Does China hold the key to global recovery?

China has often been described as the sleeping giant of the world economy, but over the last 10 years it is apparent that the giant is awake.

The dynamics of China economic structure is enigma to most westerns, due to its unique balance of a single party communist government and free market capitalism. For all China's strengths, is it able to lift the global economy out its deep recession?

Since the end of the cold war China has been experiencing the most remarkable realisation of its economic potential, this has helped to establish itself as global economic superpower. This was built on the back of cheap labour and natural resources, this has made China the world's production house. China is the second largest net exporter in the world and these exports are directly responsible for a sustained economic growth rate of approximately 8%, over the last 15 years.

China has shown remarkable resistance to the economic downturn and it is believed that the economic growth may accelerate to 8.5 percent, in the 3rd quarter. This is partly down to moderately loose monetary policy position by the Chinese government and a considerable fiscal stimulus package worth in the region of £250 billion. This optimism and growth is leading many investors and economist to believe that China's growth is enough to stimulate the world economy.

The development of the China's domestic consumer is the key, as the standard of living rises for the most populous nation on earth, their demand for raw materials and foreign goods will undoubtedly rise. The 1.4 billion Chinese, are in the process of westernisation and catching the consumer bug quickly. There are many socioeconomic factors behind the shift in spending patterns; most of it is accountable to the new generation of Chinese consumers who are heavily influenced by western media. This generation have migrated from the countryside to the newly built urbanised cities, in search of work and new opportunities. This has generated the fastest growing consumer market on earth; therefore, if China continues to demand foreign goods throughout this economic downturn it will add additional boost to global economies.

However, all the signs for China are not all positive in recent weeks there have a numerous jitters by investors, the largest of which caused a 5.45% drop in the Shanghai Stock Exchange (SSE). This is because there is feeling amongst more cautious or pessimistic economist that the fundamentals problems still remain in the global economies and that China is unable to survive on just domestic demand. This is reverberated by global trade falling by approximately 12%; this directly caused many factories to close and generated a high amount of unemployment.

There is another fundamental issue with the assumption that China is able to lift the world out of the recession, it just isn't large enough. Possible in five to ten years China will have the industrial might, to make up substantial amount of global consumption but as it stands, China only makes 8% of the global economy.

Unquestionable China's influence on the world economy is important, nevertheless a global recovery is impossible without the American and European consumers who make up 45% of global consumption. Without these two super-states in an upward economic cycle, it will be difficult for world economy to recover to pre-recession levels.