BANGLADESH UNIVERSITY OF PROFESSIONALS
An Assignment on
China's Rise to Global Power: A Clear Look at Its Path and
Challenges
Course name: Development Patterns and Economic System
Course Code: ECON-3505
Submitted to:
Asrarul Islam Chowdhury
Professor
Department of ECONOMICS,
Faculty of Social Sciences,
Jahangirnagar University.
Submitted by:
Name: Md. Gawsul Azam Shanto Name: Fahmida Binte Azam Name: Hasibur Rahman
ID: 2214881059 ID: 2214881085 Siam
Name: Ahbabur Rahman Name: Md. Whaheduzzman ID: 2214881001
ID: 2214881067 Parvez
ID: 2214881067
Submission Date: 19/01/2025
China's Rise to Global Power: A Clear Look at Its
Path and Challenges
C
hina has emerged to the status of world power and considered one of the success stories
of the twenty-first century. It has changed itself from a former agrarian society and a
detached economy to the second largest economy in the world, a leading importer and
exporter of goods and services, and a rising power in the diplomacy of the world. This
transformation has resulted from a unique combination of factors like, A flexible political
system, State-led economic transformation, aggressive participation in the world economy, large-
scale population, and strategic geographic position. China is already competing with the
economies of developed democratic states globally through its "Belt and Road" efforts to
establish economic ties with developing states and control critical resources. This competition
may lead to a rival economic bloc that can function outside the rule-based order democracies
created after World War II. The trend suggests that this competition may become an ongoing
confrontation between China and its allies and developed democracies unless radical changes in
Chinese policies and leadership occur. Civil and military confrontations are also increasing.
I. Historical Foundations: Pragmatism and the Evolutionary
Chinese Communist Party (CCP)
As we will see, China’s road to power is rooted in the experience of the 20th century. The 1949
social revolution spearheaded by Mao Zedong led to the formation of the People’s Republic of
China, changing the political, economic, and social structures of the country. Like his original
mentor’s Marxist-Leninist doctrine, Mao Zedong focused heavily on revolutionary passion and
the collective mobilization of the masses to achieve many accomplishments at the same time as
dreadful tragedies such as the Great Leap Forward and the Cultural Revolution (Meisner, 1986).
Even though these experiences were traumatic, they helped lay the groundwork for the future of
China.
Even after Mao Zedong’s death in 1976, Deng Xiaoping brought about realism to the country.
Deng knew that centralized planning and ideological dogmatism had reached their peak and
launched reforms that placed economic development as the priority of the state (Shirk, 1993).
They would also notice the remaining flexibility of the CCP in their capabilities list. The CCP
shifted from a martial revolution party to a development-oriented party, and this is observable in
the notion of ‘Socialism with Chinese Characteristics’ another strategy that lets the CCP
accumulate more political power while accumulating wealth at the same time.
CCP also realized that stability was equally important for there to be a realization in the
economy. Some of the measures it used to establish stability were the publication of crooked
information and the suppression of any form of dissent (Xu, 2011). It is this focus that assisted in
getting stability that put in place conditions that were favorable for economic activities and
investments. The need for a new course implies the desire for an angry path outside the Soviet
model in the new economic model China wished to embrace. (Gregory P. R., 2009)
Central Themes of Investigation
1. What official development program China today has adopted that has given it an
advantage in manufacturing and commerce, unlike any capitalist or conventional socialist
economy?
2. How does China's "Belt and Road" project assist in eroding the post-war norms based on
liberal international economic order headed by the Western democracies?
3. Despite economic and strategic achievements, what additional long-term demographic
considerations and environmental conditions might perhaps impede China's expansion as
a superpower next year?
II. Economic Transformation: A Hybrid Structure of State and
Market
GDP growth (annual %)
30
20
10
0
61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20
-10
-20
-30
Source: [Link]
Fig 1.1: Annual GDP Growth of China (1961-2023)
The economic growth of China is a result of the liberalization in the market forces in harmony
with state direction. This is not a transition to capitalism but the use of market instruments within
the framework of a one-party political system (Dr. Nicholas R. Lardy, 2014). The key elements
of this system include:
Regional Decentralization: The Regionally Decentralized Authoritarian (RDA) regime has
been critically known for China’s success. Provinces and all local administrations have lots of
economic power exercised by the central government to encourage competition and innovation
(Xu, 2011). Local governments are questioned to spur development hence enhancing the opening
up of the economy and its activity.
The Ongoing Role of SOEs: State-owned enterprises (SOEs) still play a crucial role
especially where they have a comparative advantage, as in the energy, finance, and infrastructure
industries (Szamosszegi, 2011). Far from mere economic factors, they simultaneously act as
agents for the transmission of national policy and mechanisms for acquiring strategic resources.
