China has experienced rapid economic growth after implementing market-based reforms starting in the late 1970s. The reforms privatized state-owned industries, lifted price controls, attracted foreign investment, and made China's economy more business-friendly. This led to massive manufacturing infrastructure development and export-driven growth. China is now the world's second largest economy and a manufacturing powerhouse. As a single-party government, Chinese lawmakers could make authoritarian decisions quickly to implement large projects. However, this also led to issues like forcibly relocating millions for the Three Gorges Dam project. While China's low-cost manufacturing has threatened many local industries worldwide, it has also made capital goods more affordable for other countries. Living in a globalized

1. China: The Economic Saga
INTRODCTION:
Thoughmost of us are notaware of the rise of a superpowernexttoour border,itseffectis
feltindirectlyinourdayto day life throughdifferentways.Let’ssee how we andpeople of the global
communityare affectedbythe rise of a manufacturingpowerhouse calledCHINA
The rise of the dragon:
China, havingenjoyedagloriouspasttill the nineteenthcentury, grew wearyof the sluggish
communisteconomywhichcame intoeffectin1949 underMao Zedong. The Chinese lawmakers
alarmedbythe slowdownsufferedbyitsclosestally, the thenSovietUnion, decidedtoopenits
marketsto foreignplayersalso. The seriesof reformsincludedallowinglocal entrepreneurshipin
manyfields, while fewcore sectorslike bakingandpetroleumremainedmonopoly. The state owned
industrieswere contractedoutandprivatized, price controlswereliftedandprotectionistpolicies
were abolishedmakingitmore businessfriendly. Thisfollowedamassive inflow of foreignfundsto
pushits manufacturingcapacitygrowthtoexponential rate. Chinese citizens alsohada healthyhabit
of investinginmutual fundsasthe rate of returnwas high. If itis goldfor Indiansitwasstocksfor
the Chinese.The bestpartisthat theygo to an extentof gettingloansandbuyingsharesandstill
endup inprofit.The bankswere soconfidentthattheyeventookstocksas security (collateral).This
meansthat virtuallyall moneyinthe countrywasinvested. Luckilythe policymakersmade gooduse
of the availabilityof the vastcapital andbuilteverymanufacturinginfrastructureonagiganticscale
makingthe cost of productionalmostnegligible. Thisenabledthemtocapture foreignmarkets
easily. Exportdrivengrowthledtoasurge in foreigncurrencyreserve givingapositiveratingsanda
lowerrate of borrowingfromforeigncapital market. Thisledtoaneconomicbubble whichisnot
slowingdownanynow.
Stability through regime:
Beinga uni-partygovernment, lawmakerswereable totake authoritariandecisionswithout
people’sconsentanddidnothave to answerto people’scondemnations. Thisgave themfreedomto
execute variousprojectswithoutany hindrance.Thismeanstobuildaroad the governmentcan
barge intoanyone’slandanduse for itspurpose. The three gorgesdamis the world’slargest
hydroelectricprojectinthe worldwithaproductioncapacityof 22500 MW. Onthe positive sideit
controlledfloodsinYangtze river, generatedpowerandprovidedwaterforagriculture, butitledto
relocationof 22millionpeople forcible. Thoughthisismorallywrong, thatisthe costof fast track
development. June 12of thisyearheraldedawhole new level of instabilityinthe Chinese stock
market. The Shanghai composite indexfell by30% withina daydue to panic sale of stocksby

2. investors whichledtodivestinghuge sumof money(equaltosize of UK GDP).Immediatelythe
governmentsetinitsemergencyliquidityandimposedapartial capital control tocontrol downfall
and eventuallythe fall wascontainedbyJuly8.Hadthishappenedinanyothercountrythe
governmentwouldpassresolutionorreferendumandbythe time itcomesto effectthe economy
wouldhave gone bankrupt. Sotheygotthe perfect blendof libertyandrestrictionandmade itsuper
power(almost)
Run along or get trampled:
No companycan match chinawhenIt comesto low costmanufacturing. The onlyreason
manycompaniessurvivedthe Chinesecompetitionisbecause of the brandrecognition, goodwilland
quality.Sothe multinational companieswhichhadenjoyedyearsof competitionfree monopolies
noware facingfierce competitionbythe Chinesecompanies.Sothese companiesshouldrevisittheir
policyandstrategiestosustaingrowth amongthe Chinese companies.The perfectlocal example for
thisisour Sivakasi crackerindustry.Ithad beenenjoyingmonopolyfordecadesonlyuntil the arrival
of the Chinese crackerswhichtookthe marketbyfloodandnow the local manufacturersare
strugglingtocope up .Many local small scale industriesaroundthe worldisfacingthisfate.Thisis
the reasonwhyChinaaccounts for 20% of Global GDP withjust2% share of world’slandmass.On
the positive side the manufacturingsectorsare able toacquire capital goodsat a cheaperprice than
the Europeanequivalentwhichare overpriced.
Conclusion
Livingina globalisedworld,we needtounderstandthatourcompetitionisnotwithinthe
bordersand acrossit. Sowe needtopromote entrepreneurship andmake the mostof our
intellectual capacitiestosurvive inthiscompetitive world