Over the past 30 years, China has enjoyed an annual average growth rate of 10 per cent. This is remarkable, especially when considering the fact that China has been ruled for the majority of its recent history by a communist regime. Like many of their neighbours in the East, China appears to have found the formula for economic success. In contrast, here in the Western world, we continue to struggle to achieve sustained periods of economic growth that are not followed by massive depressions, much like the one we are now experiencing.
China is the second or third largest economy in the world depending on the gauge utilized i.e. value of trade or nominal GDP. China is the largest exporter in the world. What does China do differently from the economies in the West? Despite great pressure from the US, China maintains a "weak currency" policy. A measure which is unwaveringly supported by their Central Bank and ensures that Chinese exports remain competitively priced in Europe and the United States. However, the US claims that this currency management is equivalent to a subsidy on exports. In 1995 the Chinese currency, the Yuan, was pegged at 8.22 Yuan per dollar. One decade later in 2005, the Yuan was pegged at 8.11 per dollar. Today the exchange rate is 6.7918 Yuan per US Dollar. Over this period, the United States' trade deficit with China grew from US$34 billion to US$266 billion.)