It's the world's third-largest economy after the U.S. and Europe, but it will likely account for more of this year's global economic growth than both the others put together.
That, briefly, is why people in a trading country like Canada should care about the prosperity of China, whose expansion has such a powerful effect on the prices our exporters get for everything from grains to metals to oil.
And happily, it's looking as if China is pulling out of a slowdown that could have led to what analysts euphemistically call a "hard landing."
Such a development, which looked plausible until just recently, would have been another blow to the world's already mediocre growth. Hardest hit would have been resource exporters like Canada and Australia.
Indeed, there are still reasons to be cautious about predicting a smooth path for this exceptionally important engine of world growth. The big one is the ongoing uncertainty about the ability of Europe to keep patching up the cracks in its finances.
But absent an economic collapse in Europe, the world's outlook is getting brighter, driven largely by China, and with a helping hand from the belatedly resurgent U.S.
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Yan Wang, managing editor of BCA Research's China Investment Strategy publication, is one of the Canadian analysts who follows the emerging giant the most closely. While he's still keeping a wary eye on the troubled economies of Europe, some of which are shrinking again, his outlook for China continues to brighten.
Even though Europe is the single biggest export market for China, stagnant European economic performance won't really hurt Chinese exports unless a renewed financial crisis descends into a generalized meltdown.
But so far, the renewed declines in big economies like those of the U.K. and Spain are gradual, largely offset by continuing expansion in other countries, most notably Germany.
Meanwhile, the U.S., another huge market of similar importance to Europe, has shown increasing signs of strength since its debt crisis last summer.
Bottom line for China's export picture: after falling at an uncomfortable pace for a while, it's now showing signs of a significant turnaround, supported by growing sales to the U.S. Overall, new orders are now rising and global leading economic indicators are increasingly positive, showing the prospect for further gains.
Still, there's an even bigger concern, one that spooked some investors badly: the fear that China's domestic economy would crater if overheated housing markets collapsed. This, along with a generalized government squeeze on spending and monetary policy, might have crushed growth engines like property development and infrastructure construction.
That concern, which centred largely on panic about a potential Chinese housing bubble, may have been overdone. Now it is fading.
Certainly there are fewer signs of distress today than one could find last year. Housing sales are rising again after a two-year slump, helped along by easier credit for first-time buyers, while property developers' shares have rebounded strongly from a lengthy, steep decline.
The underlying cause of this improvement seems to have been a timely shift in government policy that loosened the purse strings for spending on infrastructure projects and simultaneously eased monetary policy, resuming the flow of corporate credit.
Lending standards of Chinese banks have eased recently, said Wang, and a leading indicator he watches suggests that this easing should continue for at least the near future.
"I feel more certain than I did a couple of months ago that China is re-accelerating," Wang said.
While the sustainability of this uptrend will remain vulnerable until we get past the danger of a collapse in Europe, he said, "it is very encouraging news" at a time when the world economy badly needs a boost.
Source: The Montreal Gazette