2025: Who will overtake US Economy First?

Discussion in 'International Politics' started by indopak5, Oct 11, 2009.

  1. indopak5

    indopak5 New Member

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    2025: Who will overtake US Economy First? Is it China? Or India? , only these 2 countries can do this bcoz of their BIG population. As far as i know it was china which will overtake US Economy near 2025. But i am damn sure that US-India are going to play some cards that will change everything. So guys please put some light on this TOPIC. Who is going to overtake US economy First? Will india ever be the Biggest economy and what will be india's economy in 2050? And If India going to be the biggest economy anytime, what will be the chinese economy at that time?

    I am sure that china is way ahead from india but recent recession has changed many things. How is this recession going to affect chinese economy and its position in world economy.
     
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  3. Martian

    Martian Respected Member Senior Member

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    The best reasonably reliable forecast that is available is from the IMF, dated October 2009. See List of countries by future GDP (nominal) estimates - Wikipedia, the free encyclopedia

    Five years from now, in 2014:

    US: 17.4 trillion (1st)
    China: 8.3 trillion (2nd)
    India: 1.9 trillion (10th)

    By 2025, to catch China's 2014, India will have to quadruple her GDP. 1.9 trillion x 4 = 7.6 trillion.

    But if you want to speculate, there are some people who believe that China's GDP in 2050 will be double the size of US GDP.

    "By 2050, he estimated Chinese GDP at some $82 trillion compared with $44 trillion for the US." See http://www.finfacts.ie/irishfinancenews/article_1014151.shtml

    The question is whether the prediction that Chinese GDP will be significantly larger than US GDP in 2050 is plausible. I'm a fan of MIT's Lester Thurow, who said that electricity usage cannot be manipulated and is the best reflection of a nation's economic activity.

    China's current electricity usage at 3.3 terawatt-hours is already pretty close to America's 3.9 terawatt-hours (see http://www.photius.com/rankings/economy/electricity_consumption_2009_0.html). A reasonable question is whether China will be able to continue increasing her electricity usage and hence, her economy.

    Looking at the list of hydroelectric dams under current construction and the additional dams being proposed (see bottom of page at http://en.wikipedia.org/wiki/Hydroelectric), there is reason to believe that China can keep going; assuming that dams are a good proxy for Chinese energy planning that encompasses coal, nuclear, hydroelectricity, wind, solar, biomass, etc.

    Another reasonable question is whether we believe the predictions. Is China really catching up to the US? "At official exchange rates in 2007 China's GDP was 24 per cent of that of the US - $3.3 trillion compared to $13.8 trillion." See http://socialisteconomicbulletin.blogspot.com/2009/01/new-data-on-chinas-gdp-and-its-total.html

    Crunching the numbers from the latest IMF results for 2009, China's GDP as a percent of US GDP is 30% (4.757 trillions/14.266 trillions).

    In the two years from 2007 to 2009, China's GDP has climbed from 24% to 30% of US GDP. The IMF is projecting that in 5 years, China's GDP will be almost 50% of US GDP. The trend shows that the scenario of China overtaking US in GDP is plausible. However, the future is uncertain. We can only wait and see.

    Most of the websites that I've read predicted that Indian GDP in 2050 will be roughly 88% of US GDP. 88% of $44 trillion is about $40 trillion dollars. Most websites believe the GDP rank in 2050 is China, US, and India.
     
  4. nimo_cn

    nimo_cn Senior Member Senior Member

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    No country can overtake US in 2025, US will still be the NO.1 in at least 50 years.
    It is possible that some country can surpass US, but that will not happen in the near future.
     
  5. Martian

    Martian Respected Member Senior Member

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    Why not? There's nothing sacrosanct about the US having the largest GDP. Two factors are necessary for China to catch the US.

