China poised to pass US as world's leading economic power

[W.G.Ewald]

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [email protected] to buy additional rights. China poised to pass US as world's leading economic power this year - FT.com

China is likely to be the world's richest country by next year

The US is on the brink of losing its status as the world's largest economy, and is likely to slip behind China this year, sooner than widely anticipated, according to the world's leading statistical agencies.

The US has been the global leader since overtaking the UK in 1872. Most economists previously thought China would pull ahead in 2019...

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [email protected] to buy additional rights. China poised to pass US as world's leading economic power this year - FT.com

After extensive research on the prices of goods and services, the ICP concluded that money goes further in poorer countries than it previously thought, prompting it to increase the relative size of emerging market economies.

China poised to pass US as world's leading economic power this year - FT.com

ICP calculation must also apply to India as well?

 

[Hari Sud]

Today's China is what America made it, starting from 1987. Can you imagine $1 trillion FDI in 25 years.

Unimaginable.

On top of it a very low currency value makes these products in US and Europe cheap.

If China bypasses US in a few years it US itself responsible.

Even toady if US halves the imports and raises the currency, China would grind to a halt.

 

[LETHALFORCE]

I never understood why this flawed Nixon and kissinger policy continued with so many
Different presidents. USA lost jobs,manufacturing base and soon economy for low
Cost poorly made products. Corporations like walmart gained but it wiped out
Economies in many small towns in USA. Why do some much trade with a country
Which views you as an adversary and does not share your ideology?

 

[CCP]

I never understood why this flawed Nixon and kissinger policy continued with so many
Different presidents. USA lost jobs,manufacturing base and soon economy for low
Cost poorly made products. Corporations like walmart gained but it wiped out
Economies in many small towns in USA. Why do some much trade with a country
Which views you as an adversary and does not share your ideology?

"The Capitalists will sell us the rope with which we will hang them."Lenin

 

[CrYsIs]

China is likely to be the world's richest country by next year

LOLWUT ?
FT making such a silly statement.Richness of a country is not measured in the total GDP but on per capita income.Has China's per capita income reached 40,000 $ ?

China's per capita is still less than 10,000$ where as the pci of the US is 53,000$

 

[p2prada]

China poised to pass US as world's leading economic power this year - FT.com

ICP calculation must also apply to India as well?

Yes, we overtook Japan in that respect, and we are number 3 right now.

 

[p2prada]

LOLWUT ?
FT making such a silly statement.Richness of a country is not measured in the total GDP but on per capita income.Has China's per capita income reached 40,000 $ ?

China's per capita is still less than 10,000$ where as the pci of the US is 53,000$

Percapita in dollars isn't a fair comparison when comparing rich and poor countries. The cost of goods in India and even China are still very cheap. A guy earning a $12000 salary in India is going to lead a much better life than a guy earning $60000 in the US.

 

[p2prada]

China poised to pass US as world's leading economic power this year - FT.com

ICP calculation must also apply to India as well?

India displaces Japan to become third-largest world economy in terms of PPP: World Bank - The Economic Times

 

[CrYsIs]

Percapita in dollars isn't a fair comparison when comparing rich and poor countries. The cost of goods in India and even China are still very cheap. A guy earning a $12000 salary in India is going to lead a much better life than a guy earning $60000 in the US.

I was talking about Per capita PPP not dollar value


The overall GDP is measured in dollar value where as per capita is measured in PPP.


In the article the overall economy is being measured in PPP instead of dollar value.China will only overtake the US in dollar value in the next decade

 

[CrYsIs]

India displaces Japan to become third-largest world economy in terms of PPP: World Bank - The Economic Times

And India's population is 1200 million as compared to 127 million for Japan.

10x population but slightly larger economy....not a good thing.But as said comparing the size of the economy in PPP terms means nothing

In dollar terms India's economy is only 1.8 trillion $ as compared to 4.9 trillion $ for Japan,So 10X the population but nearly 3 times smaller the economy.

 

[Yusuf]

Today's China is what America made it, starting from 1987. Can you imagine $1 trillion FDI in 25 years.

Unimaginable.

On top of it a very low currency value makes these products in US and Europe cheap.

If China bypasses US in a few years it US itself responsible.

Even toady if US halves the imports and raises the currency, China would grind to a halt.

I wrote this article

China Today: A creation of western greed and shortsightedness and lessons for India
China has rapidly grown both economically and militarily in the last 20 years. Decades of double-digit growth has propelled China to being the second largest economy in the world and is on track to become the largest overtaking the US.

