You already know how the US will respond right.
Instead of GDP, the media will focus on Per capita GDP and all that.
Chinese Economics Thread
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Instead of GDP, the media will focus on Per capita GDP and all that.
We got no chance beating US in GDP/capita until China boomers are gone.
You do the opposite to the dollar if you want higher $GDP/capita.Yea you are, just print money like them
I expect China to try to fix its debt issues in the next few years with all these defaults.
If CCP doesn't do anything and Yuan depreciates, it'll be harder to pay off those loans.
There has also been a concern/speculation that the US would abolish the GDP as a measure of the size of economy as the day approaches.
It's not totally inconceivable, the US has gradually added some measures to the GDP by taking into account of , for example. Other intangibles are also increasingly considered to be part of the intellectual property products (IPP) accounts. As the US is a service-based economy, there are a lot of flexibility to incorporate similar measures. In fact, there is one big account in the US GDP that Chinese ones does not consider, which is the owner's imputed rents. So if you live in your own house, and whether you pay rent or not, there is a rental cost (imputed) contributed to the GDP. Consumption spending on housing service, which includes gross rents and utilities paid by renters, as well as owners’ imputed rents and utility payments, averages about 12-13% of GDP.
Of course. First US will shift the focus to standard of living measured by GDP per capita. It’s already happening in main stream media reporting. Next, US will focus on human rights, freedom of speech and paint Chinese society as a dystopian autocracy.
Shifting the narrative and control people’s perceptions.
The US and India are also set to be #2 and #3 economies no matter what happens. Not in China’s interest have them form an indo-US alliance against China. If had to choose, I would rather China form better relations with the US in the long term.
China's new white paper on energy came out this week, allowing full foreign investments in power generation, oil, gas and coal sectors, while excluding nuclear power and new emerging energy sectors. The race to dominate efficient energy production and consumption, by extension productivity, is part and parcel how civilizations rise and fall throughout human history.
Vaclav Smil's book Energy and Civilization is a good read. Highly recommend it.
Full Text: Energy in China's New Era
Vaclav Smil's book Energy and Civilization is a good read. Highly recommend it.
Full Text: Energy in China's New Era
Thats not something to worry about, thats just a biological inevitability.
China is already the largest economy in the world.
PPP GDP is more relevant for China for estimating military/space/R&D capacity, since China is nearly self-sufficient in terms of technical and manufacturing capability. Most of the costs for equipment and personnel are local in nature.
Even if you buy a loaf of bread in China, the cost of the wheat and the crude that makes the gasoline for the transportation is pretty much the only thing that China doesn't produce. It's cost is minimal relative to the total value of all parts domestically produced. That is what China is importing.
Natural resources, food, and a dwindling amount of high tech items (planes, engines, semiconductors) are the few things that you might want to use nominal GDP to calculate for China. While on the other hand nations like India, who don't source most of the items, parts, techniques, etc. from the domestic market, but rather internationally, their nominal GDP is far closer to the truth.
According to consensus, the IMF never actually gets in this war of 'who is the biggest economy' and usually just releases their nominal and PPP figures/estimates and lets everyone decide for themselves, but that's actually not exactly true. In one of the supplemental appendices, the IMF implies the true relative measure of an economy is: 40% of nominal GDP + 60% of PPP GDP (might be 60% nominal + 40% PPP I honestly can't remember).
I would say this isn't entirely accurate and is a simple one size fits all measure, and China's should lean more towards PPP relative to whatever measure the IMF uses for the baseline country, but even if you use the baseline country calculation then China and the US are already close to the same economic size.
Does anyone find this surprising?
