China has always been an important country in the world. With its increasing large population, it was determined by other countries that is has a lot of economic potentials. In just one decade and a half, China has transformed itself from a giant that use to live in poverty into a wealthy powerhouse to the world economy. With one-fifth of the world¡s population, China is now producing 4% of world merchandise and a proportion of global production. It has also one of the world¡s oldest and most influential civilizations. China has established three approaches to the world economy and they are establishing an alternative socialist system (1950s); isolating itself from the system (the 1960s to mid 1970s); and participating in the system again from the 1970s. China¡s economic system was quite similar to Soviet Union¡s because it is central planning system. However, after the 1950s, this central planning is broken into regional planning by different provinces in China. In anothe!
             r words, China has changed from a centrally based country in a regionally based country, in which different provinces produces different goods and servies. This change has encouraged the development of small enterprises, which are the main driving forces of Chinese growth. In 1978, China has liberalised its economy and start participating in the world economy. With its new market reforms in every sector, China¡s door has opened its economic door to foreign investors and freer trade in special economical zones. Beginning in 1994, China's economic structural reforms have begun new breakthroughs. Major changes have been made to sectors like personal enterprises, taxation, finance, foreign investment and foreign trade. At the same time, the Chinese government is speeding up its establishment of a socialist market economy system. Hopefully, this socialist market economic system can be in place by 2010. (Roy 1-5) Major Structural Reforms Reforms already launched: 1...