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: 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. Others
 
contend
 
that
 
China’s
 
growing
 
use
 
of
 
industrial
 
policies
 
to
 
promote
 
and
 
protect
 
certain
 
domestic
 
Chinese
 
industries
 
or
 
firms
 
favored
 
by
 
the
 
government,
 
and
 
its
 
failure
 
to
 
take
 
effective
 
action
 
against
 
widespread
 
infringement
 
and
 
theft
 
of
 
U.S.
 
intellectual
 
property
 
rights
 
(IPR)
 
in
 
China,
 
threaten
 
to
 
undermine
 
the
 
competitiveness
 
of
 
U.S.
 
IP-intensive
 
industries. In
 
addition,
 
while
 
China
 
has
 
become
 
a
 
large
 
and
 
growing
 
market
 
for
 
U.S.
 
exports,
 
critics
 
contend
 
that
 
numerous
 
trade
 
and
 
investment
 
barriers
 
limit
 
opportunities
 
for
 
U.S.
 
firms
 
to
 
sell
 
in
 
China,
 
or
 
force
 
them
 
to
 
set
 
up
 
production
 
facilities
 
in
 
China
 
as
 
the
 
price
 
of
 
doing
 
business
 
there. The
 
Chinese
 
government
 
views
 
a
 
growing
 
economy
 
as
 
vital
 
to
 
maintaining
 
social
 
stability. However,
 
China
 
faces
 
a
 
number
 
of
 
major
 
economic
 
challenges
 
that
 
could
 
dampen
 
future
 
growth,
 
including
 
distortive
 
economic
 
policies
 
that
 
have
 
resulted
 
in
 
overreliance
 
on
 
fixed
 
investment
 
and
 
exports
 
for
 
economic
 
growth
 
(rather
 
than
 
on
 
consumer
 
demand),
 
government
 
support
 
for
 
state-
owned
 
firms,
 
a
 
weak
 
banking
 
system,
 
widening
 
income
 
gaps,
 
growing
 
pollution,
 
and
 
the
 
relative
 
lack
 
of
 
the
 
rule
 
of
 
law
 
in
 
China. The
 
Chinese
 
government
 
has
 
acknowledged
 
these
 
problems
 
and
 
has
 
pledged
 
to
 
address
 
them
 
by
 
implementing
 
policies
 
to
 
increase
 
the
 
role
 
of
 
the
 
market
 
in
 
the
 
economy,
 
boost
 
innovation,
 
make
 
consumer
 
spending
 
the
 
driving
 
force
 
of
 
the
 
eco