China's leading role on the world market is undeniable. Over the years, Chinese reforms transformed this country from a backward agrarian one into a leading industrial power, by industry of which the stability of many countries depends on. Another proof was the fact that since 2010, China has become the second largest economy in the world after the US, ahead of Japan, which had occupied this position for 42 years (Greenaway & Milner, 2010, p. 20).
Today, China is the largest consumer, producer and exporter in the world. China encourages the discovery of new commercial and industrial enterprises, the implementation of economic cooperation with many countries. A huge number of citizens makes China the most numerous consumer market in the world. Therefore, Chinese products are not only exported in large numbers, but also imported in large volumes. The largest western manufacturers seek to conquer this market which is characterized with variety of products – from food to luxury goods (Greenaway & Milner, 2010, p. 21).
Chinese role in world economy is largely strengthening due to world economy situation and principles of world economy. For example, in the Pacific, the USA and Japan for years have been moving their aging production in newly industrialized countries and production of more technically sophisticated and capital-intensive products to China. This was largely possible due to the well-trained Chinese laborers, high level of education, comparatively smaller wages and the overall level of economic development. Therefore, China, while enjoying favorable geographical position, a huge number of cheap and disciplined labor force, receives investment and technological achievements in significant quantities (Lardy, 2014, p. 163).
Largely, economic success of China lies in the fact that it is a very powerful and ancient civilization with its peculiar traditions and peculiarities. The continuous existence for thousands of years the Chinese state makes an unusually strong influence of social, political and historical traditions on the formation of the social and economic model of the country and its relations with the outside world. Among main distinguishing characteristics of Chinese civilization, that have a significant impact on modern economic processes, there are isolated features of the national outlook and language, the bureaucratic nature of traditional Chinese society, a complex control system, which is based on Confucian philosophy, that defines the ideals of social order. Along with a well-thought-out economic policy and diligence of the population, these features determined stability and success of China in the period of transformational changes (Lardy, 2014, p. 166).
China has been demonstrating outstanding economic achievements. For instance, per capita income of urban Chinese families increased from 358 yuan in 1980 to 17,200 yuan (2,520 US dollars) in 2009. Per capita income of rural Chinese families increased from 150 yuan in 1980 to 5,153 yuan (750 US dollars) in 2009. The poverty rate, according to the World Bank, by the mid-2000s, decreased in China by almost 3 times and reached 160 million people with a population of more than 1.3 billion people (Lardy, 2014, p. 168-169).
It was officially announced by the Chinese government that, by the beginning of the 2000s, one of the most important tasks of reform policies was achieved – China achieved the level of "Xiaokang", or the level of small majority of the population affluence. Currently, Chinese government solves the problem to achieve by the middle of the XXI century the average level of prosperity that is characteristic for the majority of moderately developed countries. Improving the standard of living is the basis of the fact that the majority of the population of China supports the ongoing policy of reforms and the expansion of economic relations with foreign countries (Cheung & Haan, 2013, p. 210).
An important feature of the ongoing China's foreign trade policy is to preserve a high level of protection and the solution of the problem of not only an integration into the global market economy and the reform of foreign economic relations, but also the effective use of external factors, including foreign investment.
The annual growth rate of China's GDP for the period of the 1980-2000-ies was amounted to 9.8%, and, by this indicator, the country, along with Asian leaders, entered the top five world leading countries in certain years. As a result, by a number of indicators, China has managed to become one of the leaders of the world economy. Even during the global economic crisis in the late 2000s. China, in contrast to other leading countries of the world, has managed to maintain high rates of economic growth. According to the State Statistical Administration of China, in 2009, the country's GDP increased by 8.7% compared with the previous year and reached the level of 4.91 trillion dollars. China's economy, along with the US, Japanese and German economies, is among the four largest economies in the world, accounting for its 6% of global GDP. If we look at China's GDP by the method of purchasing power parity (PPP), the size of the country's economy is almost 2 times more, and in this case, the share of China in world economy is accounted for 11.5% of world GDP. Based on this method, China's economy is the second, after the United States, the world's largest economy (Eichengreen & Park, 2011, pp. 56-57).
Still, at present, there is a substantial gap and a significant lag in a number of indicators from the developed countries. The most common criteria characterizing the relative backwardness of the Chinese economy are the low level of per capita income, lack of capital and skilled labor needed for the development of modern production methods. China's industry is characterized by the transition from mechanized to a partially automated production. A fifth of the population is still illiterate. The size of unemployment, according to the World Bank estimates that over 120 million people. The size of R & D expenditure is 10 times less than US level. Still, building an innovation economy of China is becoming a major priority – it is stated that, by 2020, China needs to become an innovative country (Cheung & Haan, 2013, p. 210).
Previously, the mining industry was the central sphere of economy development of China. But now, there is a focus is on the manufacturing sector of the economy. Production in China is growing from year to year. The most important role in the Chinese economy is played by special economic zones: in the country, there are four of them. While three special economic zones are located in the same Guangdong province. Because of such zones, Chinese production of textile, pharmaceutical and electronics industry is one of the largest in the world (Cheung & Haan, 2013, p. 215).
