China’s Spectacular Ascendance Begins to Reshape the World Economy

The New York Times (via the Guardian) looks at the global impact of recent news that’s China’s economy has surpassed that of Japan, making it the second largest in the world:

China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence in Asia, Africa and Latin America, with things like special trade agreements and multibillion-dollar resource deals.

“They’re exerting a lot of influence on the global economy and becoming dominant in Asia,” said Eswar Prasad, a professor of trade policy at Cornell and former head of the International Monetary Fund’s China division. “A lot of other economies in the region are essentially riding on China’s coattails, and this is remarkable for an economy with a low per capita income.”

Beijing is also beginning to shape global dialogues on a range of issues, analysts said. Last year it asserted that the dollar must be phased out as the world’s primary reserve currency.

…There are huge challenges ahead, though. Economists say China is too heavily dependent on exports and investment and needs to encourage greater domestic consumption — something it has struggled to do.

See also an op-ed in the New York Times by Piers Brendon which puts this news in an historical perspective. See also Robert Reich’s blog post: “China is #2: What does that mean for us?” China Beat has also compiled a round-up of analysis and opinion on this topic.

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