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Chinese Economy Overview -
Why The China Economy Has Economic Staying Power

The Chinese economy has been growing at an annual average rate of more than 9 percent for the past 25 years. Questions have been raised about the sustainability of maintaining such high growth rates in the future. Chinese investment in infrastructure has grown many fold since the Chinese economy adapted to liberalization. According to a report provided by the International Monetary Fund (IMF) productivity growth has helped the growth of the Chinese economy to a great extent. Capital accumulation accounted for approximately 42 percent of Chinese economic output growth post 1979. The progress of economic growth has been faster in the greater China region, although not at similar rates comparable to China. The success story of the Shanghai economy, the performance of Hang Seng Index, the development of the Taiwanese economy, all have been noticed across the globe.

The Chinese economic boom also reflects on the performance of China's Stock Market exchange. The Chinese economy is projected to grow bigger than the U.S. economy. Unlike the rise of Japan there are strong and convincing reasons that support that the Chinese economy may surpass U.S. as an economic super power. China has already become a super supplier in electronic devices and toys. Factories based in China manufacture 70 percent of the world's toys, one-third of luggage, almost 50 percent of the shoes and approximately 60 percent of the world shoes production. Further, China is estimated to become the largest consumer of steel by 2010.

One of the key advantages of the Chinese economy is the availability of labor at very cheap rates. The Chinese economy has also maintained a healthy savings rate as compared to other leading economies. This is not the only advantage, which will help the Chinese economy to surge past the U.S. In addition to this China possesses adequate technical know-how, manufacturing capacity, bargaining power and expertise to continuously register a growth rate of more than 8 percent in the future years. The eleventh five-year plan also envisages a growth rate of 8 percent for the Chinese economy. Economists also project Chinese debt and securities market too cumulatively to reach $2 trillion by 2010. Chinese investments in development of infrastructure and urbanization of the country have grown rapidly over the past. Major U.S. players have entered the China adopting the foreign direct investments (FDI) route. Major players who have set up operations include General Motors, Motorola and Coca-Cola.

All these above-mentioned factors strongly support the viability of the Chinese economy to become the largest economy in the next decade.