In the twenty first century, China has been driving the world’s economy at a very fast rate. In this regard, some economists argue that China is likely to become the world’s largest economy, thereby overtaking USA. In fact, China is currently the world’s leading exporter and manufacturer. Furthermore, the country is the largest global consumer of oil, depicting a high level of manufacturing activities. The growth of the Chinese economy may be observed from the dimension that in the year 2011 alone, it managed to pull half of its population above the poverty level. At the lowest level of economic analysis, the entire Chinese population is expected to be living above the poverty line by the year 2030, if the economy grows at the same pace. On the other hand, United States’ economy has been growing at a much lower rate during the last decade. This can be attributed to poor macroeconomic policies that USA has been adopting viz. expansionary monetary and fiscal policies to finance war: in Iraq and Afghanistan. However, the American government has realized that China is likely to overcome it as a superpower. In this regard, the government has reduced its expenditure on military activities by 10%. Factors that have been driving the Chinese economy include: Government intervention and innovation, people power, rapid urbanization, traditions and modernity, and an international outlook.

People power

Unlike in many economies, where a large population has been viewed as a burden and a hindrance to economic growth, Chinese large population is a key driver of economic growth in the country. This can be viewed from the fact that the country’s population is comprised of a large and growing middle class. This group of people provides local firms with a mass of economic activities. Additionally, the large middle income class has led to the rapid increase in demand for durable goods such as automobiles and services. It is rather interesting to note that the Chinese lower income class has also contributed to the country’s economic growth significantly. This is because availability of such a population has enabled firms to access cheap labor, thereby, lowering the cost of production. In fact, access to cheap labor is an essential competitive advantage that China possesses over USA. This has made Chinese products more competitive in the global market.

Another way, through which people’s power is transforming the Chinese economy, is through acquisition of relevant educational skills. In this regard, it is important to note that China has undergone through the largest educational revolution ever in the history of mankind. Empirical literature depicts that in the year 2004, while USA produced less than 75,000 engineering graduates, China produced more than 600,000 of them. Furthermore, China has increased the provision of Science and Technology doctorates from 125 in 1980’s to 15,000 in 2000’s. In fact, it is projected that by the year 2015, more than 90% of doctorate holders in engineering field will be in Asia. The contribution of engineering field to any economy should not be overlooked. In fact, this is a field that will greatly influence China’s ability to overcome USA as a superpower.

Government Intervention in Innovation

Chinese government has also contributed significantly to the revamping of the country’s economy. In this regard, the government has created an enabling environment that facilitates research and development. It is important to note that research and development is a fundamental growth engine to any economy. As such, the Chinese government has increased expenditure in this area. Besides, the government has embraced a favorable taxation policy, where major research institutions are given tax incentives. This has raised the country’s level of technology and productivity, by reducing the cost of doing research.

International outlook

Focusing on the international market is another factor that has given China much power in the global economy. Though China has a large domestic market, it continues to seek for foreign markets for its goods, services and technology. This move has negatively affected other major economies of the world viz. USA and Japan, as their share in the global market continues to reduce, with China’s increased participation. Empirical studies show that over the last decade, China’s share in the global market for highly technological goods has increased from 5% to more than 20%. In the same period, the export of such goods yielded a 15% revenue increase to China.


Asia is becoming urbanized at a fast rate. It is projected that by 2030, about 60% of the Asian population will be living in urban areas. The creation of megacities in China is a key driver to the economy through agglomeration of economic activities. In economics perspective, urbanization contributes towards economic growth of any country; through providing large markets, improvement in infrastructure and diffusion of technology. In China, economic activities in cities contribute to about 65% of the country’s total GDP.

Traditions meeting modernity

Some activities that are traditional in nature have been very important in the modern world. In this regard, China has a tradition in paper and printing and also traditional medicine. These traditions have been combined with the modern technology to produce highly competitive products. For instance, China is modifying its traditional medicine, using modern technology. Such medicines have become very competitive in the global market, further increasing China’s power in the global economy.

Constraints and Challenges

The above analysis does not imply that China is the world’s superpower. Rather, it only offers a suitable ground for discussing the fact that China has some chances of becoming the superpower. Despite the impressive progress that China has made during the last three decades, there exist some impediments that continue to narrow down the chances of this country becoming the superpower. These impediments include: corruption, high economic divide between the rich and the poor, high dependency ratio, pollution and environmental pollution. These problems are very severe as to demand immediate attention, failure to which China’s effort of becoming the superpower will come to naught.

