'As China greys, India set to become world's growth engine'

[Phenom]

Its Basic economics that an aging populace would lead to decreasing growth rate, the only way to counter it, is through immigration, but I doubt China Communist party would allow migrants in. China will probably continue to grow but at a much slower rate.

Also, I get the feeling most Chinese (atleast on internet) think that their country is invincible and can defy all odds. They have a lot to be proud of, for what their country has achieved, but I hope they realise that China is not some super hero that can defy the laws of physics and economics. The same economic principle that worked in every other nation will also work in China.

 

[Vinod2070]

I see that currently Taiwan has almost 5 times the per capita GDP of China (in nominal and PPP) terms. You are saying you will be at par in 5 years!

China was 98th in the world in per capita income and 92nd in human development index.

So there is a long way to go.

 

[badguy2000]

I see that currently Taiwan has almost 5 times the per capita GDP of China (in nominal and PPP) terms. You are saying you will be at par in 5 years!

China was 98th in the world in per capita income and 92nd in human development index.

So there is a long way to go.

10 years ago, Taiwanese per capital nominal GDP was 20 times more than that of mainland China.

Besides, Taiwanese per capintal nominal GDP is only 2 times of that of rich provinces such as Guangdong and Zhejiang.

It is not a surprise at all that Guangdong and Zhejiang have their per capital nominal GDP at par with Taiwanese's in 2015.

 

[Vinod2070]

10 years ago, Taiwanese per capital nominal GDP was 20 times more than that of mainland China.

Besides, Taiwanese per capintal nominal GDP is only 2 times of that of rich provinces such as Guangdong and Zhejiang.

It is not a surprise at all that Guangdong and Zhejiang have their per capital nominal GDP at par with Taiwanese's in 2015.

So you expect that the current skewed development in China will continue and the massive differences in the coastal and other areas will also continue?

Also in 10 years, China's per capita income has increased four times? I hope even you can realize that not all of it is real growth, much of it is coming from currency fluctuations and inflation. The same factros may not continue. As the GDP increases, the growth rates go down the world over. China is no exception.

Taiwan lost much of their competitive edge in cheap manufacturing to China, China will lose it some others when the Western firms find new places to outsource the low skilled work.

 

[badguy2000]

So you expect that the current skewed development in China will continue and the massive differences in the coastal and other areas will also continue?

Also in 10 years, China's per capita income has increased four times? I hope even you can realize that not all of it is real growth, much of it is coming from currency fluctuations and inflation. The same factros may not continue. As the GDP increases, the growth rates go down the world over. China is no exception.

Taiwan lost much of their competitive edge in cheap manufacturing to China, China will lose it some others when the Western firms find new places to outsource the low skilled work.

hehe, let me tell you. " increased 4 times" not comes from "currency fluctuation and inflation",but a correction of "serious undervalue of RMB".


in fact, RMB is still be seriously undervalued.

if all undervaluing of RMB is correted completely, CHinese per nominal GDP would be much higher .

During 2000-2010, CHina's infaltion is always <3%. inflation is nothing here. appreication of RMB play a limited role here.

 

[Vinod2070]

hehe, let me tell you. " increased 4 times" not comes from "currency fluctuation and inflation",but a correction of "serious undervalue of RMB".


in fact, RMB is still be seriously undervalued.

if all undervaluing of RMB is correted completely, CHinese per nominal GDP would be much higher .

During 2000-2010, CHina's infaltion is always <3%. inflation is nothing here. appreication of RMB play a limited role here.

If that were the case, your GDP(PPP) would have a higher ratio with India compared to nominal. In fact it is the reverse.

I agree the Yuan is undervalued and it is kept undervalued for a reason. A very good reason. You don't hav the luxury to "undervaluing of RMB is correted completely"!

 

[badguy2000]

If that were the case, your GDP(PPP) would have a higher ratio with India compared to nominal. In fact it is the reverse.

I agree the Yuan is undervalued and it is kept undervalued for a reason. A very good reason. You don't hav the luxury to "undervaluing of RMB is correted completely"!

well, trade balance is the best indication showing whether one currency is undervalued.

CHina has global biggest trade surplus while India has a trade deficit.

as for PPP, I always think the per capital electricity consumption and household applance penetrating rate is the best indication of life quality.

China's per capital electricity consumption and household applance penetrating rate is almost equal to Malasia and east eruope

 

[amoy]

no, no B_G

back to senses, if "undervaluing of RMB is correted completely", what about the export oriented industries?

u can't stride ahead only with nominal GDP in mind

 

[Vinod2070]

well, trade balance is the best indication showing whether one currency is undervalued.

CHina has global biggest trade surplus while India has a trade deficit.

No. Currency valuation is just one of the factors. One among many.

Zimbabwe has a much more undervalued currency, doesn't mean it can export more.

as for PPP, I always think the per capital electricity consumption and household applance penetrating rate is the best indication of life quality.

