As little as 50 years ago, China was an economically isolated nation struggling with extreme poverty. In 1978, key reforms were introduced and China was brought onto the world stage. Between 1978 and 2008, the size of the Chinese economy grew by an average of 10% a year, swelling to almost 50 times its original size.
Over the past decade, the rate of growth has slowed, reflecting the larger size of the economy. But the country has still notched up an impressive average growth rate of 6.5% since 2013. For comparison, the US has been recording growth rates ranging from around 1.5% to around 3% in the decade following the 2008 crash.
China’s strong recovery from the pandemic has accelerated this trend, with China expected to contribute more than a fifth of the total global increase to GDP in the next five years.
A major factor in China’s economic rise has been its massive network of factories that manufacture everything from toys and electronics, to aluminium and chemicals, leading China to become the world’s largest exporter.
With a population of 1.4 billion and rising household wealth, China also has the fastest-growing consumer market in the world – around 400 million people are now classified as middle class. This means there is more money to be spent on domestic consumption, which will help buoy the economy during periods of economic slowdowns.
According to forecasts, Chinese consumption is expected to grow by about US$6 trillion from today through 2030. That sum is equivalent to the combined consumption growth expected in the US and Western Europe over the same period. This level of growth will be key to China becoming the world’s largest economy, especially as it looks to rely less on its exports.