markwu Post time 2012-1-2 10:33:55

It is better to be number two in a fast-growing world

than top dog in a stagnant one.

How to get a date      The year when the Chinese economy will truly eclipse America’s is in sight              Dec 31st 2011                    | The Economist(source:



IN THE spring of 2011 the Pew Global Attitudes Survey asked thousands of people worldwide which country they thought was the leading economic power. Half of the Chinese polled reckoned that America remains number one, twice as many as said “China”. Americans are no longer sure: 43% of US respondents answered “China”; only 38% thought America was still the top dog. The answer depends on which measure you pick. An analysis of 21 different indicators chosen by The Economist  finds that China has already overtaken America on over half of them and will be top on virtually all of them within a decade.

Economic power is best gauged by looking at absolute size rather than per-person measures. On a few indicators, such as steel consumption, ownership of mobile phones and beer-guzzling (a crucial test of economic superiority), the milestone was reached as long as a decade ago. Several more have been passed since. In 2011 China exported about 30% more than the United States and spent some 40% more on fixed capital investment. China is the world’s biggest manufacturer, and partly as a result it burns around 10% more energy and emits almost 40% more greenhouse gases than America (although its emissions per person are only one-third as big). The Chinese also buy more new cars each year than anybody else.

        The country that invented the compass, gunpowder and printing is also challenging America in the innovation stakes. We estimate that in 2011 more patents were granted to residents in China than in America. The quality of some Chinese patents may be dubious but they will surely improve.

The World Economic Forum’s “World Competitiveness Report” ranks China 31st out of 142 countries on the quality of its maths and science education, well ahead of America’s 51st place. China’s external financial clout also beats America’s hands down. It has total net foreign assets of $2 trillion; America has net debts of $2.5 trillion.

The chart shows our predictions for when China will overtake America on several other measures. Official figures show that China’s consumer spending is currently only one-fifth of that in America (although that may be understated because of China’s poor statistical coverage of services). Based on relative growth rates over the past five years it will remain smaller until 2023. Retail sales are catching up much faster, and could exceed America’s by 2014. In that same year China also looks set to become the world’s biggest importer—a huge turnaround from 2000, when America’s imports were six times those of China.

What about GDP, the most widely used measure of economic power? The IMF predicts that China’s GDP will surpass America’s in 2016 if measured on a purchasing-power parity (PPP) basis, which adjusts for the fact that prices are lower in poorer countries. But America will only really be eclipsed when China’s GDP outstrips it in dollar terms, converted at market-exchange rates.

In 2011 America’s GDP was roughly twice as big as China’s, down from eight times bigger in 2000. To predict how quickly that gap might be closed, The Economist has updated its interactive online chart (also here) which allows you to plug in your own assumptions about real GDP growth in China and America, inflation rates and the yuan’s exchange rate against the dollar. Our best guess is that annual real GDP growth over the next decade averages 7.75% in China (down from 10.5% over the past decade) and 2.5% in America; that inflation (as measured by the GDP deflator) averages 4% and 1.5% respectively; and that the yuan appreciates by 3% a year. If so, then China will overtake America in 2018. That is a year earlier than our prediction in December 2010 because China’s GDP in dollar terms increased by more than expected in 2011.

Second place is for winners
Even if China became the world’s biggest economy by 2018, Americans would remain much richer, with a GDP per head four times that in China. But Rupert Hoogewerf, the founder of the annual Hurun Report on China’s richest citizens, reckons that it may already have more billionaires. His latest survey identified 270 dollar billionaires but the true total, he says, is probably double that because many Chinese are secretive about their wealth. According to the Forbes rich list, America has 400 billionaires or so.

America still tops a few league tables by a wide margin. Its stockmarket capitalisation is four times bigger than China’s and it has more than twice as many firms in the Fortune global 500, which lists the world’s biggest companies by revenue. Last but not least, America spends five times as much on defence as China does, and even though China’s defence budget is expanding faster, on recent growth rates America will remain top gun until 2025.

Being the biggest economy in the world does offer advantages. It helps to ensure military superiority and gives a country more say in fixing international rules. Historically, the biggest economy has become the issuer of the main reserve currency, which is why America has also been able to borrow more cheaply than it otherwise would.

