[China’s]…economy has gone from being rather smaller than Italy’s to the world’s second largest, and is now home to one million US$ millionaires. By the time the new generation of leaders hands over power to the next in 2022, China could be challenging the US for top spot.
This transformation has changed the way the world does business. Cheap Chinese labour has helped dampen prices in the West for everything from moccasins to mops to mobile phones. It is now the biggest investor in Africa, promising to shift the continent’s focus away from Europe and the US for the first time in two centuries. And China is now the biggest foreign holder of US government debt – a threatening stick, or a foolhardy bet?
The key question now is whether the new leaders can keep the economy growing at the same rate as in the past, and help the rest of the world recover. Most Western analysts expect it to slow from 10% a year to a still impressive 6-7%, but argue that deep reforms are needed if China is to become a rich rather than middle-income country.