Income Inequality

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Despite registering an impressive economic growth, China is characterized by a wide gap between the rich and the poor (Naughton 38). Fundamental to this discussion, it is important to know how economic gap is measured, for comparison purpose. The best way to measure the economic gap between the rich and the poor is by making use of economic tools. Here, income inequality is measured on a standard scale called the Gini index; where a value of one hundred indicates perfect inequality and a value of zero indicates perfect equality. The country’s high rate of income inequality can be depicted by its position in the Gini index. In the years 2005 and 2007, China was positioned at 49.6 and 40.8 in the Gini scale respectively. Though this signifies a considerable decrease in inequality, this rate is still far much higher than that of USA. It should be recorded that USA has the least inequality level in the world. In fact, it is currently positioned at 0.45 marks on the Gini scale, implying less inequality. Furthermore, China suffers from a large income disparity between rural and urban areas. In this regard, the per-capita income in urban areas is thrice that of rural areas.

It is important for China to address the problem of income inequality to increase its chances of becoming a superpower. This is because economic models argue that there is a negative correlation between income inequality and the long run economic growth. This implies that China can’t continue enjoying impressive growth of its economy, if nothing is done to reduce income inequality. In any case, a superpower country implies that all citizens of that country have economic power. Therefore, in a situation, where growth is only shared by few individuals in a country, superpower is impossible to attain. This is because only a few people are economically powerful, while the rest of the population remains economically weak.

Population Explosion

China is arguably the most populous country in the world (Spence 13). Though the Chinese population is an essential ingredient for economic growth, it is important to conduct a detailed macroeconomic analysis of this population. This is because in economics, absolute measures are less important than relative measures. This simply means that it is important to analyze the growth of the China’s economy in relative measures, so as to create a more meaningful conclusion. It would yield less economic sense to compare China’s and USA’s economies in nominal terms. This is because though China’s GDP has been increasing at a faster rate than that of the US, in absolute terms, the per-capita income in the US remains far much higher than in China; since the population growth rate in China is higher than in America. This implies that the living standards in USA are still better than in China. If China does not control the population explosion it is experiencing, there are chances that the population growth rate will be greater than economic growth rate, at a time in the future (Eckstein 19). This means that the economy will not grow, but stagnate, reducing chances of the country becoming a superpower.


Corruption is prevalent in China. In fact, Transparency International ranked China in position 78 out of 179 countries in the world on the corruption scale. Solving the corruption problem is a condition precedent to China becoming the world’s superpower. It is important to note that as opposed to China, corruption is very low in America. However, the Chinese government has launched a war against corruption. Paradoxically, corruption in China is more prevalent in government regulated agencies than in the private sector. For instance, the banking and the construction industries are regulated by the government, yet they have recorder the highest corruption rate. Corruption deters economic growth by promoting inefficiencies and distorting important economic decisions like pricing. Empirical studies suggest that in China, companies that get public tenders are not the most efficient. Rather, they bribe to obtain important tenders. This has led to poor quality delivery to the public. For China to think of being the superpower, it must endeavor to be a corruption free nation (Sheng 23).


Though this seems to be purely an environmental issue, it has important economic implications. In the recent past, economists have been analyzing the correlation between China’s economic growth and the environment. Economists appreciate the fact that a clean environment is core in achieving a sustainable economic growth. This is an area that China continues to overlook. China’s economic growth has been shaped by industrialization, which, in turn, causes severe effects to the ecosystem. It has been recorded that China has the dirtiest atmosphere in the world. In fact, 80% of the dirtiest cities in the world are found in China (Cannon 47). Furthermore, industrial activities in China lead to the formation of acid rain, which, in turn, causes damage to crops and forest worth more than $ 720 million annually. Besides, air pollution in China causes more than 745,000 premature deaths annually, in the country. Moreover, more than 20 million people suffer from respiratory diseases every year. Additionally, China is becoming a place that is unsafe for human inhabitation. In this regard, around 71% of the water bodies in the country are polluted, implying that the population faces a shortage of safe and clean water. Lastly, more than 60 % of the desert area in the country has resulted from over-cultivation.

The above analysis shows that there is an urgent need to rethink about China’s economic development. A superpower country is a country with a sustainable economic growth. From the above analysis, economic growth fueled by industrialization adversely affects other areas such as agriculture, which could help sustain the growth. China’s growth strategy is, therefore, more complicated since the growth in some sectors like manufacturing implies a negative growth in other sectors like agriculture. It is important for China to get back to the drawing board and reformulate its production techniques (Song 13). The measure that China should consider putting in place is seeking for alternative energy sources, so as to reduce overdependence on coal; which is the major cause of pollution.


Though China’s economy is growing at a faster rate, there is a need to consider the above discussed factors, to ensure that the country enjoys a sustainable growth. This is inevitable, if China will ever become a superpower. Besides, it is important for China to dedicate much attention to areas, where it possesses competitive advantages over the US.

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