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China and the Global Economy

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Despite these early years of communism in practice, China has cautiously embraced economic liberalism and a capitalist economic orientation, albeit with strong authoritarian tendencies. China today has the 4th largest economy in the world behind the United States, Japan and Germany, estimated at $2,645 billion per year. With a population of more than 1.3 billion, China remains a largely rural country with 43% of its labor force employed in agriculture with another 25% in industry and 32% in the service sector. Accordingly, decollectivization of the agricultural sector, public investment in the industry and market reforms have all played a role in stimulating this development.

Human capital has been utilized by the authorities in Beijing through direct investment in the agricultural sector as well as through institutional changes aimed at developing this sector. By emphasizing the natural resources which China has been endowed with and employing technology appropriated through an opening up of the economy, the Chinese government is currently employing market liberalization to aid in the development of this industry, among others. China’ s latest “ New Rural Campaign” is the latest manifestation of this development, accounting for strong macro-economic growth and sustainable agricultural development.

Industry, however, has driven the economic growth of this country which represents 49% of the total $2,645 billion GDP. Significantly, the average annual growth in China over a ten year period was an astonishing 10.5% (1996-2006). Much of this growth is tied to the global economy and China’ s role in international economic affairs today (The Economist, 2008: Jia & Fock, 2007). Based on the principles of economic liberalism but with a strong role for the state, China began with the creation of attractive economic-oriented trade zones to appeal to foreign investors and stimulate national growth.

Industrialization and export-oriented development are key to China’ s development model. Accordingly, this model of growth is a modern attempt at harnessing the forces of global economic capitalism through state-led development.

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