Growth and Development Trends of the Chinese

¶ … growth and development trends of the Chinese economy and economic development of China in relation to this argument. It also puts light on the role played by the Chinese government in making China the fastest growing economy of the world.

The 21st Century Is The Chinese Century

According to a number of people 'the 21st century is the Chinese century'. People, however, made the same comments about the Chinese economy 100 years ago but unfortunately such comments did not prove out to be fruitful. However, in the present era, it is quite evident from the economical and financial development of the Chinese economy that China is going to play an important and critical role in the world economy. And if we analyze the trends of development in different sectors of the Chinese economy we can deduce that China has a potential to become a global market leader. According to a number of studies, the major reason behind the rise of the Chinese economy in the 21st century is the constant development of this economy in the 20th century. (Kirby)

In a period of one and a half century China has transformed itself from a non-growing, stagnant economy, that does not play an important role in the global competition, to a giant manufacturing power house that plays an important role in the economy of the world. The output or production of the Chinese economy has been increasing at a constant rate of ten percent per year. In addition to that, the growth rate of the export of Chinese products is seventeen percent per year. China consists of about one fifth of the total world population and it has a share of about four percent in the total trade of merchandise in the world. The share of China in the total production of the world ranges between three to four percent. This share depends on the purchasing power parities and the prevailing exchange rates; hence it keeps on changing with the change in these two variables. ("China in the," 1997)

Growth Trends in The Chinese Economy

In the year 2002, the Chinese export increased to $325 billion. There was a massive increase in the exports of this country ranging up to 22%. The exports were limited to $95 billion in the year 1992. The increase in exports led towards an increase in the Gross Domestic Product (GDP) of China. Thus, with its massive export development the Chinese economy grew by 8.0% in the year 2002, which is the highest growth rate for that year. (Kalish, 2003)

The massive development of the Chinese economy resulted in the increase of Foreign Direct Investment (FDI) in the Asian region. In the year 1999, China received eighteen percent of the total Foreign Direct Investment (FDI), whereas, Association of Southeast Asian Nations (ASEAN) received sixty one percent of the total Foreign Direct Investment (FDI). But in the year 2002, the situation was somewhat contradictory with China receiving sixty one percent of the total Foreign Direct Investment (FDI) and the Association of Southeast Asian Nations (ASEAN) receiving only seventeen percent of the total Foreign Direct Investment (FDI). (Kalish, 2003)

Economic Development in China

Before the introduction of economic reforms 35 years ago, China had policies that maintained its economy at a stagnant stage. The Chinese economy grew at a negligible rate and the economy was no where to be found on the global forum. After implementing trade, investment and open market policies in the year 1979, China has been one of the fastest growing economies of the world. In the recent years, China has developed as the world's major trade and economic power. At present time China has emerged as the world's second largest economy, it is also the largest merchandise exporter. China is also ranked as the second largest merchandise importer. It is the second largest and one of the most attractive destinations for foreign direct investment (FDI). China is the largest manufacturer of the world. It is the world's largest creditor nation and holds most of the foreign exchange reserves of the world. (Morrison, 2013)

A number of economists have forecasted that China will soon overcome the United States of America as the largest economy of the world. But the maintenance of the rapid growth of the Chinese economy depends on the steps taken by the government of China. The Chinese government should implement comprehensive strategies regarding the demand and supply of goods and services, consumer satisfaction, fixed investments, the transition to an open market economy, productivity and innovation. (Morrison, 2013)

China's Strong Sense of Direction