Title: China’s Economic Rise: History, Trends, Challenges, and Implications for the United States - EveryCRSReport.com
Headings: China’s Economic Rise: History, Trends, Challenges, and Implications for the United States
China’s Economic Rise: History, Trends, Challenges, and Implications for the United States
Topic areas
China's Economic Rise: History, Trends, Challenges, and Implications for the United States
Contents
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Tables
Summary
The History of China's Economic Development
China's Economy Prior to Reforms
The Introduction of Economic Reforms
China's Economic Growth and Reforms: 1979-the Present
Causes of China's Economic Growth
Measuring the Size of China's Economy
China as the World's Largest Manufacturer
Changes in China's Wage and Labor Cost Advantages
Foreign Direct Investment (FDI) in China
Factors Driving China's FDI Outflow Strategy
China's Merchandise Trade Patterns
China's Major Trading Partners
Major Chinese Trade Commodities
Major Long-Term Challenges Facing the Chinese Economy
China's Incomplete Transition to a Market Economy
Industrial Policies and SOEs
A State-Dominated Banking Sector, Excess Credit, and Growing Debt
Environmental Challenges
Corruption and the Relative Lack of the Rule of Law
Demographic Challenges
Economic Goals of the 19 th Party Congress of the Communist Party
China's Belt and Road Initiative
Made in China 2025
Challenges to U.S. Policy of China's Economic Rise
Footnotes

Content: The Chinese government has embraced slower economic growth, referring to it as the “new normal” and acknowledging the need for China to embrace a new growth model that relies less on fixed investment and exporting, and more on private consumption, services, and innovation to drive economic growth. Such reforms are needed in order for China to avoid hitting the “middle-income trap,” when countries achieve a certain economic level but begin to experience sharply diminishing economic growth rates because they are unable to adopt new sources of economic growth, such as innovation. The Chinese government has made innovation a top priority in its economic planning through a number of high-profile initiatives, such as “Made in China 2025,” a plan announced in 2015 to upgrade and modernize China’s manufacturing in 10 key sectors through extensive government assistance in order to make China a major global player in these sectors. However, such measures have increasingly raised concerns that China intends to use industrial policies to decrease the country’s reliance on foreign technology (including by locking out foreign firms in China) and eventually dominate global markets. In 2017, the Trump Administration launched a Section 301 investigation of China’s innovation and intellectual property policies deemed harmful to U.S. economic interests. It subsequently raised tariffs by 25% on $250 billion worth of imports from China, while China increased tariffs (ranging from 5% to 25%) on $110 billion worth of imports from the United States. Such measures have sharply decreased bilateral trade in 2019. On May 10, 2019, President Trump announced he was considering raising tariffs on nearly all remaining products from China. A protracted and escalating trade conflict between the United States and China could have negative consequences for the Chinese economy. China’s growing global economic influence and the economic and trade policies it maintains have significant implications for the United States and hence are of major interest to Congress.