At the dawn of the new decade, there are few countries over which economic forecasters predict sunnier skies than China—and with good reason. After edging out Germany late last year to become the leading merchandise exporter, China, whose GDP is estimated to have grown by 8.5 per cent in 2009, is now poised to unseat Japan as the world’s second-largest economy. At this rate, some say the People’s Republic (which also just became the world’s biggest auto market) could overtake the U.S. economy as early as 2030.
Though no doubt significant, these milestones only hint at what Loren Brandt, an expert in the Chinese economy at the University of Toronto, characterizes as “a deep and sustained process of economic reform.” When China opened its doors to foreign investors 30 years ago, private enterprise was non-existent. In other words, says U of T economics professor Xiaodong Zhu, “They had a lot of catching up to do.”
And catch up they did, following “in the footsteps of Japan, Korea and Taiwan,” by committing China’s massive workforce to producing low-cost exports, says Brandt. The result: in the first 10 months of last year, China exported $957.7 billion in goods, eclipsing Germany’s $917.7 billion, according to recent Globe Trade Information Services figures. And that’s led to unparalleled economic growth; China recently revised its GDP growth rate for 2008 to 9.6 per cent from nine per cent, totalling $4.6 trillion—just shy of Japan’s $4.9 trillion. With Japan’s economy expected to contract in the wake of the downturn, China’s push ahead is all but inevitable.
And there’s still plenty of room to grow. In 2008, per capita GDP in China was $6,000—barely one-fifth of that of Japan. China is currently a “low- to middle-income country,” says Brandt. But with 1.3 billion people, every small step forward is going to feel, to the rest of the world, like a giant leap. M