Title: 
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
 

Updated
 
June
 
25,
 
2019
 

Congressional
 
Research
 
Service
 

Summary
 

China’s

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
 

The
 
Decline
 
and
 
Rise
 
of
 
China’s
 
Economy
 

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
 

Percentage
 
of
 
2017/2016
 

Major
 
Long-Term
 
Challenges
 
Facing
 
the
 
Chinese
 
Economy
 

China’s
 
Incomplete
 
Transition
 
to
 
a
 
Market
 
Economy
 

Industrial
 
Policies
 
and
 
SOEs
 

China
 
and
 
Global
 
Steel
 
Overcapacity
  

A
 
State-Dominated
 
Banking
 
Sector,
 
Excess
 
Credit,
 
and
 
Growing
 
Debt
 

Environmental
 
Challenges
 

Corruption
 
and
 
the
 
Relative
 
Lack
 
of
 
the
 
Rule
 
of
 
Law
 

Demographic
 
Challenges
 

China’s
 
Hukou
 
System91
 

Economic
 
Goals
 
of
 
the
 
19th
 
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
 

Author
 
Information
 

Disclaimer
 


Content: Implications
China’s
 
 
rise
 
from
 
a
 
poor
 
developing
 
country
 
to
 
a
 
major
 
economic
 
power
 
in
 
about
 
four
 
decades
 
has
 
been
 
spectacular. From
 
1979
 
(when
 
economic
 
reforms
 
began)
 
to
 
2017,
 
China’s
 
real
 
gross
 
domestic
 
product
 
(GDP)
 
grew
 
at
 
an
 
average
 
annual
 
rate
 
of
 
nearly
 
10%.1
 
According
 
to
 
the
 
World
 
Bank,
 
China
 
has
 
“experienced
 
the
 
fastest
 
sustained
 
expansion
 
by
 
a
 
major
 
economy
 
in
 
history—and
 
has
 
lifted
 
more
 
than
 
800
 
million
 
people
 
out
 
of
 
poverty. ”2
 
China
 
has
 
emerged
 
as
 
a
 
major
 
global
 
economic
 
power. For
 
example,
 
it
 
ranks
 
first
 
in
 
terms
 
of
 
economic
 
size
 
on
 
a
 
purchasing
 
power
 
parity
 
(PPP)
 
basis,
 
value-added
 
manufacturing,
 
merchandise
 
trade,
 
and
 
holder
 
of
 
foreign
 
exchange
 
reserves. China’s
 
rapid
 
economic
 
growth
 
has
 
led
 
to
 
a
 
substantial
 
increase
 
in
 
bilateral
 
commercial
 
ties
 
with
 
the
 
United
 
States. According
 
to
 
U.S.
 
trade
 
data,
 
total
 
trade
 
between
 
the
 
two
 
countries
 
grew
 
from
 
$5
 
billion
 
in
 
1980
 
to
 
$660
 
billion
 
in
 
2018. China
 
is
 
currently
 
the
 
United
 
States’
 
largest
 
merchandise
 
trading
 
partner,
 
its
 
third-largest
 
export
 
market,
 
and
 
its
 
largest
 
source
 
of
 
imports. Many
 
U.S.
 
companies
 
have
 
extensive
 
operations
 
in
 
China
 
in
 
order
 
to
 
sell
 
their
 
products
 
in
 
the
 
booming
 
Chinese
 
market
 
and
 
to
 
take
 
advantage
 
of
 
lower-cost
 
labor
 
for
 
export-oriented
 
manufacturing.3
 
These
 
operations
 
have
 
helped
 
some
 
U.S.
 
firms
 
to
 
remain
 
internationally
 
competitive
 
and
 
have
 
supplied
 
U.S.
 
consumers
 
with
 
a
 
variety
 
of
 
low-cost
 
goods. China’s
 
large-
scale
 
purchases
 
of
 
U.S.
 
Treasury
 
securities
 
(which
 
totaled
 
$1.1
 
trillion
 
as
 
of
 
April
 
2019
 
have
 
enabled
 
the
 
federal
 
government
 
to
 
fund
 
its
 
budget
 
deficits,
 
which
 
help
 
keep
 
U.S.
 
interest
 
rates
 
relatively
 
low.4
 
However,
 
the
 
emergence
 
of
 
China
 
as
 
a
 
major
 
economic
 
power
 
has
 
raised
 
concern
 
among
 
many
 
U.S.
 
policymakers. Some
 
claim
 
that
 
China
 
uses
 
unfair
 
trade
 
practices
 
(such
 
as
 
an
 
undervalued
 
currency
 
and
 
subsidies
 
given
 
to
 
domestic
 
producers)
 
to
 
flood
 
U.S.
 
markets
 
with
 
low-cost
 
goods,
 
and
 
that
 
such
 
practices
 
threaten
 
American
 
jobs,
 
wages,
 
and
 
living
 
standards.