China may emerge as the world's largest economy by 2020 Essay

China may emerge as the world's largest economy by 2020 - Essay Example Therefore, by 2020 China will have greatest influence on the world trading system. China will be the largest exporter and importer of goods in the system. As of now the export market of China is focused on labor intensive products. But by 2020 it will consist of even hi-tech goods. As a result, the share of other major economies, mainly United States and Europe will considerably reduce. Impact on world monetary system: China had already raised voice against Dollar being dominated in the world monetary system. The main reason for this uproar is that China holds the world’s largest forex reserves. Moreover, China wants to increase the international role of its own currency, the Renminbi. The chance of Dollar getting replaced by Renminbi is very minimal. But the role of Dollar as a common settlement currency will significantly reduce. China will emerge as the largest consumers of many commodities and goods. Therefore, the chance of Yuan getting internationalized is practicable at least for settlement of the goods for which China is the largest consumer. (Kelly, 2009) Impact on the business strategies of Europe and US based multinationals: China’s emergence as the largest economy by 2020 will force many multinationals to rethink on their global strategies. The primary area to be focused is the pricing strategy.