China's Industries: The Good, The Bad and The Ugly

From day one, the tantalizing prospect of China's 1.3 billion potential customers has loomed very large. Every investor, entrepreneur, and promoter has looked at the size of the Chinese market and seen staggering profit potential. The astonishing growth of the Chinese economy over the past two decades has created a gold rush mentality among new China watchers who seem to believe anything Chinese is assured of investment success.

From day one, the tantalizing prospect of 1.3 billion potential customers has loomed very large. Every investor, entrepreneur, and promoter has looked at the size of the Chinese market and seen staggering profit potential. The astonishing growth of the Chinese economy over the past two decades seems to assure success.

The Chinese economy has been growing at an annual average rate of more than 9 percent for the past 25 years. Questions have been raised about the sustainability of maintaining such high growth rates in the future. Chinese investment in infrastructure has grown many fold since the Chinese economy adapted to liberalization. According to a report provided by the International Monetary Fund (IMF) productivity growth has helped the growth of the Chinese economy to a great extent. Capital accumulation accounted for approximately 42 percent of Chinese economic output growth post 1979. The progress of economic growth has been faster in the greater China region, although not at similar rates comparable to China. The success story of the Shanghai economy, the performance of Hang Seng Index, the development of the Taiwanese economy, all have been noticed across the globe.