Since the 1990s, the Chinese economy has consistently grown at a rate exceeding 9% each year. Most recently, the Chinese economy eclipsed the UK to become the 4th largest economy in the world. The Germany’s economy continuing to falter, its only a matter of time before China surpasses Germany as well, leaving only Japan and the US. Though technically a communist nation, China has thoroughly embraced the concept of the market economy.

Once a supplier of cheap goods and products requiring minimal skill to produce, China is now maneuvering to become a high tech Mecca unto itself, rather than simply a manufacturing center for companies based in the US, Japan and Taiwan. Sadly, China’s economic success can now serve as a model for the west. China is lifting millions out of poverty every year, and that is being accomplished, not through grandiose social welfare projects, which serve only to entrench poverty. China is lifting millions into the middle class by creating a fertile climate for business to prosper. With over 1.2 billion people, China offers vast market potential for western companies seeking to expand. To attract these businesses, the Chinese have offered incentives to encourage foreign direct investment (FDI). This strategy has paid off handsomely.

China’s economic success has had ripple effects around the world, as supplies of petroleum have become scarcer and construction materials have become more expensive. As China has expanded, so too has domestic Chinese industry. Chinese manufacturers like Haier, Lenovo, Geely and Chery are expanding their base at home and know looking to compete in the global market, with major consequence for US, European and Japanese industries.

The Chinese, its seems, have forgotten about democracy and the promise of representative government, as average Chinese flock to the cities in search of a new middle class lifestyle, or have they? By the Chinese government’s own account, there were over 87,000 incidents of local unrest in the past year. China is hemorrhaging as its society undergoes significant growing pains. Market freedoms will inevitably lead to greater social and political freedoms, just as market integration has rendered the threat of conflict with China all the more unlikely. The key to this continued evolution in China is engagement, unlike our flawed policy vis-à-vis Cuba.
http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2006-01-25T081641Z_01_PEK232222_RTRIDST_0_BUSINESSPRO-ECONOMY-CHINA-DC.XML
http://www.msnbc.msn.com/id/10779158/