August 7, 2008 -- As the Beijing 2008 Olympic Games are about to commence and the excitement and goodwill for China runs high, it is an interesting opportunity for reflection on how far China has come – and how much there remains to do before China becomes a true economic superpower. Watching China strive to become a major economic player on the global stage is nearly as exciting as the Olympics.

It has been almost five years since I arrived in Shanghai, the second largest but most prosperous of Chinese metropolises. During that time I have seen amazing growth, development and improvements across this most-populous nation and I remain very optimistic about the prospects for China's future and the quality of life of its inhabitants.

However, when I was on my way to China in 2003, a whole group of futurists and China experts were saying that in 10 or maybe 20 years China would rule the economic world. It was easy to think that if you looked the rapid growth and infrastructure development in Beijing, Shanghai, Shenzhen and some other major cities, like so many visitors did. Five years later, China has not progressed far down that road.

The 2007 China GDP of $3.251 trillion seems huge, but when it is divided across China's 1.33 billion population, we still find a very low productivity per capita and the wealth distribution is very disparate with the top 10 percent accounting for 34 percent of the domestic consumption. Most of that wealth in concentrated in the eastern coast, the Yangtze and Pearl River deltas, as well as Guangdong province over the border from Hong Kong.

With the wealth disparity, many are living near subsistence levels even in the wealthy eastern provinces and 43 percent of the nation's labor force work on low productivity small farms. China's 8 percent poverty rate means 21.5 million rural residents live below the government's official "absolute poverty" line (approximately $90 per year - far below the UN-defined poverty level of $1 per day) and an additional 35.5 million rural residents live below the official "low income" line of approximately $125 per year. Clearly, China remains largely unable to buy its own goods, so it is a manufacturing and export base.

And foreign money is fueling the 11.4 percent annual economic growth. Annual inflows of foreign direct investment in 2007 rose to $75 billion in 2007. Most of that money is invested in the already developed eastern regions mentioned above which will serve to further the income disparities.

China as the world's factory is not a sustainable proposition, especially if it is driven primarily on foreign investment. It also means that China is trading its natural resources, environment and health in exchange for temporary wealth. Before China can be a threat or an economic superpower, it must first develop its internal economy so that its inhabitants can become consumers of its production.

Emerging China will continue to explore the forces that are shaping this development and the milestones reached along the road.