What helped China attain this high economic growth, advancement in science and technology, creation of a military industrial complex which has reached such advances that China built its own fifth generation fighter aircraft? The answer lies in Chinese smartness and Western greed.

Before 1979 when china started embracing capitalism with Chinese communism traits, it was a backward third world country just like india which under Mao saw the great leap forward which actually resulted in 45 million dead due to hunger. Early seventies saw the US under the Nixon regime develop relations with China with an eye on the Soviet and use it as a counter weight. The Chinese realized the benefit of such a move and quickly embraced the US leading to the US diplomatic relations with China and a shift from its recognition of Taiwan as the real China to Beijing. Though it was a communist country, China saw a pretty peaceful cold war as the US thought it had a friend in China. The US probably didn't benefit immensely from its relations with China as China continued its support to North Vietnam and North Korea.

The US directly invested in wide range of manufacturing sector in China, created joint ventures and also contract ventures which led to substantial transfer of industrial know how to the Chinese. American multinational corporation quickly moved manufacturing out of the US to China to cut its costs and maximize profits and today it is fully depended on Chinese manufacturing for even its basic needs. The Chinese were good enough to learn the latest manufacturing process to quickly establish vast industrial base with large capacities to become the center of world manufacturing. The Chinese learned to make advanced machines and machining technologies which have helped her in the military sector. China similarly benefited from the Europeans who increased their dependence on China for manufactured goods.

The objective was simple, to cut costs and shift lower end jobs to China and maximize their profits. China was all too happy to accept and absorb all that came its way. This has actually turned into a major problem now for the west as they run huge trade deficits with China and also let China become its major source of debt with a severe erosion in their own manufacturing capacities though they remain premier nations for research and development and high-end manufacturing.

Although trade has prospered between the west and China, arms and related technology was embargoed on China which is where the Russians stepped in. Benefiting from denial by the west, Russia supplied China with advanced weaponry and technical know how which bought it billions of dollars. But this has proved to be a disastrous and shortsighted policy. China has now learned a lot from Russians arms and its technology and violated intellectual property to develop its own military industrial complex. China now makes fighter jets that are rip offs of Russian ones which they have reversed engineered. Today Chinese arms purchases from Russia has declined rapidly. The manufacturing capability for this was derived from years of US and European shift in manufacturing industrial products to China. China benefited from the learning about the latest manufacturing, machines and machining technology from the West and arms purchases from Russia to develop its own large-scale military industrial complex which it is using to rapidly modernize it's over 3 million strong Peoples Liberation Army. China is making advanced missiles, fighter jets, ships, submarines which has led it to develop capabilities to rival the west and Russia which have long been its benefactors. Chinese are not known to be benevolent and pursue their ambitions with impunity. China does not want to share its space with anyone and in fact create more space for itself. Even if it means confronting the very nations which helped it attain the position it is in today.

China's rise has been aided largely by the west whose greed and shortsightedness is coming back to haunt it. This is where there is a lesson for India as it pursues its relations with the US. Given the right policies, India can do what the Chinese did with the US during the cold war by pretending to be with the US against the Soviets. While the US and China slug it out, India can position itself owing to its geography, its large population, is large labor force, its large middle class to become a hub for investment and manufacturing and absorb advanced technologies to create a better future for itself and secure its interests. The US is already willing to help India rise. It depends on India as to how it grasps the opportunity.

http://sarvatravijay.wordpress.com/...d-and-shortsightedness-and-lessons-for-india/

 

[p2prada]

And India's population is 1200 million as compared to 127 million for Japan.

10x population but slightly larger economy....not a good thing.But as said comparing the size of the economy in PPP terms means nothing

In dollar terms India's economy is only 1.8 trillion $ as compared to 4.9 trillion $ for Japan,So 10X the population but nearly 3 times smaller the economy.

Yeah, what to do, we are poor.

 

[Compersion]

The Japanese came also close to overtaking the Americans in the last century but they decided to live in cohabitation and not competition. (The Japs are apparently really competitive).

 

[Hari Sud]

I have been writing about rise of China since 2007. UPI Asia used to be the website which carried my opinions. It is defunct now as victim of US depression of 2008/10.

The paper above by Yusuf is very much in line with my thinking.

