ABSTRACT
As China becomes more and more globalized, it is enjoying the number one global ranking in some key economic indicators: inward FDI, foreign exchange reserves (liquid assets), and holder of US treasury bonds. All of this has contributed to China’s emergence and subsequent overtaking of Japan as the world’s second largest economy by the end of 2010 (Kim, 2009, p. 60). Traced back across three decades, China’s trade exploded from $20.6 billion in 1978 to $2.5 trillion in 2008 (a whopping 121-fold increase in 3 decades), even as trade as a percentage of GDP—a widely used measure of a country’s integration into the global economy—more than doubled once every decade, from 5.2% in 1970, to 10% in 1978, 26.8% in 1990, and then 44% in 2001. By 2007, the rate of China’s foreign trade dependence witnessed a steep rise, reaching an all-time high of 72.4%, an increase of 62 percentage points since the 1970s, compared to 26.8% for the United States, 27.3% for Japan, 48.8% for India, 55.1% for Russia and France, 61.6% for the UK, and 85.3% for South Korea for the same year (World Bank, 2009)
