China will have at least 6 provinces each with an economy the size of Canada, Russia, South Korea by 2020. In addition it will have at least another 10 provinces each with an economy the size of South Africa, Indonesia, Switzerland. If you add all the provinces up this represents an extraordinarily huge market and economy. Now if you were to add the remaining 3rd-tier provinces to these 16 provinces it will in no time overtake the US as the biggest economy in the world. This is why China is considered the new economic engine of the world and a huge market for other countries.
we all know the world will end in 2012. no point talking about 2020. play as much badminton as you can before the end comes.
Not to mention, China is now spreading her influences to Africa...with billions of dollars of investment, where few Western countries dare to go. Source from Wikileaks... http://www.bbc.co.uk/news/world-africa-11955516
Actually the nay soothsayers said the same thing many years ago in 1949. That was 60 year sago and nothing remotely close to a collapse has happened. Instead it has made progress that astounds and frightens the west.
there is certainly no doubt that the Chinese economy as a whole will increase over time and at one point usurp the US. However there are two issues that I've studied particularly in developmental economies and east-asian economies that will present China with problems down the road. First off, in order for China to sustain growth, maintaining herself as a low-cost centre will not be sufficient. China needs to become less a producer and more an innovator, such as Korea, Japan and other Asian success stories. While this is nothing new, the inability to move away from merely reverse-engineering to innovating has not been an easy task. Second, while the overall economy is increasing, the divide in extremes has been moving in the wrong direction. Yes, on whole, individual income has grown and the potential for growth is there, however, there is no middle class - the typical growth engine in most economies. Luckily, for the moment most goods sold in China that are produced locally or abroad in places such as Vietnam are had cheap and still affordable for all. But soon, inflation will slowly increase and with it, the inability for all to buy the same goods that once were affordable.
China has already announced that they are moving away from being the world's factory to produce more value-added and differentiated goods and services years ago. Dont really understand the absence of the middle class,do you mean there is a lack of merchants, traders,shopkeepers, SMIs or whatever? Dont you think an even bigger problem is the absence of infrastructure and the big divide between rural and urban areas?
I've stated in my point that the need for value-add is nothing new, however, it is a point that needs re-mentioning. Second, the lack of middle class is in reference to consumers, which touches upon your point of urban-rural divide. Again, I have made a point in saying the extremes (between urban and rural), my apologies for not making it clearer. I don't really have much thought on what could happen other than the basics of increased uprising and demand for better help in rural areas, but beyond that I don't have much thought...
I see what you probably meant was a the lack of a"middle income" segment not a "class". Understood now.
Yup, my fault...I'm going on only a few hours of sleep...so much studying going on right now. Any other thoughts? I'm curious if anyone can add some good info? Anyone deal with Chinese economics, political economy, trade or any of the sort?
Probably a collusion to make her larger than she thought she really is? Yeah, the numbers are astounding, but rather why not much is express about it's huge wall of debts as well? Issuing all the rubbish IOUs that aren't back in a transparent manner? Shouldn't she be trotting rather than cantering? Is there really ground below to land on or it is cantering off the cliff?
The country with the biggest debt ratio in the world has always been and still is the world's biggest economy, it has never become Greece or Ireland simply because the world will not allow it, because when it sneezes the world will catch cold. And it has aways been first Japan and now China who are propping up that economy. China has huge savings which it planted into US and Japan, so high are its savings and reserves that it survived the 97 crisis. It could be too dependent on foreign investments though and may have a property bubble which it is cooling now, what is important is its huge foreign reserves (like other East Asians)that can stave off any financial attack.Other countries would have long ago used up all these savings recklessly and lived on borrowed time and money or printing money. Of great concern would be low growth creating unemployment and poverty and social instability like what is happening to Europe today. Popsiclepete would have all the ratios and data to substantiate or debunk this argument. To succeed or fail can be a combination of factors.
Hard to say...Africa is a very diverse continent and rich in natural resources. It's probably in the sphere of influence of Europe and the Middle east. China coming in? May seem like a benign power with no imperialistic agenda...but history will prove otherwise. There will definitely be conflicts... http://www.bbc.co.uk/news/world-africa-11898960
I think a lot of facts and figures can be sourced from UN bodies,IMF, China Trade Statistics etc. etc.thru their web-sites.
Sadly these savings have come at a cost of extremely low consumption. Outside of what's been discussed so far, the biggest driver in an economy is the domestic consumption(spending) of its citizens. As of right now the overall personal consumption of Chinese is about 1/3 of GDP, compared to about 90% post economic crisis in the US. On average, Chinese save 30 - 35% of their income compared to less than 2% in the "western" world. So yes, China has a huge savings rate, but as already mentioned, at the cost of low consumption. The key to this suppression of social instability is the recent Maoist history. We will witness a shift in individual mindset in terms of needs and wants. As the older generation of Chinese start disappearing - the ones that grew up suppressed by Mao - the younger generation will be looking to for more out of the current government both from a social and financial perspective. How the government will react is as of yet unknown, especially with Xi Jinping most likely succeeding Hu Jintao. Sadly, there is not much known about Xi and his policies.
I read from this blog which was given to me by a friend...good bits of info if you don't want to "waste" your time reading haha http://china-economics-blog.blogspot.com/2010_07_01_archive.html Thank you for the other suggestions
I read from this blog which was given to me by a friend...good bits of info if you don't want to "waste" your time reading haha http://china-economics-blog.blogspot.com/2010_07_01_archive.html Thank you for the other suggestions
It is not true that exports constitute a major component of China's GDP. Exports alone is only one part of GDP and I suspect this figure is used to show that its exports is a big component of GDP. It is the total of gross exports less imports, giving net exports, that become a component of GDP. China's GDP is about US$5 trillion and its net exports is a mere US$175 billion. So its net exports is nothing to sing about. The reason for this small net exports is that China's imports are equally massive, which reduces the gross exports to arrive at a small net exports. It is this massive imports that provide the growth engine for the world at a time when the US, EU, and Japanese engines are stalled. Contrary to popular misconceptions, the growth in China's GDP of from 9% to 13% in the last 30 years is now mainly driven by investment, not exports. Since 2001 its GDP growth comes mainly from investments (4%), consumption (4%). In 2009 its net exports or rather imports took a 4% slice off its GDP. Investments is the tool used by China during times of recession or potential recession. It used this strategy successfully to bail out the global recession caused by the Asian financial crisis in the 1990s, so it has lots of experience on such a massive rescue that the west has not successfully faced or overcome. The current financial crisis has the west reeling and stimulus after stimulus has not worked. In China's case it is working as seen by China's recent decision to guide the country to a soft landing. If only the US knew how to do it instead of another round of printing massive amounts of paper money.