    First, China needs continuous high growth of 6 to 9% a year for another 15 to 20 years. Is this possible? I don't see why not. China's per capita GDP is only $3,259 (#104 in the world) versus US per capita of $47,440 (#13). We can see that China has plenty of room to grow in its per capita GDP. See List of countries by GDP (nominal) per capita - Wikipedia, the free encyclopedia

    Second, after the world economy recovers from the financial shock, China's currency is likely to resume its increase. China's currency has already increased 20% versus the US dollar over the last 4 years.

    "On 21 July 2005, the peg was finally lifted, which saw an immediate one-off RMB revaluation to 8.11 per USD.[20]"

    "On September 30, 2008, the renminbi traded at 6.7899 yuan per U.S. dollar, which is a 21.9% increase and the highest rate since the removal of the peg." See Renminbi - Wikipedia, the free encyclopedia

    Between the twin factors of significantly higher economic growth rate versus the US and an appreciating currency, China has the ability to catch US annual GDP in the next 15 to 25 years. Whether it will actually happen is an exciting horse race that all of us get to watch.

    Ten years ago, China's GDP was only 7th in the world. China's GDP was only 12.6% of US GDP (1.158 trillion/9.213 trillions). See http://en.wikipedia.org/wiki/List_of_countries_by_past_GDP_(nominal)

    Ten years ago, if I told you that in one decade China's percentage of US GDP would jump from 12.6% to 30%, you would have said impossible. A lot can happen in ten to fifteen years.
     
  6. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    Well, it certainly won't be China. Their asset bubble and price fixing are going to be blowing up in their face once the US dollar appreciates in value. They can only cover up their inflated numbers for so long. Once it does, they will drop 29% in asset value and find themselves with a static GDP. Capital flight will occur so fast it will make your head spin. If I had to wager on who will be first to overtake the US, it would be the EU. Once The Lisbon Treaty is ratified it will be centralised enough to be considered a state of its own. They already outpace US GDP.
     
  7. icecoolben

    icecoolben Regular Member

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    India would be at no:4 at $ 7 trillion trailing japan by less than a trillion. China would be lacking by at least $2-3 trillion to the US's 19$ trillion. But this would depend on the US retaining the dollar as the sole reserve currency. By 2050, china would be an economy 1.75 times that of US. While the US would have a gdp of $ 42 trillion and india closely behind with a 1-2 trillion deficit.
    But still by per capita income. The padingram probably won't change US at 94,000 , japan at 80,000. With india at 8,000 and china roughly double that.
     
  8. sky

    sky Regular Member

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    2025 is to soon for either india or china,but 2050 is a diffrent story. no-one here is a fortune teller and so it would be better, to do the simple thing's right and not to worry about the long term as one one can predict that.

    It's only by shear force of will and dedication any nation rises to the the top spot,both india and china have a very long way to go.But on a positive note,india has a very young population and if that can be harnessed then the world better watch out......
     
  9. icecoolben

    icecoolben Regular Member

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    Unless there is war, or a huge catestrophe. India and China will forge ahead. China was the world's largest economy by 16-17 century. India was also in a similar position before the advent of british and history has a habit of repeating itself.
     
  10. Martian

    Martian Respected Member Senior Member

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    That's true icecoolben. My brother likes to say that things revert to the mean. While I do not know the pace of Indian development and industrialization, it cannot be disputed that it will occur. The historically important positions of India and China in the world are already reasserting themselves.
     
  11. Daredevil

    Daredevil On Vacation! Administrator

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    I don't think China will be able to overtake US by 2025, it would be more like 2050. The reason being, it is difficult for China to sustain 10% growth rate forever and the recent recession gave a big jolt to its plans. China's GDP depends mainly on Exports which in turn depends on excessive consumption by western countries mainly US. With the advent of recession in all major western economies, there is strong belief of experts that the consumption levels will take at least a decade to reach pre-recession levels. Under such scenario, China is very unlikely to sustain 10% growth rate due to decline in exports and dependent manufacturing. The only way it can grow at those rate is by increased domestic consumption which is very weak in China even if compared to India. So, China is now giving stimulus to the order of 18% of GDP to increase consumption and it also increased government spending and thus showing increased growth rate. But this is not sustainable for more than 5 years. Interesting times ahead.
     
