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- Thread starter bd popeye
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The debate over whether to use nominal GDP or purchasing power parity (PPP) to compare China and US is dependent on the context of the comparison. Both metrics offer valuable insights but serve distinct purposes.
Nominal GDP is valued at current exchange rates. USD remains the dominant currency for international trade and foreign reserves. In this context, nominal GDP reflects a country's ability to engage in USD denominated transactions, like global trade and its influence within that system. This affects China's ability to purchase oil, leading edge semiconductors, machine tools and making foreign investments. A lower exchange rate benefits China's ability to export to support industrial upgrading at the expense of lower ability to import, so it's a matter of balancing these 2 needs. It's also a more volatile metric due to exchange rates which might mislead about a country's actual productive capabilities. In the context of the global USD denominated trade system, US remains dominant.
PPP attempts to account for differences in price levels between countries. A poor nation is often not as poor in lifestyle as its nominal GDP may suggest as it's domestic services and products are priced much cheaper than in international markets. That being said not all PPP are the same as each nation's domestic industrial ability varies. For example if we use PPP GDP as a proxy for national power it would appear the ratio between China and India is 2.3 instead of 4.6 in nominal terms. Yes, average Indian lifestyle isn't as bad as it's nominal may suggest as they have access to cheaper food, shelter, education, other domestic products and services but this only reflects what they can produce domestically. If we want to compare ability to produce modern weapons in a war economy, the difference between the two countries might actually be even larger than what nominal GDP suggests, in favor of China. The reason is the composition of that GDP. Chinese economy's composition is heavy in manufacturing with a comprehensive and vertically integrated supply chain in mid-end technologies striving to do the same at the leading edge. In many areas it has about half of the world's productive capabilities, with weakness in a few high end industries. PPP is a good proxy of power based on what a country can produce domestically.
The Western mainstream media's coverage of the Ukraine war is an example misapplication of using nominal GDP to gage Russia's ability to wage war. While it's somewhat true Russian influence in the global marketplace is weakened and at the level of , it doesn't reflect their ability to wage war. Russia has a vertically integrated and mature arms industry, producing at prices much cheaper than at international prices. They also have control over the raw material inputs. than US and Europe combined (NATO). This is counter to what one might conclude if we just look at nominal GDP or even PPP, as it doesn't consider composition.
In a war economy, it matters what you can produce and how much of it you can produce. Money (nominal GDP) is only meaningful if you have access to the production, else it's meaningless. After the Cold War, the US gained access to the defense productive capabilities of most of the world's major advanced industrial nations so it's strength in nominal GDP directly translates into access to war time capabilities, even if it lacks the industries itself. In the example of India, it's sizable PPP isn't reflective of its war economy capabilities due to it's weakness in domestic industries, having to rely on imports which is affected by exchange rates. Due to economic composition, most nations don't have the ability to even effectively transition to a war economy by itself.
Nominal GDP is valued at current exchange rates. USD remains the dominant currency for international trade and foreign reserves. In this context, nominal GDP reflects a country's ability to engage in USD denominated transactions, like global trade and its influence within that system. This affects China's ability to purchase oil, leading edge semiconductors, machine tools and making foreign investments. A lower exchange rate benefits China's ability to export to support industrial upgrading at the expense of lower ability to import, so it's a matter of balancing these 2 needs. It's also a more volatile metric due to exchange rates which might mislead about a country's actual productive capabilities. In the context of the global USD denominated trade system, US remains dominant.
PPP attempts to account for differences in price levels between countries. A poor nation is often not as poor in lifestyle as its nominal GDP may suggest as it's domestic services and products are priced much cheaper than in international markets. That being said not all PPP are the same as each nation's domestic industrial ability varies. For example if we use PPP GDP as a proxy for national power it would appear the ratio between China and India is 2.3 instead of 4.6 in nominal terms. Yes, average Indian lifestyle isn't as bad as it's nominal may suggest as they have access to cheaper food, shelter, education, other domestic products and services but this only reflects what they can produce domestically. If we want to compare ability to produce modern weapons in a war economy, the difference between the two countries might actually be even larger than what nominal GDP suggests, in favor of China. The reason is the composition of that GDP. Chinese economy's composition is heavy in manufacturing with a comprehensive and vertically integrated supply chain in mid-end technologies striving to do the same at the leading edge. In many areas it has about half of the world's productive capabilities, with weakness in a few high end industries. PPP is a good proxy of power based on what a country can produce domestically.
The Western mainstream media's coverage of the Ukraine war is an example misapplication of using nominal GDP to gage Russia's ability to wage war. While it's somewhat true Russian influence in the global marketplace is weakened and at the level of , it doesn't reflect their ability to wage war. Russia has a vertically integrated and mature arms industry, producing at prices much cheaper than at international prices. They also have control over the raw material inputs. than US and Europe combined (NATO). This is counter to what one might conclude if we just look at nominal GDP or even PPP, as it doesn't consider composition.
In a war economy, it matters what you can produce and how much of it you can produce. Money (nominal GDP) is only meaningful if you have access to the production, else it's meaningless. After the Cold War, the US gained access to the defense productive capabilities of most of the world's major advanced industrial nations so it's strength in nominal GDP directly translates into access to war time capabilities, even if it lacks the industries itself. In the example of India, it's sizable PPP isn't reflective of its war economy capabilities due to it's weakness in domestic industries, having to rely on imports which is affected by exchange rates. Due to economic composition, most nations don't have the ability to even effectively transition to a war economy by itself.
proelite
Junior Member
schroedinger's BBC
bioengineers of dung creation and consumption
90% is correct, but one major mistake and one major disclaimer.
This is 100% wrong on many levels: 1. Most of those nations have also deindustrialized in the last few decades considerably, not as the US perhaps, but they are getting there. 2. Two of the most still actually industrially productive of them are right at China's doorsteps and 10000km away from the US. Their industries would be obliterated at the moment they decided to help the US use them in a war economy against China in a short period. 3. Countries in the EU already had governments being changed every few months, with constant civil unrest and 20-30% support rates. I assign the possibility of them contributing to the US war economy in any meaningful way against China maybe some single digit %. 5. You yourself said that Russia outproduced the entire NATO multiple times so it didn't even matter if the US got them to commit somehow in the Ukraine - it still wasn't enough to translate into power that it presents.
Now the disclaimer: No one ever said that nominal GDP is not useful, it is just that it maybe should be looked at 10-20% when painting a picture of the economic power of great powers or superpowers. Not the 80% of the picture that westoid retarded media and dumbfuck redditors present as such. But I guess that it's true if you are a smaller-sized country that needs to import the majority of stuff then it may climb to 50% of usefulness in the basket of economic data you should look at when evaluating the economic significance of a specific smaller-sized country.
The key flaw of GDP PPP is that it doesn’t account for expensive imported high value added goods like automobiles, smartphones, heavy machinery, etc. The problem is that China makes most of these things and is able to provide them at a cheap cost to most of its citizens.
Does anyone have the link to the twitter post about the experiences of a chinese owner running a steel(?) plant in the US? It talked about how us unions are just a grift; changing some machine part needed the permission of the union and required a month, but when their own workers fixed it in a few hours they all got labelled as scabs.
Tried the search but couldn't find anything.
Tried the search but couldn't find anything.
It kinda pisses me off now that it has been revealed people get up to six figures to post online with their shit takes.
I've been doing this for year FOR FREE.
I've been doing this for year FOR FREE.
Most of them are going to be homeless with no healthcare after doge is done with them.