China is now the second-largest economy in the world and the world's largest manufacturer, surpassing the U.S. in this ranking for the first time. Its market exceeds that of the U.S. in industries such as automobiles, mobile handsets, and personal computers. China's gross domestic product has grown from $1.32tr in 2001 to a projected $5.87tr in 2011, representing an increase of more than 400 percent.
China continues to maintain an export-driven economy with policies that subsidize Chinese companies and undervalue their currency (renminbi or RMB). While the RMB rose by roughly 6 percent over the last year, it is still widely believed to be undervalued by as much as 30 percent to 40 percent. "For the first eight months of 2011, the U.S. trade deficit with China increased 9 percent over the same period in 2010. The U.S. trade deficit with China is now more than half of the total U.S. trade deficit with the world. In the year to date ending August 2011, the United States exported about $13.4bn in advanced technology products to China, but imported over $81.1bn in advanced technology products from China, for a deficit of about $67.7bn. This is a 17-percent increase in the advanced technology products deficit for the same period over the previous year, ending in August 2010."
The Chinese economy and its product exports are moving up the value chain. On a monthly basis, the U.S. now imports roughly 560 percent more advanced technology products from China than it exports to China. Exports of low-cost, labor-intensive manufactured goods as a share of China's total exports decreased from 37 percent in 2000 to 14 percent in 2010.
