Question

Analyse the basis of projecting China to overtake the US America to become the world's largest economy.

Hint:

Think of the 1978 reforms, the open door policy, very high growth and the strong export base of China.

Answer 1

Step 1: Understanding the question:
The question asks why China is projected to become the largest economy in the world and overtake the USA.
The basis lies in the change that began in the Chinese economy from 1978 onward.
Four points, one for each mark, will cover the answer.

Step 2: Point 1: Economic reforms from 1978:
China started market oriented reforms in 1978 under Deng Xiaoping.
Reforms began with agriculture and then moved to industry, trade and the opening up of the economy.

Step 3: Point 2: Open door policy and foreign investment:
China opened its doors to foreign capital and technology and set up Special Economic Zones.
Large foreign direct investment came in and the country became a base for manufacturing and export.

Step 4: Point 3: High and steady growth:
For decades China has grown at a very fast rate, far above the growth of the USA.
Its economy has grown many times over, and it has the second largest economy in the world.

Step 5: Point 4: Large population, trade and reserves:
A huge working population, cheap labour and a very large export trade give China an edge.
It also holds one of the biggest foreign exchange reserves, and it is a major member of the WTO.
If this pace continues, experts expect China to move ahead of the USA in the coming decades.

Final Answer:
The projection rests on four things: reforms since 1978, the open door policy, a very high growth rate and a large trade and labour base.