You are mixing different things. PPP has little to do with quality of life.

China's per capital electricity consumption and household applance penetrating rate is almost equal to Malasia and east eruope

Good for you!

Perhaps you can't understand (or don't want to understand) that it may be due to the economic model chosen by you. Massive manufacturing capacities necessitate those polluting coal fired power plans (still one every week?), depleting and polluting your water resources and air.

Bragging doesn't help, especially when facts are available to everyone. You seem to think otherwise.

 

[p2prada]

for your reference:

2009 , china's trade amount is NO.1 in the world,much more than Japan's . Without the huge import from CHina, Japanese economy would be worse.

It is Japanese money that is indeed creating the huge wealth in China. Germany was the largest exporter in the world until this year, but their economy is still considerably smaller than Japan's. Without imports from China the Japanese would be worse off. But without exports from Japan, China's economy would be equally bad. It is a seesaw. One affects the other.

One hand,CHina has much cheaper labour than any of developed countries;
On the other hand, China has much better infrastructures and more full industry chains than any of other developing countries.
Besides, China also has much better literacy rate than most of other developing countries.
CHinese workers are much more disciplined than those of other countries.

that is why china is invincible manufacturing titan in the world.

It may be true as of now. But it does not hold much salt say 10 years from now. That's why I said in 10 years time Chinese GDP growth is expected to fall to 5% due to increased competition from countries like India, Indonesia and Mexico. If your per capita increases to current Taiwan levels in 2020, obviously your work force will ask for more wages that may not compare to other countries.

Black Africa, and India have much cheaper labour and younger population than CHina for long time. but that is not enougn for Black Africa and India to take the place of CHina.

The racist comment apart, these are the primary factors which affected China's massive growth. Cheaper workforce and Younger population. The American and Japanese manufacturers were many times better than the Chinese in the 80s. But, they still transferred their jobs to China because of the advantages that you just pointed out. In the 80s do you think China had full industry chains you are talking about?

If india were really want to compete China, fix your poor infrastructure and broken industry chain first......
then raise your literacy rade .......
then pour the awareness of "punctual" and "discipline" into most Indian's brains and fix your unpunctual bad habbit.

Otherwise, "India shining" is just a pipe dream!

Agreed. But, even with lack of infrastructure, broken industry chain, small literacy rate, bad punctuality and indiscipline we are still managing to clock a growth of 9% and above. Imagine when we have the infrastructure China has, how will India's growth be like then?

 

[amoy]

China census shows population ageing and urban
http://www.bbc.co.uk/news/world-asia-pacific-13218733

China has been looking to contain population growth with measures like its one-child policy
Continue reading the main story
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China embarks on massive census
China begins world's biggest census
China's census shows its population grew to 1.34 billion people by 2010, with a sharp rise in those over 60.

Nearly half of all Chinese now live in cities and people over the age of 60 now account for 13.3% of the population, up nearly 3% since 2000.

But the figures reveal that China's population is growing more slowly than in the past.

That could affect the economy, as the number of potential workers, especially from rural areas, could shrink.

The proportion of mainland Chinese people aged 14 or younger was 16.6%, down by 6.29 percentage points from the last census in 2000.

The number aged 60 or older grew to 13.26%, up 2.93 percentage points.

Chinese snapshot

When China carried out its first census in 1953 it had a population of 594 million, less than half the current figure.

This census, the first in 10 years, comes after a decade of rapid economic growth that has led to significant social change.

Continue reading the main story
Analysis

Michael Bristow
Beijing
The census figures announced by the Chinese government were not particularly surprising - they show trends that were identified long ago.

But they do reveal some of the challenges and problems the government will have to tackle over the coming decades.

Chinese society is ageing. That means more pensioners, who will have to be looked after by fewer workers. China's family planning policies that limit many families to just one child is partly the cause.

There are now nearly twice as many migrant workers as 10 years ago, when the last census was taken. These are farmers who travel to the country's booming towns and cities to find work. But in their new homes they have only limited access to services, such as healthcare and education for their children.

Officials have also revealed that there are now nearly six boys born to every five girls. Traditionally, Chinese families have preferred boys. But this will lead to problems for some when they grow up and try to find a wife.

The results revealed that almost half of all Chinese - 49.7% of the population - now live in cities, up from about 36% 10 years ago. Many have been drawn to jobs in China's factories and coastal industrial zones.

The census for the first time counted migrant workers where they were living, rather than where they were registered. It found that more than 220 million Chinese had worked away from home for over six months in 2010, almost double the previous figure.

The government's strict controls on family size, including its one-child policy for most urban families, have reduced annual population growth to below 1% percent. The rate is projected to turn negative in coming decades.

There has been growing speculation in the country's media about the possibility that the government will ease the policy - introduced in 1980 as a temporary measure to curb surging population growth - and allow more people to have two children.

As it currently stands, most urban couples are limited to one child and rural families to two. The average household now numbers 3.1 people, down from 3.44 a decade ago.