I like to make an additional point. If Chinese export 45% of their GDP as exports to earn cash then it leaves only half of $10 trillion (PPP) for 130 million people to share. This is roughly equivalent to $5 trillion which 120 million share. Hence what is this hype of Chinese suddenly acquiring western living standard. There is only one thing right. Chinese earn about a trillion dollars in cash, of which US and Europe keep as Bond sale and deposited in western banks and rest they bring home to build infrastructure and military etc. This where they are ahead of India.

One more thing which is better in China. They do not have opposition parties to highlight plight of people to grab power and then put money in their own pockets. No unnecessary negative reporting is allowed by local or international press. India is victim of unrestricted negative reporting of evil and ignoring the good. The media masters have concluded that negative reporting makes more money, hence they try their best to bring the worst of the worst reports. This election season is no exception.

 

[CrYsIs]

Yeah, what to do, we are poor.

We are poor because we chose the path of poverty not because of some bad fate.

 

[amoy]

The headline itself is overhyping. According to prediction of below graph Chinese real GDP per capita will be still way below US in 2030 (1/3)

And development is very uneven - - GDP can be delusional as wealth is largely concentrated in the east/coastal + main cities while the vast inland / west /rural areas lagging behind in stark contrast.

 

[amoy]

Macau tops at [Current Macau GDP Per Capita: 78,275.15 USD]
Macau GDP Per Capita

But the poorest Guizhou Province only at Nominal (US$) 3,692 [2013 GDP per capita figures]
List of PRC administrative divisions by GDP per capita - Wikipedia, the free encyclopedia

I don't think US or any developed country has so wide a gap internally. The more developed a country becomes the narrower the gap gets like water seeks its own level with the trickle-down effect of industries migrating from well-developed/costly area to the underdeveloped/lower-cost areas gradually.

 

[LalTopi]

Looks like they tried their hardest not to be seen as number 1.

China tried to undermine economic report

China sought for a year to undermine new data showing it is poised to usurp this year the US as the world's biggest economy based on purchasing power, according to people who helped to compile the report.
The report, released this week by the International Comparison Program under the auspices of the World Bank, included a line stating that the "National Bureau of Statistics of China has expressed reservations about some aspects of the methodology". Beijing has declined to publish the headline number for China and the report said that the NBS "does not endorse the results as official statistics".

But, according to those involved in compiling the data, China's distaste for the findings went further.
"A year ago, there was a huge debate. China wanted to throw this out. They don't want to be seen as number one. They're worried about the political implications with the US," said one person involved in preparing the report. "They begged and threatened for a whole year ."‰."‰. China hates it," he said.
The main reason for China's lack of triumphalism is that leaders do not want exposure to the international pressure that comes with being the world's largest economy, according to several people familiar with Chinese official views on the matter.
"They certainly don't want to overstate the size of their economy. They are sensitive about that," said Vinod Thomas, director-general of independent evaluation at the Asian Development Bank, which played a role in compiling Chinese statistics for the report. "The pushback and sensitivity has been muted publicly but, behind the scenes, it's been there for sure."
China's tightly controlled state media did not mention the latest estimates, which were widely reported outside the country. In recent years, Beijing has often balked at international estimates showing it has taken the global lead in everything from carbon emissions to energy use.
Taking the title as the world's largest economy, held by the US since 1872, might be seen as a crowning achievement after three decades of rapid economic growth. However, China's leaders are wary of the added international responsibility that could come with it.
"From the perspective of China's leaders, who are preoccupied with managing the many challenges they face at home, anything that looks like it could upset the current world order too early is undesirable," said an adviser to senior Chinese policy makers. "On a per capita basis, China is still a very poor country so it does not want to be asked to do too much on the international stage – at least not yet."
At current exchange rates and projected growth rates, China is expected to overtake the US in real terms in about a decade but, even then, the country's 1.36bn people will, on average, be relatively poor.
According to the latest ICP report, in per capita purchasing power terms China ranks just 99th in the world, while the US ranks 12th.

China tried to undermine economic report - FT.com

 

[LalTopi]

LOLWUT ?
FT making such a silly statement.Richness of a country is not measured in the total GDP but on per capita income.Has China's per capita income reached 40,000 $ ?

China's per capita is still less than 10,000$ where as the pci of the US is 53,000$

GDP matters when it comes to buying military hardware and throwing your weight around on the international stage.

 

[Julian]

GDP matters when it comes to buying military hardware and throwing your weight around on the international stage.

Right. India 's PCI is lower than Thailand, yet only mentally retarded would think that Thailand is in any way comparable to India in terms of army or diplomatic weight.