The Rising Sun sets behind the Land of Dragons!

                       Well, it’s official and as expected China overtakes Japan as the world’s second largest economy. But what exactly do these signs mean? What is it for global trade and world economy? Where exactly is the world heading and what do these signs refer to? From an underdeveloped economy to being one of the world’s largest power houses is indeed a story of richness and superior growth. Chinese exports have actually increased the consumer confidence and spending across the globe especially in countries such as the USA and in regions of European Union. China’s major economic driver was high economies of scale. Countries such as the United States could not achieve high economies of scale and started falling behind China in terms of controlling global trade. 

                      One also should understand that when a developing economy is growing at a faster rate, often richer countries accuse it of cheating by keeping its wages and exchange rates low. This is an actual stage of development and it will slowly come to an end over a period of time. The rising labor costs are one significant indicator for China that the end is not too far off. It is also a fact that the economy in China is driven by exports and government backed small private enterprises. But if one looks at the numbers with a lens in their hand, one can clearly observe that fixed asset investment has also been a major driver of the economic growth. “Rapid Urbanization” it is and this is indeed one of the largest factor that is fueling the economic growth. The government initiative to increase the number of Special Economic Zones across the coastal regions of China has indeed given benefits for the economy. Though, majority of suppliers in China have been depending on exports to survive, the local consumption is also on the rise. This indeed is a sign of things to come. Some of the major worrying factors for China will of course be its internal consumption and natural resources. There have been many reports as to how China is trying to control the global oil market by controlling oil wells in Northern and Western Africa by funding weapons and money, but all these have been very well planned and are being taken ahead by benchmarking against the global economies such as the USA, Russia and Japan. The three major regions that are indeed propelling the Chinese growth are Yangtze River Delta, Pearl River Delta and the Beijing-Tianjin corridor. Look at the number of small and medium sized firms in these regions for various commodities and end products. Almost every enterprise is backward integrated and is offering a wide range of services to come. 

                      While India is struggling to hold the Common wealth games with an overall estimated investment of around $ 2- 3 billion, China brought the world under the bird’s nest at a whopping $28 billion. Global MNC's are trying to enter and utilize the Chinese economy to make more revenues. China has a lot of recent additions to its belt of achievement such as becoming the global leader in exports and in becoming the largest market for passenger vehicles. Indeed, it is an achievement and the Chinese economy will definitely stand stronger for years like the great wall of China.