Isn't It Wonderful That China Will Be A Bigger Economy Than The US By 2016? - Forbes Weâ€™ve a prediction that the Chinese economy will be larger than the US one by 2016. Isnâ€™t that just absolutely wonderful? Chinaâ€˜s economy expanded last year at 7.8pc â€“ its slowest pace in more than a decade â€“ and recent data has fuelled concerns that any rebound in the countryâ€™s growth is losing steam. However, the OECD was upbeat, predicting in a new survey of Chinaâ€™s prospects that the countryâ€™s economy could expand by 8.5pc this year and by 8.9pc in 2014. While the OECD noted the slowdown in Chinaâ€™s aggressive expansion, it nonetheless predicted that growth should average 8pc in this decade at current rates of investment and reform. After allowing for price differences, it forecast that China could become the worldâ€™s largest economy, overtaking America, around 2016. It is only a prediction and as the man said, prediction, especially about the future, is difficult*. And hereâ€™s a clue or two to why this is such a wonderful thing to happen: At the recently built head office of Zhejiang Hongyu Medical Commodity Co.Ltd â€“ the medical supplies firm which also sells to the UKâ€™s 99p Stores and Castleford-based firm OTL â€“ factory workers said they put in 10-hour days, with two days off each month. For that, they are paid around Â£320. Still, they say, the work is good. â€œIâ€™m quite content with my job otherwise I wouldnâ€™t have stayed here for so long,â€ said Wang Jinfang, a 42-year-old who has worked at the factory for 10 years. Back at the turn of the millenium factory wages in China were more like $1,000 a year. Now, as you can see, theyâ€™re around $5,000, $6,000 a year. Thatâ€™s a startling rise in incomes for what is, after all, the home of some one sixth of our fellow humans. A serious increase in human happiness and wealth in fact. As to why theyâ€™ve been increasing: But the party may not last for ever. Local factory owners said overheads were rising and complained that it was increasingly hard to find staff. Mr Cohen said he had also heard talk of jewellery manufacturing being moved to Vietnam because wages and other costs there were cheaper. Mr Wu, the owner of the scarf manufacturer Wells Knitting, admitted he was also feeling the strain of rising production costs and planned to retreat to his home province, Henan, in five years time to open a business there. Itâ€™s all happening just as Marx said it would. Capitalists are indeed greedy for profits. So, if there are profits to be made by employing people then capitalists will compete amongst themselves to employ the people out of whom they can make profits. And once that â€œreserve army of the unemployedâ€ is exhausted, the end result will be rising wages for the workers. Exactly what weâ€™re seeing happening here. And as to why itâ€™s happening, thatâ€™s simple too: globalisation. We, thatâ€™s all of us, are simply both more willing and more able to buy the things made by poor people in poor parts of the world. This makes us better off: we get stuff for cheap. But it also makes the people making the stuff better off: see that 6 times rise in Chinese wages in only 13 years. We get better off, they get better off, isnâ€™t it all just the most remarkable demonstration of the truisms that Adam Smith and David Ricardo laid out two centuries and more ago? The division of labour, the specialisation of it and the trade in the resultant production makes everyone richer. Itâ€™s worth noting that even as Chinaâ€™s economy approaches, even surpasses, that of the US the Chinese wonâ€™t be gaining US living standards. For there are four times more of them than there are of Americans, so the same value added (this is what GDP measures, the value added in an economy) must be divided by four to give average living standards. But it is a huge advance in human happiness that this is happening. Over a billion people getting rich simply by making things that we want to buy. As my boss at the Adam Smith Institute in London, Madsen Pirie, is wont to say. If you care about the poor of this world then buy things made by poor people in poor countries. For as above, itâ€™s the one thing weâ€™ve really ever found that makes them richer. Which leads me on to a larger point. Yes, I know, this globalisation, this neoliberalism, supposedly itâ€™s put forward by those who are just mouthpieces for the 1%. Simply apologists for the capitalists running pigdogs. But the truly remarkable thing about it is how pro-poor the outcomes actually are. The last 30 odd years of this globalisation thing have led to the largest reduction in poverty in the entire history of our species. Fewer people are absolutely poor than they were, a smaller portion of humanity is absolutely poor. Itâ€™s actually been so extreme that global inequality is falling too. Chinaâ€™s getting rich which is a wonderful thing. Huge swathes of our fellow humans are moving from destitution to the petit bourgeois pleasures of a roof over their heads, a change of clothes and three squares a day. And all just because weâ€™re now allowed to buy the things that theyâ€™re willing to make. Ainâ€™t that great? Something to be celebrated? Globalisation actually works, it reduces poverty. *There are a number of versions of who said this but I would go with Nils Bohr.