China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. Wayne M. Morrison, Specialist in Asian Trade and Finance, August 21, 2014.

“The rapid rise of China as a major economic power within a time span of about three decades is often described by analysts as one of the greatest economic success stories in modern times. From 1979 (when economic reforms began) to 2013, China’s real gross domestic product (GDP) grew at an average annual rate of nearly 10%. It is estimated that to date 500 million people in China have been raised out of extreme poverty. China has emerged as a major global economic power. It is now the world’s largest manufacturer, merchandise exporter, and holder of foreign exchange reserves. China is currently the second-largest economy after the United States, and some analysts predict that it could become the largest within the next five years or so. On a per capita basis (a common measurement of a nation’s standard of living), however, China is significantly less developed than the United States. China’s rapid economic growth has led to a substantial increase in bilateral commercial ties with the United States. According to U.S. trade data, total trade between the two countries grew from $5 billion in 1980 to an estimated $562 billion in 2013. China is currently the United States’ second-largest trading partner, its third-largest export market, and its largest source of imports. Many U.S. companies have extensive operations in China in order to sell their products in the booming Chinese market and to take advantage of lower-cost labor for export-oriented manufacturing. These operations have helped some U.S. firms to remain internationally competitive and have supplied U.S. consumers with a variety of low-cost goods. China’s largescale purchases of U.S. Treasury securities (which totaled $1.3 trillion as of April 2014) have enabled the federal government to fund its budget deficits, which help keep U.S. interest rates relatively low.”