Can America Compete With China's New Economy?

If the phrase "Made in China" evokes images of cheaply made toys and T-shirts, think again. Today's China manufactures fighter jets, space rockets, and has the world's first levitating train, which can reach speeds of 260 mph -- faster than the Japanese bullet train.

There are now more than 120 Chinese car makers, which sell 5 million cars a year domestically and will begin selling in the United States in 2007.

"China is everything," said James McGregor, author of the book "One Billion Customers." "It's the top scale. It's the bottom scale. It's high-tech, it's low labor, all across the board."

"The new slogan is 'China rising,'" said financial analyst Donald Straszheim. "It's more than a slogan."

In fact, China is literally rising. Shanghai has some of the world's most cutting-edge skyscrapers, with 300 more under construction. China presently uses nearly half the world's cement.

In the southern city of Shenzhen -- a Chinese Silicon Valley -- Huawei is the world's second-largest producer of the components that drive the Internet and the largest maker of some cell phone technology. Half of Huawei's 35,000 employees are engineers.

China graduates more than 325,000 engineers a year, five times as many as the United States. There are more Chinese learning English than there are native English speakers in the United States.

Even the old state-owned companies, such as China Aviation, are learning and adapting.

After making tail assemblies for Boeing jets for nine years, next year the company will start manufacturing its own commercial jets. The Asian Regional Jet, as it's called, was designed and will be built entirely in China.

The plane means that Boeing's one-time subcontractor will soon compete head to head with the U.S. aviation giant. That is the new reality of U.S.-China trade.

"Many Americans see China as both a threat and an opportunity," said Straszheim. "It's far more of an opportunity. China is now the global agent for change and also the engine for growth."

With more than 20 consecutive years of near double-digit growth, no country has grown this big, this quickly.

The Chinese have an expression for it: "Like a tiger that's grown wings."

ABC News' Jim Sciutto filed this report for "World News Tonight."