The Economic Ascendancy of China - China as a Major Player in World Economics

The Economic Ascendancy of China - China as a Major Player in World Economics

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China has experienced unparalleled economic growth within the last two decades. This growth has undoubtedly earned China the position of a major economic power in Asia. China ranks slightly behind Japan in economic power and marginally behind the United States in purchasing power. In world rankings, China is the sixth largest merchandising nation in the world, the twelfth largest exporter of commercial services, and the largest beneficiary of foreign direct investments. China's ascendancy has been furthered by its entry into the World Trade Organization in late 2001. Although there is some argument that the actual growth of China's economic status is not as high as the Chinese government presents, however there is little doubt that China has officially entered the global stage as a major economic player.

Many experts are so impressed by the exponential growth of China's economy in recent years that they have referred to the nation as "the worlds manufacturing center". Surely, as China has become a major exporter of world goods, this description, although exaggerated, is largely descriptive of China's position in the world economy. However, this growth has been questioned by some experts and has worried other Asian nations. China's growth within the Asian market itself has increased steadily in the last two decades; a phenomenon largely unequaled by any other nation in the world.

With other nations within Asia, as well as with nations outside of the geographic area, China's exports have far exceeded their imports. This growth has excited the investment sector and resulted in the inflow of global capital into the nation's economy. Although China's exports are still a relatively small portion of the Southeast Asian totals, most experts insist that China will be the areas largest exporter of goods within the decade. Experts have also noted a steady trade surplus with western nations such as the United States and the European Union that are likely to sustain and encourage China's economic growth.

Part of this economic growth has been fueled by China's attraction as a tourist destination. The past two decades has seen a rise in the influx of tourists as well as the increase in both inbound and outbound business travel. Just like the rise in China's economic growth, its tourism market has also experienced significant increases. Currently, China has the world's fastest growing tourism market with over two million visitors each year in recent years. And as the nation continues to grow in a business sense, more and more individuals will be traveling into and out of the nation. There has been some concern that China's growth as an exporter of consumer goods may render other exporters somewhat impotent in the global consumer goods market.

However, some experts argue that this will not occur because the increasing globalization of the world consumer goods market is likely to render other nations equally competitive in the production and exportation of such goods as communication technologies and electronics and that the production chain that exists throughout nations, especially in the case of Southeast Asia, will only be enhanced by the growth of such nations as China and their ascendancy as a world economic player. However, experts also predict that, especially in the areas of clothing and textiles, China's growth may result in increased competition in the Southeast Asian market that may render competing markets unable to keep up. Although this will surely keep market prices low, it will also give China a distinct advantage over its Southeast Asian neighbors and have an undesired effect on the wages and profit margins of industries in those other nations.

There is also some concern over the amount of funds that are flowing into China as opposed to the investments that are entering other Southeast Asian nations. China has a decidedly larger share of foreign investment funds than its neighbors. Especially in Southeast Asia, the competition for foreign investors is intense with almost half of these funds now going to China and the rest of the nations of the area realizing an almost 50% reduction in foreign investment funds. Many experts note that the majority of China's growth has been a result of the opening of China's markets to foreign investors. Although doing business in China remains difficult in some sense, the opening of the economy has been a boon not only to investors, but, obviously to China as well. Before China's economic rise, Japan was the only nation in Southeast Asia to be recognized as a major world economic player and they were also the recipient of the majority of foreign investment funds.

However, as can be imagined, Japan has suffered financially as a result of China's growth in that as foreign investors recognize China's economic potential, the bulk of foreign investments funds have shifted away from Japan and into China. Additionally, Japan has had to decide whether to invest some of their own funds into China's economic market and growth. Although they have been reluctant to invest in China's growth in the past, there may now be a growing trend toward Japanese investments in China with the planned relocation of several Japanese businesses. Some experts predict that China's growth will benefit its neighbors as China begins to invest in other Southeast Asian nations. In fact, China herself has asserted that her economic growth should not make the surrounding nations nervous but should instead be a welcomed part of the entire area's growth as China promises to share the wealth.

Although some individuals see China's explosive growth as a recent event, it has actually been a long time coming. Since China opened its economic and physical borders to investors in the early 1990's, the nation has been the beneficiary of much of the world's investors who were searching for new markets in which to invest. However, some experts predict that the general political instability of the region may well be the downfall of China's economic growth as these experts wonder how long such growth can be sustained especially to the disadvantage of the rest of the area. These same experts predict that the only way for other Southeast Asian nations to compete will be to develop similarly effective trade policies as has China. However, these nations, bogged down by internal political problems and poor leadership may not be able to keep up. China's rise in recent decades from a poor country with a stagnant economy has been noted as a huge success story.

China has been one of the few nations to realize steady economic growth even during periods of economic depression. Some analysts insist that this growth has put China behind only the United States as a total world power and some even assert that the next few years may indeed see China overtake the United States as a major world power in every respect, not just economically. Certainly, China's rise as a world player in economics as well as politics has opened communications between China and the U.S. as well as with the rest of the world. China is now the United States' second largest trading source and many U.S. investors have flooded China with U.S. investment funds. However, as some analysts predict that China will overtake the U.S. as the world's largest economy within the next decade, other analysts argue that, even if China continues to realize sustained economic growth, it does not have the political structure to overtake the U.S. as a world superpower.

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