China is poised to overtake Japan in 2010 as the world's second largest economy, weighing in at about 40% of US GDP.
According to leading economists, the dominant underlying force propelling China's growth is the continued migration of people from the agricultural sector to the more modern economy - industry and services.
A transition of surplus labour from agriculture to industry and services would increase efficiency and align the Chinese economy with OECD. Thanks to the economic downturn, China’s stimulus package has produced much needed infrastructure that will buttress future growth.
But in the long run, China must carefully steer its economy away from reliance on cheap exports towards domestic consumption to make its roaring surge more sustainable, and forestall a Japan like bubble.
How China will spend this new capital remains an open question. China’s record as an ethical and responsible actor on the world stage is not inspiring. For instance, China maintains that “Western Style” democracy does not suit Africa. China supports despotic regimes in place like Zimbabwe; it has no qualms about doing business with murderous leaders such as Sudan’s Bashir. In October 2009, China struck a $7 billion deal on minerals and infrastructure with Guinea's military junta.
My sense is that as China waxes and the West wanes, the modest democratic and human rights gains in most of Africa could founder. Buoyed by “no strings attached” cash from China, a new wave of African dictatorships could emerge.