Understanding China?s historical development: The profit and the risk that China?s stock market provides investors

The purpose of this paper is to describe China?s unique historical development that transformed the Celestial Empire into the largest economy in the world in the beginning of the nineteenth century, with a GDP that exceeded that of Western Europe, Japan, the US and Russia combined, and the decline during the ?Century of Humiliation?, and Mao Zedong?s communism that culminated in the ?Three Bitter Years? from 1958 to 1961 that produced the large famine with an estimated death of 20 to 30 million people. After this disaster, aggravated by the ?Cultural Revolution? that followed, came the amazing growth started by Deng Xiaoping?s economic reforms in 1978, that is only comparable to the United States emergence as an economic giant during the nineteenth century. China?s sustained growth, at an astounding 10 percent per year over the last 30 years, is without precedent. Many economists predict this growth rate will continue at 7 to 8 percent per year for several decades. This extraordinary sustained growth was partially fueled by the formation of its rapidly expanding financial market, and the profit and risks that its stock marked provides investors.