Upon taking control of the Communist Party of China in 1978, new paramount leader Deng Xiaoping inherited an economy that was very primitive for an industrialised nation, so set about replacing Maoist class struggle with reform and development. His famous quote of the time when referring to manners of growth was "It doesn’t matter if a cat is black or white, as long as it catches mice." That might seem very mild, but compared to what the population was used to reading from the late Chairman Mao, bromides such as "The contest of strength is not only a contest of military and economic power, but also a contest of human power and morale", this was a radical proposition. To illustrate the scale of the task Deng and his politburo had before them, in 1980 China's gross domestic product was estimated at around US$191 billion, or about $195 per capita given the population that year was around 982 million. By comparison, in 1980 Australia's GDP was not that much lower than the PRC's at US$150 billion, with a GDP per capita of $10,200. With Australia's population at the time being 14.7 million citizens, that meant that despite China having 66 times as many people, the Australian economy was 52 times more productive.
And Deng's reforms obviously worked. At the time of his death in 1997 Chinese GDP was approaching US$1 trillion, and GDP per capita was almost US$1000. To return to the above listed benchmark, this was now double the size of the Australian economy, and the difference in productivity had roughly halved. In 2006 the PRC overtook the United Kingdom to become the world's fourth largest economy, the following year Germany, and by 2010 China was finally ahead of Japan, with eyes on the global leader for the past century, the United States. In 2008 China hosted the Summer Olympics, and for those with a knowledge of history, the opening ceremony of the games was illustrative. It celebrated thousands of years of Chinese culture, and showed off the dynamic emerging China of the 21st Century. Missing was anything from recent history; at least before the world's gaze the Century of Humiliation had been banished. The term "rising" was inescapable and dragons replaced Russian bears in the editorial cartoons of western broadsheets. Foreign study of Mandarin increased, although it was also said at the time there were more Chinese learning English as a second language than there were native English speakers.
However just three weeks after the Olympics concluded with a spectacular closing ceremony and China topping the medal table, on the other side of the world, on September 15, Lehman Brothers suddenly collapsed. This was a key moment when the United States' subprime mortgage crisis triggered what became the Global Financial Crisis, which lead to The Great Recession. While there were multiple causes including the subprime mortgage sector in the US, the excessive risk taking by investment banks such as Lehman Brothers was symptomatic of mistakes of the broader financial industry that had spent the previous thirty years deliberately unlearning the lessons of the Great Depression. Governments responded with big stimulus spending in order to compensate for the sudden market contraction, but even with all this additional money to prevent job losses and prop up spending almost every major economy went into recession. China was one of the few that did not, yet the very thing that helped it not only avoid an economic contraction but enjoy another decade of strong growth is now strangling the PRC and will contribute to its decline.