  12. johnee

    johnee Elite Member Elite Member

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    X-posting. This article puts in context, China's economic condition specially in this recession. For them to sustain the growth of 9% for a decade is really uphill task. We really dont know what is the real situation of Chinese economy.


     
  13. Martian

    Martian Respected Member Senior Member

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    johnee, do you really believe that the Asian Development Bank (ADB), IMF, and World Bank are all lying about China's growth and that China is really "cooking the books?"

    "Graphics shows the forecast of China's year-on-year economic growth in 2009 revised up to 8.2 percent by the Asian Development Bank on Sept." See China's 2009 GDP growth revised up to 8.2%_English_Xinhua

    "Last October the IMF forecast China's GDP would grow at 8% in 2009." See China’s 2009 GDP growth : Core Economics

    "The World Bank raised its 2009 economic growth forecast for China from 6.5 percent to 7.2 percent due to its stimulus-driven" See WB raises China 2009 growth forecast to 7.2%

    Why would all of these different international institutions lie about China's growth? Does that mean the growth rates published for all countries by the ADB, IMF, and World Bank are all lies and cooking of the books too? Or do you think the published growth rates are a good reflection of reality and the conspiracy nuts (that keep claiming that China's growth is fake) are living in their fantasy world?
     
  14. Vinod2070

    Vinod2070 मध्यस्थ Stars and Ambassadors

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    Well, as of now it is fair to say that China has a big lead over India in economy. So by all accounts they would be there first, whenever that happens. Their lead is large and increasing as of now.

    But they do have many chinks in their armour and India does have some strengths that can help us reduce the gap in the near future. I think the effects of the one child policy will catch up very soon with them, reducing the ratio of productive age people vs. the dependents. Also as has been pointed out, they are more dependent on exports which would be really difficult to sustain at the previous growth rates. Their economy is also much more resource intensive.

    We have a fair stab at overtaking them in the next few decades if we get our act together.
     
  15. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    All these institutions base their numbers on what the Chinese Central Banque provides.
     
  16. indopak5

    indopak5 New Member

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    Thanks for replying Martian," But what i am thinking is, will US allow china to become the biggest economy?" see what i know is , its only US which can change the world economy or World Order. If US once decided, india can become the swing state. really it would be very interested to see what these 3 countries(US, india, china) do further.
     
  17. indopak5

    indopak5 New Member

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    i think it will be india. but a long time for that. i am sure that US-India are already playing some big cards. Coz i never seen US too much interested in india or india Interested in US. They are going to change everything.
     
  18. Martian

    Martian Respected Member Senior Member

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    "will US allow china to become the biggest economy?"

    I think it is too late for the US to shut China down. The US made some critical decisions that allowed China to grow at phenomenal rates. First, Nixon (and Kissinger) established trade relations with China in 1971.

    "That same day, the U.S. announced plans to remove a 20-year embargo on trade with China." See The American Experience | Nixon's China Game | People & Events | Ping-Pong Diplomacy

    "The U.S. Trade Rep. explains the U.S.-China trade deal ... China” were almost nonexistent, until 1972" See NewsHour Extra: Trade Relations With China - May 25, 2000 or 1972 Nixon visit to China - Wikipedia, the free encyclopedia

    That's the first critical step. The US market, the world's largest, is now open to China.

    Second, the US extended Most-Favored-Nation (MFN) trading privileges to China.

    "Clinton Grants China MFN, Reversing Campaign Pledge." See http://tech.mit.edu/V114/N27/china.27w.html

    "In the 1990s, continued most favoured nation status for the People's Republic of China created controversy because of its sales of sensitive military technology. China's most favoured nation status was made permanent in 2000. All of the former Soviet states, including Russia, were granted most favoured nation status in 1992. On a bilateral level, however, the United States cannot grant MFN status to some members of the former Soviet Union, including the Russian Federation, because of the Jackson-Vanik amendment. This presents an obstacle to those countries' accession to the WTO.[1]" See Most favoured nation - Wikipedia, the free encyclopedia

    Third, the US agreed to let China join the WTO in 2001.