It is common that the majority of China’s biggest companies are state-owned.
A Hybrid Market System: It is safe to say that the structure of the economic system of
China is halfway between capitalist and socialist. Despite opening itself to market forces, the
state of China intervenes in the market through the coordination of investment, regulation of
some sectors, and manipulation of its results (Dr. Nicholas R. Lardy, 2014) . This duality can
generate confusion (for example, private businesses are somewhat under state control).
Strategic Global Integration: China has systematically linked its economy with the global
economy to attract foreign direct investments, join the WTO, and engage in the global value
chain (Naughton, 2007). By getting involved in manufacturing and exports, China integrates its
economy with the world economy.
Focus on Exports: First, China relied on investment in an export-oriented manufacturing
industry with a low cost of labor for export production (Dr. Nicholas R. Lardy, 2014). This
strategy was helpful in accumulating large trade surpluses, and international reserves in foreign
currencies. But as wages rise again, there are efforts to once more call for demand to emphasize
exports.
Gradual Reforms: The so-called Deng Xiaoping’s line of avoiding the visibly named “Crossing
the river by feeling for the stones” was characterized by gradualism and trials. This enabled the
government to experiment and respond to conditions (Gregory P. R., 2009) that made reform
gradual at the same time produced a transitional development that was also unbalanced with
different regional disparities.
III. Influencing Strengths: Demography, location, and strategy
Demography, location, and strategy may be the key themes of the current global business environment,
but they are not the only issues that businesses must consider today. China’s rise is not only the result
of political and economic strategy but also of exploiting its demographic and geographic
advantages:
The Power of the Population: Although China is a highly populated country, this favored
its economic development through the availability of a large and cheap labor force. This made
foreign investment flow in and boosted its manufacturing market. However, population aging
will become difficult in the future as a challenge comes with a significantly older generation.
China's Gender Gap
750
700
650
Population (millions)
600
550
500
450
400
350
300
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Years
Source: [Link]
Fig 1.2: China’s gender gap
Strategic Geographic Location: China is situated in East Asia near water bodies,
benefiting from good access to the region’s sea highways. It has become an international market
and is well located in other vibrant economies. Trade: The “Greater China” region has also
played a boost in their international trade (Gregory P. R., 2009).
Resource Acquisition: China has deliberately purchased a range of resources from different
parts of the globe, as the case with Africa and Latin America (Brautigam, 2009). This has been
very vital, especially in the industrialization process.
IV. Challenges to Continued Growth: Internal Issues
Despite its success, China's rise is accompanied by significant challenges that threaten its long-
term stability:
Rising Inequality: Although the rates indicate that China has made progress in poverty
reduction, economic liberalization has increased income disparities (World Bank , 2023). This
situation regarding the social disparity between ‘haves’ and ‘have-nots of the developed world
and the countryside is not healthy for the general public and stability.
Corruption Concerns: Corruption has been the most common scenario in state-owned
entities and officials remain a pending issue that thwarts development and erodes people’s
confidence, and social cohesion (Corruption Perceptions Index, 2023).
Weak Legal and Governance Systems: However, China still has much work to do in the
legal framework and corporate management systems. High risk and uncertainty result from a
lack of defining property rights and an independent judicial system.
Environmental Issues: China’s growth has led to drastic industrialization, thus causing
negative environmental impacts like air and water pollution, deforestation affecting the health of
the people, and growth in the future (World Bank , 2023).
The Hukou System as a Barrier: The hukou system despite its function of regulating
migration has led to structural discrimination where a set of people gets restricted access to
fundamental social amenities if they do not possess local permits (Chan, 2008), it even divides
citizens into two groups: the urban and the rural group.
Aging Population: Population aging and problems of demographic divergence pose new
economic challenges to China. China is rapidly aging at an earlier stage of its development than
other countries. Current demographic trends could hinder economic growth and create
challenging social issues in China. (Hart, 2024)
Population History & Projections for China
100+
90-94
80-84
70-74
60-64
Age Groups
50-54
40-44
30-34
20-24
10 14
0-4
-60,000 -40,000 -20,000 0 20,000 40,000 60,000
Populations in Thousands
Male Population (thousands) Female Population (thousands)
Source: [Link]
Fig 1.2: Population History & Projection for China
V. Global Influence: A Shifting World Order
China’s transformation is not just an economic success but also a geopolitical one which is
generally giving China a long-term growth potential. Several factors are contributing here to
uphold China as the next superpower-
Economic Influence: China has a trade and investment power that helps to maintain
influence by providing for trade, investment, and such projects as the Belt and Road project.
