Three decades of rapid growth andstructural change have transformed China into anupper-middle-income country and global economic powerhouse.China's transformations over this period wieldedincreasing influence over the development path of othercountries, either directly through bilateral trade andfinancial flows or indirectly through growth spillovers andterms of trade effects. Looking ahead, as China embarks on anew phase in its development journey, a phase characterizedby slower but higher-quality growth, the economic landscapefacing the developing world is expected to be redefined yetagain. As China changes, so will its interactions with theoutside world. China is expected to remain both a market anda competitor, but its changes are likely to lead to newopportunities for many and new challenges for some. Keyquestions in this respect are: (i) how will the level andcomposition of China's import demand evolve as itseconomy slows and rebalances; (ii) to what extent will thepresumed out-migration of labor-intensive manufacturingmaterialize and create new opportunities elsewhere; and(iii) how quickly will China move up the value chain andredefine its competitive advantage in the globalmarketplace? How these uncertain long-term developmentsaffect individual countries will depend on differences intotal supply chain costs, resource availability, andinnovation capability. As in the past, China'stransformations are expected to put formidable pressure oncountries to adapt and reform, requiring both political willand entrepreneurial capacity, in a collective race wheresuccess will be measured against a rapidly moving frontier.
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