Impact Of China On World Economy

World Economy

An economy is the area of production, distribution, and trade as well as the consumption of goods and services. The economy basically deals with the allocation of resources, production of goods, and consumption. An economy can be on a local scale or an international scale.

The world economy is very complicated. It refers to the economic system controlling all economies in the world. It deals with the entire world’s consumption, allocation, and production. Thus it has a lot of factors that go into determining its condition. However, as many of us may know, some countries have a greater influence on it in comparison to others.


Every country has some impact on the world economy even if it’s every minute. However, some countries have a massive impact on the world economy. Industrial powerhouses such as China, the United States Of America, Japan, and Russia have a great impact on the world economy. This is because they produce and consume such large amounts of goods and services that the world is directly affected by them.

In this article, we will specifically be looking at China and why it has such an impact on the world economy as a whole.


While there are many factors that go into making China the powerhouse it is, the population is definitely one as well. China has a population of around 1.4 billion. That is about 17.8% of the entire world population. So technically, almost one out of 5 people in this world should be Chinese. That is massive.

This population has made them major influencers on the world economy. Any product that the Chinese economy makes or consumes will ultimately have an impact on the world economy. The population also allows for a massive labor force. The Chinese labor force is one of the most efficient and largest in the world. Their sheer size alone has resulted in their ability to produce millions and millions of products every year.


Another important factor that a lot of people overlook is that China has a very high rate of savings. Their domestic savings outweigh the domestic investment. This has made China a net lender. That means that they supply loans in the international economy. Thus they have a great impact on it as well. This high level of savings has helped China support large investments and be crucial to the world’s supply of loanable funds.


China has an astounding number of manufacturing businesses. These include both local and international firms. Most firms outsource their production to China. Why? Because it’s cheaper. Big names such as Apple have their assembly plants in China from where the final product is shipped all over the world. This is because labor is a lot cheaper in China as compared to other developed countries.

The high population results in a large quantity supply of labor. This makes labor rates cheaper. Thus a lot of manufacturing firms locate themselves in China. This has made China the manufacturing powerhouse of this age.

China manufactures items of all types and categories. You can find car light manufacturers such as Sunway car lights OEM or something as built as airplanes. Everything is manufactured in China. Or even better, you can just google how to find a supplier in China and you’ll get hundreds and thousands of results for suppliers of all kinds.

Technological Advancements

What happens when you combine the world’s largest workforce with the most advanced technology? Productivity rates shoot through the sky. For years China was not considered to be on the cutting edge of technology. It was advanced but not as much as other big nations such as the United States. However, it has recently been catching up.

These technological advancements have allowed China to increase its production rates substantially. In the past, we have seen some other economies develop rapidly too. However, after some time they become stagnant and fall into the middle-income trap. This is because they could not sustain high levels of growth over a long period. China could have faced the same consequences. However, it appears that they are making efforts to avoid that by incorporating technology and other policies.


There’s no challenging the fact that China’s economic size is massive. Many economists argue that China has overtaken the United States of America as the biggest economic power today. Its GDP share in 2017 was a whopping 18.3%. This just goes to show how much influence China has on the world economy.

China’s impact on the world economy will continue to rise as it grows even more. The technological advancements combined with their labor force are destined to make them an economic super power. They have already solidified their place as the leading economic power of today.

In conclusion, the above-given factors are just a summary of why China has such a great impact. There are a lot more factors that go into making it as impactful as it is. Good leadership and sound economic decision-making are always key to an economy and China possesses both.


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