China's Global Economic Position

Since the 1980’s China has emerged as one of the world’s fastest growing economies. Many have suggested that over time this will necessitate a shift in global economic dynamics. Will this change bring forth prosperity in the global economy or not?

        With the ever increasing influence of Chinese markets in the world, their dominance over the global economy seems inevitable. The question to determine however is that whether this Chinese economic dominance would be a benefit to the international society or not. China does have the potential to become the next superpower of the world, and has had the potential for a while now but unfortunately has never fully utilized its potential. For the global economy the economic dominance of China has many benefits, especially in the recent financial crisis where China was considered to have potential enough to bring several countries out of recession too (Torres, March 2011) . However at the same time the Chinese economy has been blamed for many reasons such as harming domestic economies of other countries and undervaluing their currency (Rahguram G. Rajan, 2010).

        China entered its current development era after 1978 when the “Democratic dictatorship” of Mao Zedong ended and China entered in a time of social, political and economic reforms. Ever since China has been credited as being one of the world’s fastest growing economies, sometimes even at surprising rates. China has always been one of the richest economies of the world even in the past, Chinese empires were counted amongst the rich empires of the world. Their growth rate has been compared to that of the “Asian tigers”, which were praised for their rapid economic growth in the 1960-1990’s.

 However China failed to modernize in equal stride with the western powers. China’s greatest drawback was its fast paced population growth. In the mid 1950’s China was acknowledged as being even more backward than India with its income per capita being only 83% of India in 1952. There were many reasons for this reduced growth in China mainly due to their communist regime which restricted foreign capital entering the economy. This left most of the economic burden on China’s own internal finances.

China’s main comparative advantage was its vast population which meant it had a large working population. It was the communist government that took initiative to spread literacy in their territory. Education became a top priority for the communist regime, as they realized that the only way to achieve economic success they must have a literate working population (Plafker, 2001). This early realization of the fact that literacy is the key rate to development has proved to be very advantageous to the Chinese economy now.  According to the Ministry of Education, the overall literacy rate has gone from 20 percent in 1950 to more than 85 percent today (Plafker, 2001). This has become China’s strongest point and remains so since the early years of their development and has also been the main cause of their increased economic growth.