But it would be a mistake for American leaders to try to block China’s rise. China’s rapid growth benefits the whole global economy. It is better to be number two in a fast-growing world than top dog in a stagnant one.

pantarhei Post time 2012-1-2 14:19:54

It depends who you are I guess. Is better to earn 2000 yuan per month this year or 2400 yuan then next. Or earn 2000dollar and 2050 next year. I would prefer the 2000 dollar.

China is underdeveloped but has some good policies that allows for growth. America has more mature economy and this makes the structural problems more apparent.

Boso Post time 2012-1-4 10:32:47

after reading what you post here, I get to understand that..thanks..

attilaattila Post time 2012-1-4 12:46:41

In 2011 America’s GDP was roughly twice as big as China’s, down from eight times bigger in 2000. To predict how quickly that gap might be closed, The Economist has updated its interactive online chart (also here) which allows you to plug in your own assumptions about real GDP growth in China and America, inflation rates and the yuan’s exchange rate against the dollar. Our best guess is that annual real GDP growth over the next decade averages 7.75% in China (down from 10.5% over the past decade) and 2.5% in America; that inflation (as measured by the GDP deflator) averages 4% and 1.5% respectively; and that the yuan appreciates by 3% a year
Forecasting economic growth for a decade is pointless, I will be happy if China's growth will be 7,75%/year  in the next decade but I doubt that, I also think US growth will be below 2,5% per year. That 7.75% will be more like 5% I fear , but we shall see.

Mishao Post time 2017-8-23 23:47:33

Exactly right.

markwu Post time 2017-8-24 13:34:37

S: Thank you for the noodles. Shouldn't i have paid?
H: It's alright. Pleasure all mine. Next round on you.

S: What do you think of China's growth?
H: One can appreciate the challenges of economic policymakers. How to maintain continuous growth to pull the rest up while dependent to some extent on other economies to keep those who have come up going ....ergo, how to make all moderately rich before many become immoderately old.

Nevertheless, the present growth has surprised even the best of the west. The profits have increased which are understandably being re-invested in financial housekeeping in many of the outperforming businesses in preparation for the next wave of growth by prudently reducing loan exposure.

S: Nonetheless, do you also think it is better to be number two in a fast-growing world than number one in a stagnant one?
H: Your question is actually another. How much has the west invested in the development infrastructures of emerging economies?

Very little i would add. On the other hand, China has literally moved mountains to help other countries emerge faster by building on commercial BOT terms for them what they direly needed now in order to move their men and goods so as to earn more and lift up their own poor in the same way she has done for hers. She could as well have used the funds for herself, no?

If she had only thought of herself exclusively like what the western colonialists had done, today she would already be number one many times over. (Sucks tooth)...Don't you agree?

S: I can think of India, Myanmar, Philippines, Indonesia, even Vietnam, what more Chile, let alone all of Africa.
H: Some sulfuric hoofs will of course gallop in to suggest she binds those she helps with her loans but i remember she has forgiven many of the debts of African nations while continuing to provide ongoing manpower support and market for their produce.

Besides, it is important for any success that the right motivation is used. Aid receivers too want to be able to earn on their own steam but that would however take learning time, given how much they were neglected in the first place in those days of rapacious colonialists. Don't believe me? Ask those descended from the slave trade.

S: I too notice most of the western media which were quite virulent about China's success with her African brothers have become solidly stolid in their quietus.
H: (crooks one eyebrow; only) Failing with a rising Africa, their media focus moved next to Asia north and east to ruffle both land and sea; stopped in their tracks, they are now back to Asia central and south, playing the talibans whom they had used against the USSR and then turning on them via Afghanistan which was followed by next trying to deputize Pakistan against Afghanistan,  now turning on Pakistan by deliberately siding with India via a trumphic speech which will of course transmute India to be their next organ monkey and arrogated stopper of the very 1B1R they have on the other hand given perfunctory nod which even India cannot deny would uplift many poor such as in its own midst.  

Eagle, or snake, you don't have to inquire anymore.  Next will be balochistan in Pakistan. But have their jewish think-tankers given thought that Pakistan is as theocratic as both tribes of the....Middle East?  Do their masters want another wave of jihads besides kidnappings by kids in loins? Serendipitily silly, yes?

Taking a fuller cognizance of long-horizon history, who is therefore today not acquainted with the broken record of the musical chairs of imperial mischief?

S: But that is geopolitics, not economics, yes?
H: In today's multi-polar world, the dance between geopolitics and economics has become a riotous rumba when it should be a graceful waltz.

