Introduction

Few countries have integrated into the world economy as fast, or as dramatically, as China has since 1978, when it started opening up from almost isolation. The world’s most populous country is emerging as the world factory through turning into an exporting machine. A visit to a department store will reveal that many of today’s consumer goods are made in China. Export volume increased over 60-fold in 26 years, from $9.8 billion in 1978 to $593.4 billion in 2004. As a result China is now the world’s third largest exporting nation, accounting for over 6 percent of world merchandise exports. It is virtually certain that China will become even more important in the near future because of its size, dynamic economic growth, and continuing policy reforms. Many analysts predict that in a few years China will become the second largest exporting nation in the world, after the US, and its share in world exports will be more than 10 percent, making it the world factory.