Not all shocks are bad. One of the most significant developments over the past three decades has been the emergence of China as an economic power. Following Mao Tse Tung’s death, China embarked on a program of economic reforms in the late 1970s under the leadership of Deng Xiaoping that transformed it from a backward country into the world’s second largest economy today. Over that period, China grew at a compound rate of 9.5% annually, and it amassed record external surpluses in the past decade that turned it in the world’s largest capital exporter. As such, China’s economy now has considerable influence not only on other Pacific Rim economies but those in other parts of the world, as well.