ABSTRACT
Introduction: China as number one? China’s rise as an economic and trading power has been impressive on many levels, and the development of the Chinese economy and its remarkable transformation from having a minimal effect on the global economy to actively shaping it will be examined in this chapter. There is currently much debate over the development of what has generally been referred to as “China Inc.”,1 including the effect of Chinese economic growth on its foreign policy development. Following the initial economic reforms of the late 1970s and especially after joining the World Trade Organisation at the turn of this century, China’s effect on the global economy has been staggering, and both scholars and economists have noted the growing percentage of global trade coming from the country, its increasing stockpiles of foreign exchange, and the gradual development of Chinese brands for sale internationally. In 2011, China officially overtook Japan as the second-largest economy in the world after the United States, and there was much speculation as to when, not if, the Chinese economy would become the biggest. Figures released by the International Monetary Fund (IMF) in October 2014 indicated that China had surpassed the United States as the largest economy, at least in terms of purchasing power parity (PPP). However, it is important to remember that in many ways China’s economy remains very much in a state of reform and transition, with important obstacles to overcome both on the domestic and the global levels. This chapter will discuss how and why the country has made the transition from a closed command economy directly controlled and often restrained by the state to a more modern, but still reforming, economic and trading system.
