A survey of China

Abstract

China's role in the world economy is an increasing source of attention or concern, depending upon one's perspective. Current evidence indicates that China will continue to be an engine of growth for Southeast Asian economies, drawing in large volumes of imports across a range of inputs. In the near term the United States will remain a major destination for Chinese exports of finished products, although imports of high-tech goods from the U.S. are increasing, with foreign invested enterprises (FIEs) in the manufacturing sector the main producers. While China's comparative advantage in low labor costs will persist, other factors will increase in importance, making the business environment more competitive. Specifically, structural changes in the economy, gradual movement up the production value chain, and government policy to increase human capital, develop the interior of the - country, and decrease corruption, will increase growth in the domestic economy. Finally, the financial sector shows increasing flexibility, which lowers exposure to external shocks as fiscal and monetary policy become more effective and the country moves closer to a market economy.