It isn't when you consider some facts about the relative differences in other metrics (which are highly correlated with economic size):
As of end-2019, total assets for all SOEs in China was $78 trillion, more than the combined non-financial assets of all US households, nonprofits, small businesses, corporate businesses, financial businesses, local governments, state governments, and the US federal government, combined. This is despite the fact that SOEs only contribute 40% of all Chinese income (a different metric but still impressive). () ()
China has four of the top ten most competitive financial centers (Shanghai, Hong Kong, Beijing, and Shenzhen), more than any other country (USA has 2). This is according to the GFCI which is widely considered the top source by international organizations and institutions for ranking financial centers. () ()
According to the only bank that compiles global national wealth data, China is either the richest country in the world or is about to be within the next year or two. ()
The 2020 numbers listed by Credit Suisse above show the net national household worth of China is $81.4 trillion compared to $114.9 trillion in the USA. This does not account for government net wealth, which was $17.4 trillion for China as of end-2016 and over -$21.5 trillion for the USA as of beginning-2019 (yes negative $21.5 trillion!), with the discrepancy likely being even worse as of 2020. () ()
From the same source but for last years issue, China already surpassed the United States in the total number of people within the top 10% of global wealth. China had 100 million wealthy people (each owning a net wealth of over USD 110,000) compared to the US with 99 million. ()
China also has the world's largest total banking sector assets of $45.838 trillion (309.41 trillion CNY) with $42.063 trillion in total deposits and other liabilities () ()
China has more Fortune 500 companies than anyone else in the world, in nominal value not PPP. China has over 25% of the worlds largest companies. () ()
While Forbes ranks China as having the 2nd largest number of billionaires, Hurun Global Rich List, which is actually located in China and may know more about local business operations lists 799 billionaires for China (I'm sure excluding many relatives of certain officials) to the USA's 626 billionaires. ()
China manufactures $3.896 trillion of goods every year compared to $2.317 trillion for the USA, or about 68% more. ()
Hell, even when the US shows off how much it buys from everyone else, China buys just about as much as the US does. While US imports were $2.568 trillion in 2019, China's was $2.069 trillion, or only about 25% more... ()
China has more 5G users than the rest of Humanity combined. In fact, it's not even close. By the end of July 2020, China's 5G users had already surpassed 88 million, accounting for over 80% of users worldwide -- far ahead of the previously projected 70% share for the whole of 2020. ()
Our economic wunderkind Gordon Chang says that electricity consumption is actually the best indicator of Chinese growth. China consumes 6.31 trillion kilowatt-hours per year as of 2017, while the US consumes 3.91 trillion kW·h/yr as of 2015. Does someone want to tell him that China consumes 63% more electricity than the United States every year? ()
I can go all day with these stats. China produces 12x as much agriculture value (adjusted for PPP), China produces significantly more food (contrary to popular belief), China produces over 2x as many cars every single year, China produces $7 trillion MORE industry than the US every single year (adjusted for PPP), and on and on and on. China outproduces and out-consumes the United States on 90%+ metrics that exist. See for yourself:
Also funny to note, many of these are outdated enough that a decent proportion that are listed as another country leading actually belong to China if you look a little bit deeper.
Let's not forget with most if not all of these numbers the differences will continue to grow in China's favor with each passing year, and that some of these numbers are already slightly outdated so the actual reality is even more in China's favor than indicated. So how can a country which is only supposedly 70% of US GDP be this much bigger in every other metric? It doesn't make any sense.
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The Chinese born between 1950 and 1970 are the ones that guided China to where it is today. Mother nature makes sure that they will fade away in the next 30 years but their absence is not required ingredient for China to reach GDP per capita with the U.S. in dollar terms.
Matching the U.S. in per capita GDP does seem a very tall mountain to climb but not inconceivable give it another 30 years. How likely was the thought China will surpass the U.S. in dollar terms in less than 30 years in 2000?
Assuming the two reaches parity in dollar terms in 2030 and the goal is to reach parity in per capita GDP by 2050, China must close the 4X difference in 20 years. For China to double its economy in 20 years takes an average of 3.5% growth rate (72 / 20). That sounds feasible given the current urbanization rate and the savings rate. To get the other 2X, we can engineer a lowering of China's PPP to 1.0 (from 2.x right now). Probably from a combination of China's CPI appreciation and USD depreciation against the CNY especially since the U.S. must inflate away its massive public debt for its economy to stay viable.
To make this scenario happen, given that China will plateau in population soon while the U.S. is still growing (through immigration), it is imperative for China to extend the retirement age, to provide an universal social safety net so people will open up their wallets, and to increase productivity through automation/education/R&D/etc. It also helps that the expected long-term decline of the USD also makes it less likely for the U.S. to weaponize SWIFT. If China plans it right, a smaller denominator in GDP divided by population size will be a blessing, not a curse.