One of the hottest topics in the financial markets is that of China's captivating growth story. The Chinese economy underwent a major metamorphosis in the past 20 years, moving from a rigid centrally planned structure towards more influence from free market forces. The reforms included the privatization of state owned enterprises, the establishment of Special Economic Zones with tax incentives to attract foreign direct investment, the lifting of price controls, and the abolishment of credit quotas in the banking sector.

The surge in growth has stemmed primarily from China's
gradual initiatives to becoming a full member of World Trade Organization (WTO). It all began with China's membership in
the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO in 1986. After the WTO replaced the GATT, China was given until 2005 to open and liberalize their economy to better integrate into the world economy and give a basis for confidence for foreign investors and trade partners. At that time, exports increased from 5 to 10% of China's GDP, which accounted for 1% of world exports. Exports now represent close to 30% of GDP and 5.8% of world exports. In 2005, textile quotas are expected to be eliminated, leading many analysts to conclude that China will become an even stronger powerhouse over the next few years. Once the quotas are eliminated, the lowest-cost and most efficient producers will be able to export as much as they want. According to a WTO staff report released in August 2004, in the U.S. clothing market, China's share could shoot up to 50 percent from 16 percent in 2002, and in the E.U. clothing market, China's share is forecasted to rise to 29 percent