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August 21, 2007

Why China all of a sudden?

One country has dominated the world's economic news in recent years, and that is China, a very old country with a long commercial tradition. What changes have occurred that have allowed the country only recently to become a force in international trade? N.C. State University economist Mike Walden cites two major developments.

"The first came in 1978 when new Chinese leadership came in, and that leadership was worried about China's economic plight. In fact, China was really a basket case at that point economically," says Dr. Walden, a professor of agricultural and resource economics. "And the leadership looked around at the rest of the world, and they decided that 'you know, we need to stimulate a free market here.'" And so they loosened things up. They allowed for private decision-making. They actually allowed for private ownership of property, which you couldn't have done under the previous Chinese leadership. They allowed for profit.

"And this rhis really unleased all the ingenuity [and] all the productivity in the Chinese economy," he adds. "They started first doing that in agriculture and then moved to industry.

"The second big change came later, starting in 1999 when there was a major trade treaty between China and the U.S. that really opened up each country to the other in terms trade," he adds. "And then finally China joined the World Trade Association in 2001, which really nade china part of the world trading community. So this has clearly benefited China.

"China, in fact, right now is on track to become the third largest economy in the world," he concludes, "right behind the U.S. and Japan."

Posted by deeshore at August 21, 2007 08:00 AM