The spectacular festivities that opened the Beijing Olympics visually portrayed the optimistic forecasts of economist Jeffrey Sachs, who said, "China is the most successful development story in world history."

Most economists feel that sometime in the 21st century, China will again enjoy the world's largest gross national product after a hiatus of two centuries.

 

In 1978, the effective leader of the Chinese Communist Party, Deng Xiaoping, urged the regime to focus on economic development and not ideology to guide the nation.

Fareed Zakaria, in his book "The Post-American World," reported the extent of Chinese success since 1978:

* It has achieved more than 9 percent annual growth, the fastest rate for any major economy in recorded history and close to three times greater than American growth during a similar period.

* About 400 million people were lifted out of poverty, with the average Chinese citizen's income increasing nearly sevenfold.

* It is the world's largest producer of coal, steel and cement.

* It has become the world's manufacturing workshop.

* It is the world's largest holder of money, with foreign exchange reserves of $1.5 trillion.

China has become a worldwide low-cost, high quality economic powerhouse.

However, for various reasons, China could stumble:

* The country suffers from overcapacity in the low-end manufacturing of products such as cheap toys, steel and retail goods.

* It has shortages in power, rail, renewable energy, coal and cement.

* It must clean up its environment to prevent further shortages in potable water, clean air and productive soil.

And China needs to update its financial system to prevent continued support of large state-run inefficient companies and to energize its highly productive private sector.

Tom Friedman, in his book "The World Is Flat," highlighted the advantages of China going to a mixed economy because it enhanced the free movement of the best practices, the best products, the most innovative ideas and the most competitive prices. The combination of free trade, open communication and technological advances at breakneck speed will challenge America's pre-eminence.

Zakaria describes the benefits of the post-American world.

Many nations have contributed in industrial, financial, educational, social and cultural areas.

That is, an economically healthy United States, Europe, Japan, Russia and China competing in the marketplace, and not on the battlefield, creates a win-win environment.

Certainly, the massive trade deficits incurred by the United States with China have caused tensions. The General Administration of Customs said that China reported a $262 billion surplus with the United States in 2007.

Top economic officials from both countries spend considerable time trying to reduce frictions over issues such as trade, currency, environment and civil rights.

Yu Yongding, a Beijing-based researcher at the Chinese Academy of Social Sciences, a government think tank, feels that China's enormous trade surplus is not good for either America or China.

He pointed out that for the United States and Japan, trade is equivalent to about 20 percent of the value of gross domestic product. For China, it is about 75 percent.

While China's economic growth remains robust, its stock market since October 2007 has been one of the world's worst-performing. Reuters reported on Aug. 11 that the Chinese stock market was 60 percent below its October 2007 record.

The Shanghai Composite Index that had catapulted sixfold from June 2005 until last October stumbled because of several factors:

* Worries over continued appreciation of the yuan.

* China's producer price index rising about 10 percent over the past year.

* High shipping costs that have undermined Chinese export price advantages.

* The Chinese market trading at 50 times declared earnings, more than double New York's ratio.

* China's state control over 34 of its 35 largest companies on the Shanghai stock market is often at odds with openness, honesty and efficiency.

In conclusion, the Beijing Olympics have brought into our living rooms the reality that a large percentage of the world now competes and consumes in a competitive world economic environment.

Deng's historic 1978 speech and the fall of the Berlin Wall in 1989 tipped the balance of power across the world toward those advocating democratic, consensual, free-market-oriented governance."

"Citius, Altius, Fortius," which means "Faster, Higher, Stronger."

Let the games go on!