China's Emergence: Prospects, Opportunities and Challenges We are grateful to Dong He for sharing his view; and to Paul Armington, Eliana Cardoso, Albert Keidel, Vikram Nehru and Alexander Yeats for their comments on earlier versions of this paper. An earlier version of this paper was submitted to the ICSEAD conference on Interdependence and New Directions for Development Policy in East and Southeast Asia.
Barring major disruptions, China will become the world's most dynamic growth pole, and could become one of the world's largest economies, if not the largest, by the year 2020. Industrial countries, especially Japan and the United States, are expected to benefit, while many developing countries may be put under competitive pressure. A simulation analysis shows that in the long run China will be resilient to adverse external developments, but in the short term, a shock such as loss of most favoured nation status in the US market could threaten the macroeconomic stability so important to its continued economic opening. Preserving open trade relations is in the best interest of both China and the United States.
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Document Type: Original Article
Affiliations: 1: Magdalen College, Oxford 2: The World Bank 3: The World Bank and Nagoya University
Publication date: November 1, 1996