Some demographers have said that the limits on family size may now threaten China's economic future, with fewer people left to pay and care for an older population, as well as to work in the factories that have transformed the country into the world's second largest economy.

"The data from this census show that our country faces some tensions and challenges regarding population, the economy and social development," said Ma Jiantang, head of the National Bureau of Statistics.

"First, the ageing trend is accelerating, and second the size of the mobile population is constantly expanding."

He said China would have to "actively respond to the new challenges in demographic development".

But state-run Xinhua news agency said President Hu Jintao told top party lawmakers on Tuesday that China's family planning policy would remain unchanged and the low birth-rate be maintained.

 

[no smoking]

It is Japanese money that is indeed creating the huge wealth in China.

I think you are wrong here, my friend. It is overseas chinese money that is indeed creating the huge wealth in China. In contrast, Japan's investment in China is even behind US and Germany in last 90s.

It may be true as of now. But it does not hold much salt say 10 years from now. That's why I said in 10 years time Chinese GDP growth is expected to fall to 5% due to increased competition from countries like India, Indonesia and Mexico. If your per capita increases to current Taiwan levels in 2020, obviously your work force will ask for more wages that may not compare to other countries.

Regarding India and vietnam, Chinese workers' wages are twice of their counterpart in these 2 countries. But the total cost is still lower than the 2. Obviously there is other factors matter here: like stable electricity supply, cheap transportation, cheap imported part etc. Another big difference is that the machine or productiin line used in most of industries of China are produced domestically except high end machine, while the other 2 countries don't have such ability or don't have enough capacity to supply its own industry. This cause the higher maintenance fee for the factories in India and vietnam.

But, they still transferred their jobs to China because of the advantages that you just pointed out. In the 80s do you think China had full industry chains you are talking about?

Yes, China did have a full industry chain at that time, even though it was producing only crap. Why i am so sure, because when I was a school student in last 80s, this industry chain was critized as a money-wasting policy instead of advantage REPEATLY!

Agreed. But, even with lack of infrastructure, broken industry chain, small literacy rate, bad punctuality and indiscipline we are still managing to clock a growth of 9% and above. Imagine when we have the infrastructure China has, how will India's growth be like then?

That is what the different opinion is. Based on China's experience, all these weakness would take at least 2 decads and trillions of dollars to fix. So far, india is still using its existing advantage in the development. When the potential of these strengths are completely exploited, india has to face these problems. Furthermore, your investment in these areas won't produce any significant return in the initial stage. So, you can't expect foreign investment here.

There is another problem for india when it tries to fix these problems: democracy. Don't get me wrong, what I saying is democratic system would give everyone a say in any project, which means far more time and cost to carry out a project. So, if a road took chinese 2 years and 200m dollars to build in last 80s , it may cost india 8 years and 1 billion dollars today.

 

[badguy2000]

democracy is not one asset ,but one reiliabity to India.

 

[nimo_cn]

Oh, come on Chinese members, leave something for them to cheer up.

 

[badguy2000]

Oh, come on Chinese members, leave something for them to cheer up.

if CHina were not to collapse,those Gordon CHangs would collapse.

 

[Armand2REP]

Regarding India and vietnam, Chinese workers' wages are twice of their counterpart in these 2 countries. But the total cost is still lower than the 2. Obviously there is other factors matter here: like stable electricity supply, cheap transportation, cheap imported part etc. Another big difference is that the machine or productiin line used in most of industries of China are produced domestically except high end machine, while the other 2 countries don't have such ability or don't have enough capacity to supply its own industry. This cause the higher maintenance fee for the factories in India and vietnam.

Cost isn't lower or companies wouldn't be relocating to them. Even Chinese companies are outsourcing to Vietnam, Indonesia. I was not aware these countries were prone to rolling blackouts. Cheap transportation... in China? Trucks have to go through so many toll roads, it adds another $200 to the load. Cheap imported parts... in China? Why would China import parts? What they import isn't cheap. Foreign producers will supply whatever machines they need, usually from the West. Your factors aren't really adding up. On the other hand, factors to keep foreign producers in China is getting rather precarious due to three factors.

A) rising wages
B) rising transport cost
C) rising yuan

Several US companies, GE/Marconi/Cummins, have already shifted production from China to Mexico (20,000 jobs), as it is cheaper to ship, and soon to be cheaper labour costs. Same thing for Western Europe moving to Eastern Europe which is where most of the German toy manufacturers relocated. Another problem with China is the high turnover of factory workers, once the New Year comes, many don't come back requiring expensive training cost for a new class. Now many of these workers move inland along with many of the factories. That just adds more transportation cost as the supply chains are no longer on the coast. It was a factor often overlooked thanks to the low wages, but now it is not so easy with so many factors against them. The recent ending of foreign subsidies is certainly not going to help. Hundreds of thousands of foreign export jobs have already left, it just isn't highly reported as so many domestic production facilities take their place.