China's economy has powered ahead, growing by nearly 9% in 2009 and is now close to becoming the second largest economy in the world, and with forecasts of further similar growth in both 2010 and 2011. Simultaneously, there are reports of labor shortages, both factory workers and skilled staff. Thus, is this performance an economic `miracle' or is it a `mirage' hiding some real economic dangers? Are there any issues and challenges in the seemingly `cast iron' labor market? These topics are discussed in this current piece.

China has overtaken Germany and in 2010 is fast closing in on Japan to become the second largest economy in the world. China's economy has zoomed ahead, growing by nearly 9% in 2009. One recent IMF forecast predicts another 10% expansion in both 2010 and 2011. The massive financial stimulus policy to counteract the global `credit crunch' economic crisis is praised and 2009 saw the biggest easing in monetary and financial conditions in history and China's banks more than doubled the amount of loans extended in 2008. China is increasingly seen as an `economic superpower' and is so intimately linked to the US that the two countries are being dubbed the `G2'. As outward investment has grown, China has become the biggest lender to the US with one result being that the currency, the RMB, is predicted to become a reserve currency by some. However, reports of labor shortages - both factory and skilled workers - are re-emerging. Is this blistering performance a `miracle' or is it a `mirage' hiding some real dangers? Are there any issues and challenges in the seemingly limitless Chinese labor market?

This performance is not unalloyed or uncontested. There are some siren voices of caution being raised, even within China itself by senior officials. This concern revolves around the growing twin threats of, first, an over-heating economy and inflationary pressures, mixed with a property (especially housing) boom and credit binge; and, second, some worrying labor market and demographic pressures and trends.

Effective Executive Magazine, Economic Crisis, Credit Crunch, Economic Superpower, Demographic Pressures and Trends, Global Recovery, Global Financial Crisis, Monetary Policy, Financial Stimulus Policy, Gross Domestic Product, GDP, Global Financial System.