They provide a non-conventional means of financing with reference to conventional funding
models.
Geopolitical Ambition: China is emerging as the more assertive actor in foreign policy with
a clear goal to preview and redefine the order and norms (Economy, 2018). This entails
deepening engagement in international organizations and advancing its interests in areas of South
China
Soft Power Strategies: China also needs soft power in education and media outreach (Nye,
2004) because the country aims to promote its cultural image overseas. In politics (particularly in
international politics), soft power is the ability to co-opt rather than coerce (in contrast with hard
power). It involves shaping the preferences of others through appeal and attraction. Soft power is
non-coercive, using culture, political values, and foreign policies to enact change.
International Tensions: Most countries are worried about the rise of China. Hence, tensions
arise when it seeks to alter the predetermined world order and interrogate its diminished rights.
The CCP must contend with both the inside and the outside conditions, where the outside
condition refers to how China relates to other nations.
Conclusion
The path of China’s emergence to a global powerhouse is a process that connects with many
factors, including political authoritarianism and economic openness. They explain its success in
terms of the political institutions, strategic positioning, scale factor, and in terms of its orientation
to international trade. Yet, China needs to solve problems related to inequality, corruption, shaky
institutions, and environmental degradation to build stability and maintain its impact in the long
term.
References
Brautigam, D. (2009). The dragon's gift: The real story of China in Africa. Oxford University Press. Oxford
University Press.
Chan, K. W. (2008). INTERNAL LABOUR MIGRATION IN CHINA: TRENDS, GEOGRAPHICAL DISTRIBUTION
AND POLICIES. New York.
Corruption Perceptions Index. (2023). Retrieved from TRANSPARENCY INTERNATIONAL:
[Link]
Dr. Nicholas R. Lardy, A. M. (2014, 8th October Wednesday). Markets Over Mao: The Rise of Private
Business in China. Peterson Institute for International Economics. Retrieved from
[Link]
Economy, E. C. (2018). The Third Revolution: Xi Jingping and the New Chinese State. Oxford University
Press.
Gregory, P. R. (2009). Why China Won and Russia Lost. Hoover Institution, 15-39. Retrieved from
[Link]
Gregory, P. R. (2013). The global economy and its economic systems. Cengage Learning.
Hart, B. (2024, January 31). How severe are China’s demographic challenges? ChinaPower Project.
Retrieved from [Link]
Meisner, M. J. (1986). Mao's China and After: A History of the People's Republic. Free Press.
Naughton, B. (2007). The Chinese Economy: transitions and growth. Internet Archive. Retrieved from
[Link]
Nye, J. S. (2004). Soft power: The means to success in world politics. Academia. Retrieved from
[Link]
oseph_S_Nye_Jr
Shirk, S. L. (1993). The Political Logic of Economic Reform in China. University of California Press.
Szamosszegi, A. &. (2011). An analysis of state-owned enterprises and state capitalism in China. US-China
Economic and Security Review Commission. Retrieved from
[Link]
World Bank . (2023). Retrieved from World Bank: [Link]
Xu, C. (2011). The Fundamental Institutions of China’s Reforms and Development. Journal of Economic
Literature, 1076-1151.
Years Incidents
1949 The social change initiated by Mao Zedong.
1953-1957 The emergence of the first Five-Year plan: industrialization of the economy
largely relying on heavy industries and state control.
1958 Beginning of the Great Leap Forward economic and agricultural reform
designed for far-reaching industrialization and peasant emigration to cities; The
cultural revolution; severe famine and economic breakdown.
1966-1976 The Cultural Revolution brought an abrupt change in the economic and social
elites; with the paramount focus again shifts to purity of the revolution, rather
than growth.
1978 Deng Xiaoping started the reforms to plan for the economy more toward a
market type with limited political decentralization.
1980 Shenzhen, and other areas government introduced Special Economic Zones
(SEZs) to encourage foreign investment.
1982 Contract responsibility system in agriculture displaces collective farming thus
enhancing agricultural output.
1984 Economic reform – opens up to cover the urban areas with permission to carry
out business ventures and engage in the export business.
1992 Deng’s Southern Tour begins the fast and profound market-oriented change
highlighting FDI.
2001 China becomes a member of the World Trade Organization WTO; the country
continues with the process of globalization.
2010 the China rises to the second place in the world in terms of international Gross
Domestic Product.
Appendix 1.1
Important turning points in China's social and economic change (1949–2010)
source: (Gregory P. R., 2013)