the general secretary of Communist party of Chin- Hu Zdintao, has declared that China is going to enlarge the economy of the country to 4 trillions of dollars before the year of 2020. Such and 4-trillion economy will allow 1,3 milliard Chinese citizens to increase their income from $1230 till $3000[3].