China is already a global power today but with their size, population and history they have a lot more room to grow. Probably the most signifigant factors are the post-Mao changes with the country moving away from communism to a system of capitalist economic features combined with a socialist political system. Their liberalization in areas like property ownership, foreign investment and personal wealth set the stage for explosive growth.
The economic growth began as primarily exports. Their low cost of labor and their government's control of currency valuations allowed them to produce materials for export at very low prices. Improvements in shipping efficency like containerized cargo and world wide delivery services like UPS and FED-Ex made the distance less of an obstacle.
The Chinese have now moved into in the second growth phase. The profits from the exports have built an enormous consumer base with money to spend that's now fueling the economy internally. Their current concern is inflation from their growth rate.
The attractive prices of goods from China have put producers in the US and Europe at a competitive disadvantage. In tough economic times businesses are forced to get more competitive or they're gone. In the past three years, even more buisnesses have closed plants in the US and contracted production in Asia in order to survive. Those jobs aren't coming back.
In addition to the loss of jobs, China is buying US bonds in volume. They now hold a huge chunk of the US National debt.
There are two sides to the coin. The competitive disadvandage creates much anxiety for the U.S. Economy but the mutual dependance between the U.S. and China probably makes for a safer world.
