October 12th, 2010
02:26 PM GMT
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October 12th, 2010
06:55 AM GMT
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Hong Kong, China (CNN) - When I cover business and economics in China, I always remind myself of one astonishing fact – the market reforms initiated by Beijing in 1979 have pulled more people out of poverty “than all the aid programs we have seen throughout the world,” as Stanford economist Paul Romer recently put it.

In 1981, about 85 percent of Chinese were living on less that $1 a day; by 2005, only 15.9 percent of the population was living in extreme poverty. During that time 600 million people – or 10 percent of the population of the planet – escaped poverty in China.

This year, China eclipses Japan as the world’s second largest economy. Rather than doing a victory lap, Beijing is beset by a raft of new problems.

Chinese leaders face extraordinary international pressure to let its currency rise faster in value and abandon its loose peg to the U.S. dollar. The U.S. and European chambers of commerce have recently released reports claiming it is harder for foreign multinational companies to do business in China.

When Chinese Premier Wen Jiabao was in Europe last week, individual nations lined up to try to cement lucrative trade deals with the Asian giant while the European Union collectively spanked China for its currency value.

Speaking before the Greek parliament – which gratefully accepted $5 billion in financial help from Beijing for its shipping industry – Wen addressed this point by saying that China remains a developing nation despite its progress.

"Although China's total GDP and external trade are among the largest in the world, the basic reality about China - a populous country with a weak economic foundation and uneven development - has not changed," Wen said, according to China’s state-run Xinhua news service. He pointed out that China’s per capita GDP is only one-eighth of Greece’s and that poor people in China number three times that of the entire population of Greece.

So – China is a de facto leader in the world economy, yet still struggles on an individual level compared to populations in the developed economies of North America and Europe. And yet emerging markets, led by China, are pulling the world economy out of recession – a scenario never seen before.

It almost seems there needs to be a third way to describe China – neither developed (which describes its impact on the global economy) nor developing (which describes the average wealth of its citizens). Can China have it both ways?

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