China in the 21st Century: Expectation vs. Reality

Corporate Finance & Restructuring

May 28, 2015

China spent much of mankind as the world’s most prosperous country. Now it is back on top. But it isn’t the China many expected at the turn of the century: one with double-digit growth, a powerful military and dominant corporations. Neither has it supplanted the U.S. in terms of soft power and the cultural beats that help define empires. On this measure it is even further off.

In short, it may have overtaken the U.S. this year as the world’s biggest economy in terms of purchasing power parity, but it is not a true 21st Century super-power. Not yet.

Instead, the People’s Republic remains focused on shoring up a faltering economy, taming an overheating property bubble and jealously protecting its borders.

Add to this the political battle to eradicate corruption from the upper echelons of government and the emergent picture is of a country fighting itself and others for an identity.

The picture looked a little different at the turn of the century when China’s first five-year plan of the 21st Century called for broad reform, foreshadowing the difficulties the country would have in terms of the balance of its economy.

It called for a shake-up of its state-owned enterprises, an end to business monopolies, the development of its own technology expertise and the embracing of foreign investors.

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