Could China, in the Near Future, Pose a Threat to the World Economy

Rasib Ali Bhanji

13020144

Nabiha Meher Shaikh

SS100 Section 12

11th May 2010

“Could China, in the near future, pose a threat to the world economy?”

The rise of China from a poor underdeveloped country to a major economic superpower within the time span of a few decades is nothing short of an economic miracle. Before the 1980s the Chinese government had implemented a centrally planned economy i.e. one in which all industries were state owned owned and private ownership was discouraged. China also focused on making itself self-sufficient so it would not have to rely on trade so, apart from a few commodities, everything was being produced domestically. However a transition took place when the leadership realized that in order for China to grow, it needed to engage in trade as well as allow capitalist industrialization. In the early 1980s the government began a campaign of reforms placing focus on developing a trade-based economy (Elwell, Labonte and Morrison). This allowed China to realize its true potential as it quickly became recognized in the world for its cheaply priced goods which other exporters found hard to compete against. China started to expand with its growth rate reaching all time high of 11.9% in 2006 (Chinability). The IMF predicts that China will keep growing at a steady rate with its GDP growth forecast for 2011 being 9.9% (Jones). However impressive Chinas growth may be, there are consequences to its unnaturally fast rise. Other export based countries are losing out on customers due to the unfair policies China uses, the US is in a very risky stage since China owns most of its government bonds and there are worldwide complaints of the Yuan being undervalued and threats of industrial takeovers as well.

It can be said that China is in the perfect position to achieve long-term growth. In order to grow a country requires vast amounts of natural resources, a stable political system and continuous capital investment. China covers around...