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China's Future...What Path?

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What is all of the talk on China about? We hear its economy has grown tremendously and we read something new in the newspapers every day. Does everyone fear that China’s rapid growth and powerful economy will overtake the United States? Well, some people do and others don’t really think it is likely. What do I think? Watch out, China’s future will be a shock to almost everyone. Never underestimate the power of the dragon.

The year is 2001. China joins the World Trade Organization (WTO) and Americans give way to the new “Asian powerhouse.” China has grown 9 percent a year for more than 25 years and is recorded as the fastest growth rate for an economy in history according to and abstract by Peter Katel in the CQ Researcher. With exports rising from 38.8 billion to 196.7 billion (a 400% increase) from 1994 to 2004 to the US alone, no wonder why China has gained new popularity with the business world. In the same article Peter Katel goes on to state that two-thirds of the world’s copiers, microwave ovens, DVD players and shoes are manufactured in China. With this powerful advantage that China has, its promising future does not seem that far away. The graph to the left shows the US merchandise trade with China. As you can see, the US exports to China have fallen and its imports from China have increased greatly from 1994 to 2004.

With its 4,000 skyscrapers in the financial capital, Shanghai, and the ever rapidly growing economy, China might just do more than “catch up” to the United States. It may seem ironic that the country that has a replica of our “42nd st” would also be in growing competition with our economy and it may also seem like China is the “little brother” of the US, but how long will this go on for? Will the US be able to keep up soon enough? This is the direction China seems to be headed for. But what makes China the greatest exporter of goods in the world? Bartlett, a businessman Peter Katel refers to in his article, states that “the unbeatable china price is due not only to low labor costs but also to unethical trade practice.” According to the 2005 article, Congress has yet to approve more than a dozen pieces of legislation that would allow the yuan Ð'Ґ to “float” in world currency markets, allowing for free-market forces to establish its value. Will the changes have a negative affect on China’s “winning streak?” I personally think not. What I do think is that China presents itself as a threat to the US global economy. The graph to the right displays China’s rapid rise by showing the share of global gross domestic product it is predicted to own by 2015. The graph shows an amazing 20.3%. And though the future is never certain, I think we can expect for China to continue doing well for many more years to come.

But is it really all that bad? We would have to admit, thanks to China we have enjoyed everything from socks to televisions all of which has been made affordable to us by China’s ability to produce goods for less and offer lower prices. According to an article in Newsweek World News titled, “Does The Future Belong To China,” a Morgan Stanley report showed that cheap imports from China has saved American consumers more than $600 billion in the past decade. But some people view the world’s fastest-growing large economy and second largest holder of foreign-exchange reserves as a threat while others just ignore the hype altogether. To the left is a graph showing China’s foreign-exchange reserves. By 2005, the numbers reached an incredible $659.1



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