The Rise of China

1. Introduction

  In 1978, after years of having a centrally planned economy where all companies were owned by the state, the government of China (under the leadership of Deng Xiaoping) embarked on a major economic reform program whose goal was to generate adequate surplus for financing the modernization of the Chinese economy   (Hu , 2005). By nearly all accounts, the strategy has worked spectacularly” (Hu & Khan, 1997, p.1). With just over three decades following the economic reforms, China boasts remarkable economic success. The country has rapidly become the world’s fourth-largest economy, with over US$2 trillion in terms of aggregate GDP at market exchange rates (Yueh, 2007).[1] Furthermore, China is the world's biggest holder of foreign reserves with its currency stockpile topping US$2 trillion (Research institute of economy, trade and Industry, 2009).

  All developments come at a cost and there have been negative externalities associated with the economic growth. One of the biggest concern is the impact of China`s activities on the global environment. These impacts have not only been felt in China and its surrounding countries, but it has become a global issue that has called for attention across the world. Environmental issues such as this have become a leading cause of social unrest in China and around the world (Smecker, 2009).

  This essay employs a two-sided approach by first looking at the Chinese experience (from which some general lessons can be drawn by other developing countries) before attempting to understand the implications of the rise of China on the global environment. The final section concludes.

  2. Factors Behind the Rise of China

  As stated by Yueh (2007), economic reforms in China were part of a ‘partial’ reform strategy. China’s heavily managed reforms were in some aspects conflicting with Adam Smith’s free market paradigm of economic success which has its roots in the market’s invisible hand. On the contrary,...