Rise of the Red Dragon

from the April 17, 2007 eNews issue

China has the fourth largest economy in the world, and the nation's red hot economy has been growing even faster than analysts predicted. For the fifth straight quarter the Chinese economy has grown more than 10 percent - with no signs of slowing down.

Made In China

Recently the World Trade Organization released its first batch of global trade statistics for 2006. According to the WTO, China has surpassed the United States as the world's second-largest exporter. Furthermore, at current growth rates, China is projected to overtake Germany as the world’s biggest exporter in 2008. Since 2000, China has more than doubled its share in world merchandise exports.

Meanwhile, the US trade imbalance with China grew to $232.5 billion, the highest ever with a single country. The United States has accused the Chinese of benefiting from an undervalued currency, illegal government subsidies, unfair barriers to foreign competition and widespread piracy. The United States filed two new complaints against China at the WTO on Tuesday over copyright policy and restrictions on the sale of American goods.

Record-Breaking Reserves

In November of last year, China's foreign currency reserves passed the 1 trillion dollar mark - setting a new record for the world's largest currency reserves and sparking a debate over China's economic policies. China's currency reserves have been growing at a rate of nearly 30 million dollars per hour. In just the first three months of 2007, China's foreign currency reserves have surged even higher, to over $1.2 trillion dollars.

Experts estimate that over 70 percent of China's record-breaking currency reserves are US dollars. However the Chinese Central Bank has announced plans to diversify their currency reserves. Besides China, other countries, such as Iran, Switzerland, and Russia have also announced that they plan to move reserves away from the dollar. At present, approximately two thirds of world trade is conducted in dollars and two thirds of central banks' currency reserves are held in the American currency which remains the sole currency used by international institutions such as the International Monetary Fund. This confers on the US a major economic advantage: the ability to run a trade deficit year after year. If more banks move away from the dollar it could cripple the US economy.

A New Era

In recent years China has transformed itself from an isolated communist nation into a growing superpower. If the 20th century was the American century, then the 21st century will undoubtedly be the Asian century.

In addition to its considerable influence on the international economic and political scene, China is a major player in Biblical prophecy. We find references to their involvement in both Isaiah and Revelation. For more information on China's role in prophecy see our briefing titled The Kings of the East.