After reading The Undercover Economist by Tim Harford, I began to understand the reasoning behind China’s rapid economic expansion. I articulated these findings in a presentation last May, which centered on the main points in Chapter 10 of the book.
The title of Chapter 10 is “How China Grew Rich.” However, China is not rich. Not yet. Millions of Chinese citizens live on less than $1 per day; well below the poverty line compared to the United States. See below for economic data.
As China began to modernize, investors realized the value in cheap labor. Moreover, less governmental restrictions led to outside investment, which would eventually increase their economic output to record levels.
I feel China is an economic hotbed, which will continue to increase output well into 2009 and beyond. As long as you have a tolerance for risk, foreign investments (like China) may be the best place to put your money, especially as the dollar continues to weaken relative to foreign currency.
View the main points from my presentation here
China vs United States economic comparison