preview

China 's Economy Is Becoming The World 's Second Largest Economy Behind The United States

Decent Essays

1.1 Background
Since initiating a series of economic reforms and adopting the open policy in 1978, China’s economy has experienced a spectacular growth and achieved a remarkable success over the past three decades. In particular, according to the government figures released on August 16th 2010, China’s economy in the second quarter has slightly surpassed Japan’s in terms of gross domestic product. This milestone suggests that China is becoming the world’s second-largest economy behind the United States. At the same time, the opportunities created by the striking economic growth have led China’s most important investment markets, stock and real estate markets to undertake an enormous transformation and development. On one hand, since the two stock exchanges (Shanghai Stock Exchange & Shenzhen Stock Exchange) were launched in 1990, China’s stock market has served as a vehicle for financing and supporting the development and reform of State-Owned Enterprises. That is, within China’s bank-dominated financial system, stock market was restricted by a series of regulations and assumed only a secondary role in the financial economy. Not until the late 1990s did the stock market acquire an increasingly important strategic role in China’s economy. The stock market was vigorously promoted by relaxing regulations imposed on it and experienced tremendous growth in size and liquidity since the early twenty-first century (Lai & Yang, 2009, p.409-410).
On the other hand, as same as the

Get Access