Failing to disrupt economic growth of others unless they want to fire a "smith & wesson self-shooting revolver", they are now disrupting positive geopolitics and replacing it with the muddy water of ideological alignment cooked in the curry-house kitchens of psychological dependents furthermore stoked by media fed on sinophobic prejudices that are designed to realize the very thucydides trap of their own self-fulfilling concoction.

The very fact there is no objective rationale for their actions if they really want a wholly positive outcome for all is enough convincing conclusion that they only desire to win for themselves at all costs, especially onto others who have been too long without economic benefits which would come from bending spears into plowshares, no?

S: (looks into his eyes; deeply) I sense you have left something unsaid. A small misgiving, perhaps?
H: If by that you mean whether i harbor concerns for China, perhaps (coughs).

S: (eyes twinkle girlishly, beige-pink lips makes an O) Ooh...
H: There was the old refrain - a nail that stands up will get knocked down. Historically, this has been pointedly germane for all manners Chinese. One is reminded of the british 'Chinese and dogs not allowed' and the american 'Chinese Exclusion Act' and the japanese 'not even good as fertilizer'.

As as aside, shouldn't the jews be sympathetic with those who can, downtrodden by those who couldn't, as they themselves had experienced? That is, if they still have any conscience after doing to the palestinians what the nazis had done to them in the ghettos. But that's another matter. Which however has relevance in the hallways of the western corridors of power, think-tanks, lobby parlors, media-houses, even film studios.

S: So, are you suggesting China should have risen quietly and in the background instead?
H: My first thought was that. It could have reduced all the reactions and misgivings about her rise since what is not seen outwardly will be less likely to be debated, focused and publicized in ways slanted without real facts such as we have unremittingly seen so far.

S: But then..?
H: But then i asked myself how do you avoid seeing one fifth of the human race leap up in one generation? Unfortunately, what is still part of the human race was quickly categorized as just the Chinese race. There was no celebration of her achievement for being able to get up again so quickly. There was no recognition and sympathy with the fact she was down so long because of the perfidies and malignant exploitation by others of the same human race, what more the things they had done to her peoples were utterly inhuman. There was only focus on mistakes she had made whilst trying to change her society and industry with threadbare resources that were only not taken from her as well because all else have been sucked dry by the invading vampires whose agenda we can still see as the same shadows lurking around the next corners today.

S: Is it because she is the only nation today which has a unique historical basis of tianxia?
H: It could be but i hesitate to say more if only because i can already hear the saber-rattling by fear-mongers against its benign ideal.

S: So how do you see the future for China and the world?
H: (looks sadly into the teacup).....
S: (looks aggrieved)..Oh no..are you already dispirited? But why, why?
H: (grins ear to ear). Just testing you. (Smiles). I see China as primus inter pares but with Chinese characteristics (rolls out tongue).

S: So are you saying China will be numero uno but will pretend not to be number one?
H: Well, some things she cannot pretend. Like her prowess with huge constructions, logistics, e-commerce, solar applications, robotics, electric transport, retail and payments, even public infrastructure and economic, monetary, fiscal and geo-strategic development policy formulations.  Among other great things yet to be revealed, these she can lead the rest of the world.
S: (bites lips as if exasperated) Hmmm, such a long phrase..
H: (grins to show sparkling teeth). Anything else? (blinks innocently)

S: What do you think of Mishao?
H: Is that a trick question? I cannot think of anyone else when you are in front of me. But you already know that, don't you?
S: (eyes roll and roll as if in disbelief). You men are so incorrigible.
H: Oh, how deflating.  And i had thought you would not think of me by now only as one of the men. But as Da man.
S: (blushes). That's for me to know, for you to find out. Quick, tell me what you think of Mishao.
H: (raises eyes to look at eyebrows, shakes head). I give up. Is Mishao a man or a woman?
S: Why?! is the gender important?
H: Since i value my life, presently in your hands, discretion is certainly the better part of valor.
S: (twists mouth, looks suspiciously from corner of eyes). Quick, say...
H: Ok, diplomatically i would say Mishao is almost as intelligent as abcfirst who is of course a quantum leap above that, erh, that, erh,  sicko...
S: Ok then i shall next ask abcfirst for a date.
H: Grief, what i have done to myself?!

The end
Of being Number Two.

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