China

The world's most populous nation with 1.3 billion citizens, China is in the throes of the greatest economic transformation ever seen. Its unprecedented period of sustained high-speed growth has shattered preconceptions about the limits of expansion and sent many economists scurrying back to their calculators. Since the mid-1980s, the Chinese economy has grown at around 10% annually, doubling in size every seven and a half years. It now ranks as the world's fourth largest economy after the U.S., Japan and Germany, and is expected to rise to second place within a decade.

China's rebirth has stunned the world with its speed and breadth, propelling what was an isolated, near-pariah state into the forefront of world powers—where most Chinese, a proudly nationalist group, believe it rightfully belongs. What China's President Hu Jintao likes to describe as his country's "peaceful rise" is all the more astonishing when viewed against the backdrop of its chaotic, blood-soaked recent history.

Until the early 1980s, when then-paramount leader Deng Xiaoping launched his "reform and opening" policies, China had endured nearly a century of war, famine, political turmoil and economic collapse. Its long-suffering population had known little but luan, or chaos. During the early 20th century, large chunks of the country were ruled by squabbling, capricious warlords or were wracked by bitter fighting between the Communists and their rivals, the U.S.-backed Guomindang, led by Chiang Kai-shek. Moreover, in 1932 Japanese forces entered northern China in the first of a series of brutal incursions that would leave Tokyo in control of huge portions of the country, including cities such as Beijing, Nanjing and Shanghai.

By the close of World War Two, the once ragged band of Communist guerrillas led by Mao Zedong had grown into a formidable army. Supported by funding from the Soviet Union, the Communists eventually drove their Guomindang rivals from the Chinese mainland to the island province of Taiwan. On Oct. 1, 1949, Mao stood atop a palace gate in Beijing's Tiananmen Square and proclaimed the foundation of the People's Republic of China.

Any illusions that the new government would usher in a period of stability and prosperity were soon dispelled. Almost entirely shut off from the rest of the world, ordinary Chinese spent the next 30 years as the subjects of the Communists' ideological experiments, which were often little more than the fallout from bitter power struggles in Beijing. Private property was effectively banned, capitalism banished and virtually every detail of economic development determined by central planning.

The results were nightmarish. As many as 20 million died in the famines of the late 1950s and early '60s caused by Mao's Great Leap Forward, ironically a campaign aimed at fostering the speedy development of the country's economy. Another 1.5 million died and many millions more suffered physical and psychological injuries during the so-called Great Cultural Revolution from 1966 to 1976.

By the time Deng's reforms began to unleash the country's long-suppressed entrepreneurial drive, China had nowhere to go but up. And up it shot, as more and more Chinese began to xiahai, or "jump into the sea," by setting up their own businesses. Not surprisingly, such volatile change brought equally volatile side effects: pervasive corruption, increased crime and a rapidly expanding income gap between those who benefited from the changes and those left behind. Social dislocation and growing anger at the inequalities, mixed with a new sense of freedom, produced the protests in Tiananmen Square in 1989. As the world watched, transfixed by the television images, tens of thousands of soldiers invaded Beijing to clear the square, killing hundreds or possibly thousands in the process.

Ostracized by the international community for ordering the bloodshed, Beijing remained defiant. The Communist leadership seemed to be controlled by conservatives who sought to overturn Deng's reforms and return to the isolationist authoritarianism of the Mao years. But in 1992, the diminutive Deng once again surprised everyone, this time by taking a pointedly public tour of the "special economic zones" he had set up in the country's south and calling for a renewed drive for reform.

That famous "Southern Tour" was, as Mao himself might say, the spark that lit a prairie fire. Reinvigorated reformists enacted new laws liberalizing business conditions and encouraging foreign investment. Hundreds of billions of dollars flowed in from overseas companies eager to take advantage of China's cheap labor and potentially huge domestic market. Deng's death in 1997 did nothing to slow the juggernaut of the economy or the continuing reforms.

As China's apparently unstoppable boom roars on, President Hu and his fellow leaders must confront a daunting array of social, economic and environmental problems: continuing corruption, horrifying pollution, an increasingly restless peasant population, growing unemployment, a collapsing health care system, yawning income disparities, disobedient provincial governments—the list is almost endless.

Like the crew of a ship that must keep sailing forward or sink, Beijing needs to keep the economy humming to stave off ever greater social unrest. But economic growth itself feeds that unrest. Can China's technocrat leaders deal with that apparent contradiction? Indeed, can the country's unprecedented boom continue or must it inevitably collapse of its own weight, bringing unimaginable consequences?

And abroad, what of Beijing's attempt to manage its transition from pariah state to global player? It is a performance that has so far met with mixed reviews, particularly when it comes to securing a supply of needed raw materials or handling relations with unsavory dictators who have nuclear ambitions. While many hoped the 2008 Olympics would thaw sometimes-frosty relations with members of the international community, the road to Beijing has been rocky and lined with protestors, who staged demonstrations in Europe, the U.S. and Asia against Chinese policies toward Tibet. Can China's leaders manage their nation's growing nationalistic pride and global clout without clashing with existing world powers, notably the U.S.? The answers to these questions will have a profound impact on the world for decades to come.

Like the crew of a ship that must keep sailing forward or sink, Beijing needs to keep the economy humming to stave off ever greater social unrest. But economic growth itself feeds that unrest. Can China's technocrat leaders deal with that apparent contradiction? Indeed, can the country's unprecedented boom continue or must it inevitably collapse of its own weight, bringing unimaginable consequences? And abroad, what of Beijing's attempt to manage its transition from pariah state to global player, a performance that has so far met with mixed reviews, particularly when it comes to securing a supply of raw materials or handling unsavory dictators with nuclear ambitions? Can china's leaders manage their nation's growing nationalistic pride and global clout without clashing with existing world powers, notably of course the united states? The answers will sway the lives of generations.

—Simon Elegant/Beijing