The Rise of Chinese Economy and Its Impact on Global Trade

Abstract

Prior to 1978, China saw yearly growth of 6% (with some difficult ups and downs along the way), but after 1978, China experienced average real growth of more than 9% annually with fewer and less difficult ups and downs. The economy expanded by more than 13 percent over a number of peak years. In the past 15 years, per capita income has nearly quadrupled, and some researchers even forecast that the Chinese economy would surpass that of the United States in approximately 20 years. Productivity gains contributed more than 42% of China's growth between 1979 and 1994, and by the early 1990s, they had surpassed capital as the main driver of that expansion. The policy of opening up China economically to the rest of the world constitutes an essential part of Chinese economic reform. Since this policy was initiated in 1979, the Chinese leadership has attached to it the dual aims of strengthening the country's economic potential by importing foreign capital and know-how and lifting Chinese foreign trade.