China's Economic Development: An Overview

Since the initiation of economic and trade reforms in 1978, China has been one of the world's fastest growing economies. According to Chinese data, real GDP grew at an average annual rate of 10% between 1979 and 1996, increasing the real size of the Chinese economy by five times its 1978 level and substantially raising Chinese living standards. Much of China's recent economic growth has been driven by a high rate of capital accumulation and large productivity gains, both largely the result of economic reforms. Foreign investment and trade have played a major role in China's economic growth. U.S.-China commercial relations have sharply expanded; China is now the 4th largest U.S. trading partner. Many analysts predict that China's economy will likely continue to experience rapid growth in the near future, especially if economic reforms are expanded and deepened. As a result, the importance of China as a U.S. trading partner could be greatly enhanced. U.S.-Chinese economic relations have been a major issue in the annual congressional debate on extending China's most-favored-nation (MFN) status, as well as congressional oversight of the Administration's policy towards China's application to join the World Trade Organization (WTO).