    "Press release, 17 September 2001; WTO Ministerial Conference approves China's accession." See WTO | China - Member information

    Without full American cooperation, China could not have become the export powerhouse that it is today.

    "Aug 26, 2009 ... 26 -- China's rise as the world largest exporter" See China becomes world largest exporter for first time_English_Xinhua

    China has grown beyond anybody's expectations. China is too large a part of the world economy. Also, the US is heavily indebted to China. These two factors indicate that the US no longer possesses the power to stop China's further economic progress.

    "The American and Chinese economies are intertwined, and the success of one depends on the health of the other.

    The United States is China's biggest trade partner. Americans bought Chinese goods worth $338 billion last year. Beijing is Washington's biggest creditor, with more than $800 billion invested in government debt. American automakers look to China's growing market to propel future sales.

    The financial crisis set back U.S. growth by years and will add trillions to the federal debt over the next decade. But China avoided the worst of the crisis. Its banks are healthy and, with the help of a 4 trillion yuan ($586 billion) stimulus, this year's economic growth is on track to top 8 percent.

    Already, demand from China can affect oil prices, and it is starting to influence what products are available worldwide. Western jobs are tied to Chinese spending, from British auto factories to Australian iron mines. Chinese money is financing development of oil fields from Venezuela to Central Asia.

    And China's role as Washington's lender-in-chief is altering the dynamic of the countries' relationship.

    At a meeting in London in April, President Barack Obama assured his Chinese counterpart, Hu Jintao, that Washington would cut its budget deficit — a promise no American leader ever had to make to a Soviet leader.

    Washington's 3-year-old strategic dialogue with Beijing has long been dominated by U.S. trade grievances. But the latest round in July, overshadowed by America's need for China to keep buying its debt, became a discussion between equals." See http://www.mercurynews.com/business/ci_13517840

    Regarding India, the US can indeed open many doors for India. However, Indian businesses will still have to compete in the world marketplace. China was lucky. Back in the old days, during the 1970s-1990s, there were fewer economic competitors. Today, as India tries to grow her exports, she will run into China, which occupies many rungs on the economic ladder.
     
  19. Martian

    Martian Respected Member Senior Member

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    "All these institutions base their numbers on what the Chinese Central Banque provides."

    China is the world's second-largest consumer of electricity (more than the entire EU; see Electricity - consumption(kWh) 2009 country ranks). The world's second-largest consumer of oil. And the world's largest exporter that has piled up a world record $2.1 trillion dollar forex reserve.

    China is also the world's largest car market. "Partnerships with West have given it needed technology; now it's the world's biggest car market, having passed the US this year." See China's auto industry shifts into high gear | csmonitor.com

    Would you say that the IMF, World Bank, and CIA are correct in saying that China has the world's third largest economy? See List of countries by GDP (nominal) - Wikipedia, the free encyclopedia
     
  20. nimo_cn

    nimo_cn Senior Member Senior Member

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    By that logic, i am wondering if US will allow India to be the first.
     
  21. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    China is also one of the most inefficient users of energy too.

    Most of it tied into the underperforming dollar. They are losing money by keeping it there.

    Because they spent hundreds of billions to subsidise their auto industry. They aren't making money buying their people cars.

    As I said, those agencies go off China's Central Banque statistics which are doctored. The Chinese domestic economy is a ponzy scheme supported by export revenues and FDI. Two fifths of the Chinese economy is real, which are exports. Three fifths of it are 2/3rds subsidised making it artificial. When the CCP can no longer cover the balance sheets for those artificial markets, you are going to see a huge chunk of the Chinese economy vaporised. That is why China will never overtake the US.
     

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