China – Next Economic Superpower?


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“Money rules the world” – This assumption is reflecting the world’s most fundamental structure but at the same time representing the most important component of the international system: the economy – to be concrete, capitalism.

Overgeneralizing – the economy of a nation-state means more prestige and, conforming to the UN, more responsability.

According to historical facts – since the creation and independence of the United States of America – the U.S. has always been a type of ‘policeman’ for the International Community because of it’s huge economy, and therefore being able to establish a modern and strong military army. But according to data retrieved from the World Bank, the U.S. will not longer enjoy its economical leading position anymore by the end of 2014.

China has become the world’s largest goods trading nation in the last years, to take an example in 2013 China’s total merchandise trade was $1,986 Billion larger than in 2007. China increased the exports by $992 Billion and the imports by $994 Billion. If we compare this data with the U.S. goods traded that increased $741 Billion, the EU $1,024 Billion and Japan only $214 Billion, we can see that China alone will increasingly produce more goods than these three developed countries together.

One of the popular claims about China that usually appears in the media is that this fast growth of their economy is slow in terms of the raise of consumption and standards of living, but this affirmation is not true at all. The professor of the London School of Economics Danny Quah noted that: In the last 3 decades, China alone has lifted more people out of extreme poverty than the rest of the world combined. Indeed, China’s ($1/day) poverty reduction of $627 Million from 1981 to 2005 exceeds the total global economy’s decline in its extremely poor from $1.9 Billion to $1.4 Billion over the same period.

On the other side, China’s structure is based on Communism but also having a capitalist economic policy. These strict policies that both the public and private sectors must obey are being regulated by the state, which controls the prices of goods and services. Thus, the dominant role of the state is being affected by certain restructuring reforms that produce large layoffs in a country without unemployment benefits. Under the state’s occultism it is difficult to assess the depth of this corporate restructuring. Without this public sector reform, financial reform is difficult, which gives priority to huge bank deposits – consequences are a very high savings rate and restrictions on capital outflows – whose destination are public companies regardless of their viability.

Economic transformation is not easy and China is facing inflation as well as social conflicts such as huge unemployment, due to its fast growing population. Currently the most important task is to find a promising solution to economic stagnation before China can become the world’s new economic superpower of the 21th Century.

China’s economic growth seems to be relatively new, although it was predicted since the empowerment of the Communist Party. It does not matter at all how many good or bad consequences this evolution will bring with it, –

as Napoleon said, “let China sleep, for when she awakes, she will shake the world”.

Some people think this will bring a positiv feeling in the international economy, and others think it will be awful or even totaly destructive. Which of these assumptions are true?
Future events will show.

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