So how did a communist country become so good at capitalism? Emma Joseph travels to Shagnhai for this week's Big Question: Why are so many people saying this is going to be China's century?

"In [The China of] 1949you would not imagine what China would be like in 1979, when we started the economic reform," Professor Shen Dingli of Fudan University tells the Big Question. "In 1979 you did not expect what would happen in 1989. And in 1989 one would not imagine what China today would be. It's a half superpower already."

Twentieth-century China lived through foreign invasion, a civil war, a communist revolution, and a famine that killed tens of millions. But over the past fifteen years there has been a dramatic economic change - the architect of which was Deng Xiaoping.

"In the past, the central government had control of every sector of industry including agriculture," says Zhang Jun, Director of the China Center for Economic Studies. "First they liberalised the farming system, they returned the farm to the family. From 1979 to 1984, Chinese agricultural production doubled and China for the first time became a net exporter of food." Improved rural living standards led to a demand for non-agricultural products, says professor Zhang, and the industrial sector wanted to copy the strategy. From the mid-1980s, Chinese industry began a process of industrial decentralisation, offering incentives to rural entrepreneurs.

"In the early 1970s China exported very little manufactured goods," says Professor Zhang. "Today it is a centre for manufacturing in the world." Toys, textiles, televisions, mobile phones, and increasingly, hi-tech computers are made in China and sold abroad - its biggest trading partners are the European Union, the US, and Japan.

"There are almost half a millionforeign manufacturing firms in China," Professor Zhang tells Emma. "I think the biggest attraction is the cheap labour."

But it's not just for export, as living standards rise the local Chinese market is growing too. And in China that potential market is huge - it has a population of 1.3 billion people. Now, China consumes more basic agricultural and industrial commodities than the US - it is the biggest consumer of grain, meat, coal and steel in the world.

"It's exciting to work in a market like this," says Paolo Gasparrini, President of L'Oreal China. "It's an experience you probably can have only in China!"

Is this expansion unprecedented? "During the Tang Dynasty (618-907AD) there was a boom in trade between China and the outside world," says Chen Nianqi, an economic historian from Shanghai Academy of Social Sciences. Chinese ships were reported as far away as the Persian Gulf. During the Song Dynasty (960-1279AD), the port of Quanzhou in southern China was said to be crowded with foreign boats.

Gu Jian Jian, director of the Maritime Museum of Jiaotong University, says it was during the Yuan Dynasty (1279-1368) that China's sailors travelled the furthest. And the Ming Dynasty (1368-1644) saw the emergence of an imperial adventurer called Zheng He who sailed the oceans with a huge fleet of boats and 27,000 sailors. His biggest ship, which could carry 1000 men, was larger than any that had ever been built.

So is China herself predicting this will be China's century?

"We don't say that too much," says Zhang Jun. "The living standard has been rising but is still low. We have a long way to go, but if China's economy keeps on growing and the US economy is stable, over time we will shorten this gap."

"I doubt the very quotation," says TV journalist, Yang Lan. "I see a lot of difficulties and challenges facing this country - a massive destruction of the [Chinese] environment and a lack of sustainable resources. Half the rivers and drinking waters are polluted, and of the top ten most unliveable cities in the world more than half are in China." This growth rate is not sustainable, she says. "Everyone is thinking of making more money. That's a great thing, but if they are only focussed on his own interests, then who is caring about the whole country?"

"I see people who think China is growing too fast, posing a threat as a [potential] superpower. To them I want to say China has enough domestic problems like corruption, the destruction of the environment, the disparity in wealth. Other people think China will have too many crises and will collapse at any time. To them I want to say, as long as most people in this country are better off, the snowball will move forward with its promises and problems. Only moving forward can give it a chance…"

This edition of The Big Question was first broadcast on 26th February 2005

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