ABSTRACT
In the past quarter of a century, China has made rapid and significant progress towards becoming an important part of the world economy. With a quarter of the world’s population, China now produces at least 3.5 percent of the world’s GDP, which makes it the world’s sixth largest economy.1 In its drive for growth, China has followed a development strategy that was previously charted by some of its Asian neighbors, particularly Japan and South Korea. Like South Korea (hereafter, Korea) before the 1990s, China exhibits many of the features of the early postwar Japanese financial regime (Cargill and Parker, 2001), and China shares an export orientation that is helped by a fixed and, many perceive, undervalued exchange rate. As a result, China now accounts for almost 5 percent of the world’s exports. China’s recent admission to the World Trade Organization (WTO) and its rapid growth record suggest its economic importance will only continue to increase.
