China in a Globalized world

This paper analyses the macroeconomic reasons for the Chinese boom msince the mid-1990s. It is argued that the stable growth performance of China would not have been possible without the strategy of unilaterally fixing the exchange rate, which has been implemented since 1994. This strategy was successful because it was accompanied buy a reform of the wage-setting regime in the mid-1990s, ma heterodox macro-economic demand management that has addressed the country's needs and a rather closed capital account. This arrangement has made it possible for China to both master the challenges of globalization and modernize the domestic economy at the soma time. Without this macroeconomic complement to favourable microeconomics conditions,