At present, China leads the world in coal, iron, manganese, lead, zinc, antimony and tungsten ores mining and wood processing; It is the world's largest producer of coke, cast iron, steel and steel pipes, aluminum, zinc, tin, nickel, televisions, radios and mobile phones, washing and sewing machines, bicycles and motorcycles, watches and cameras, fertilizers, cotton and silk fabrics, cement, shoes, meat, wheat, rice, sorghum, potato, cotton, apple, tobacco, vegetables, silk cocoons; it has the largest in the world volumes of poultry, pigs, sheep, goats, horses and yaks, and also leads in the catch of fish. In addition, China is the world's largest automaker (18 million cars in 2010) (Eichengreen & Park, 2011, p. 80).
Representatives of most world companies noted the huge potential of the Chinese retail market, which has not any weakened interest in China. One of the most promising in China today is the market of luxury goods. According to forecasts of Boston Consulting Group, by 2018, income of China's population per capita will be at least two times higher than at present, so that China will account for one-third of the global luxury market. Already in 2009, in Shanghai and Beijing, the number of boutiques selling luxurious expensive products was equal to the number of similar ones in New York City and Chicago. In the West, this market has been already formed, but the Chinese consumers only get acquainted with international brands, which creates great opportunities for manufacturers of luxury goods (Eichengreen & Park, 2011, p. 82).
Further, a huge population of the country puts China in the first place in the number of Internet users and mobile subscribers. Thus, according to the China Internet Network Information Center (CNNIC), at the end of 2014, 668 million Internet users were registered in China, and more than 594 million Chinese people use mobile phones. This led to the fact that buying through the Internet is one of the most common ways to purchase goods and services. The most famous online store in China is Taobao. Taobao Website takes 80% share in the Chinese market of Internet purchases (Lardy, 2014, p. 196).
At the end of 2014, the volume of e-commerce in China amounted to $ 2.68 trillion. Currently, e-commerce market in China continues to grow. It is expected that in the next five years, the market for delivery of electronic shopping will increase by 40% annually. Therefore, Chinese retailers have become serious competitors for such online American giants as Amazon and eBay. The largest Chinese Internet company Alibaba is a serious competitor to the world leaders of e-commerce market (Lardy, 2014, p. 196).
Additionally, China is critical to Asian economies. With a large supply of cheap labor, it became the center of a regional export accumulation. Its foreign exchange reserves reflect not only the trade surplus, but capital inflows from other Asian economies such as Japan, South Korea, Taiwan and Hong Kong. China's central bank, in fact, funnels excess of Asian savings into dollar assets (Eichengreen & Park, 2011, p. 48).
In the end, it is needed to mention factors of the phenomenal growth of the Chinese economy. Undoubtedly, an important role is played by the active participation of the state in the economic life of the country. When analyzing Chinese theory of reforms, economists regard it as "integrated system of macroeconomic control, carried out at the expense of economic levers". The development of the Chinese economy is carried out via the "gradualist" approach – through progressive, sequential transition from one reform to another. The second factor lies in significant labor resources at constant improvement of their quality and low wages. The third factor is a high share of savings and investment (higher than 30% of GDP), supplemented with effective strategies to attract foreign capital, primarily in the high-tech industry. A very important factor, based on export-targeted development model is the openness of the economy. Equally important to the success of China is a geographical position its territory, as well as rich natural resources potential (Eichengreen & Park, 2011, p. 51).
At the beginning of the XX century, China was known to the foreigners for its poverty and underdevelopment. World nations perceived China as hopelessly backward country without a future. Currently, due to its high economic growth rate and scale of country`s economy, China has become one of the locomotives of the world economy, accounting for an average of about 12-15% increase in world gross domestic product, which is particularly important in conditions of the global economic crisis. China is one of the largest world buyers of many raw materials and industrial products, including transport and power equipment, as well as aviation engineering, metallurgy and other products (Eichengreen & Park, 2011, p. 53).
At present, China has become the world’s largest producer of goods, shifting the USA from this leading position after 110 years since the US occupied it from the beginning of the XIX century. A variety of products from China are available in more than 70 countries and regions. The title of “world’s factory” was assigned to China long time ago. China takes world-leading position in the production of a huge number of goods. Electrical machinery and equipment, clothing and shoes, toys and furniture are the most popular products for consumers around the world. A leader in the production of these goods is China. Finally, once Napoleon spoke of China as a “sleeping giant”. Now the world with surprise and some trepidation watches a growth demonstrated by this country.
Works Cited
Cheung, Yin-Wong & Jakob de Haan. The Evolving Role of China in the Global Economy. Cambridge, MA: MIT Press, 2013. Print.
Eichengreen, B. & Yung Chul Park. China, Asia, and the New World Economy. Oxford, UK: Oxford University Press, 2011. Print.
Greenaway, D. & Chris Milner. China and the World Economy. Basingstoke, UK: Palgrave Macmillan, 2010. Print.
Lardy, Nicholas. China in the World Economy. Institute for International Economics. Basingstoke, UK: Palgrave Macmillan, 2014. Print.
