Thread: China overtakes U.S. as biggest economy? (Yes!)

After news like:

"China lends more money than World Bank to developing nations" and "The most powerful person in the world coming from China" (Hua Jintao not the Prez of the U.S.)


who doubts this news.





BEIJING, Jan. 19 (Xinhua) -- Though China is yet to release its annual economic data, a U.S. economist has already crowned China as the world's biggest economy in terms of purchasing power parity (PPP).
The "generous" No. 1 title given by Arvind Subramanian, senior fellow at the Peterson Institute for International Economics in Washington, has drawn suspicion from Chinese scholars, who say such remarks are "pure fiction."
Chen Fengying, director of the World Economy Institute of China's Institute of Contemporary International Relations, said the title was an honor unfit for China.
The size of China's economy in 2010 was 14.8 trillion U.S. dollars, compared with 14.6 trillion U.S. dollars for the United States, when accounting for the countries' differing costs of living, Subramanian wrote in a note published on Jan. 13, a week before President Hu Jintao visits Washington.
Purchasing power parity calculates gross domestic product (GDP) using exchange rates and takes into account price differences of the same goods between nations.
However, statistics from the International Monetary Fund (IMF) and the World Bank (WB) tell another story to that of Subramanian's.
The IMF, for instance, estimates gross domestic product, in PPP terms, in the United States was about 14.6 trillion U.S. dollars in 2010, while China's was 10.1 trillion U.S. dollars. The World Bank estimates a similar gap.
That's why David Leonhardt, an economics journalist with the New York Times, said on Jan. 14 in his article "On the size of China's Economy, a dissenter" that "I was careful to say that, by most measures, the United States still has by far the largest economy in the world."
Ranjit Lall, the Financial Times' 2010 Peter Martin Fellow and also a senior statistician, said on Jan. 14 in his article "Has China already overtaken the U.S.?" that "one might wonder, if this were the case, why Chinese policymakers have made no effort whatsoever to correct the IMF's statisticians."
Subramanian argued that China raised no concerns about the IMF's price data because a revision would lead to more pressure on China to appreciate its currency against the dollar, according to the article.
Theoretically, the PPP model has flaws, such as it takes traded goods into consideration while omitting non-traded ones, it neglects the influence of trade costs and trade barriers, and it overlooks the impact of international capital flow on exchange rate, analysts say.
By framing China as the world economic bellwether, Subramanian aims to cook up an excuse to add pressure on Beijing for currency appreciation, said Yuan Gangming, research fellow with the Institute of Economics of the Chinese Academy of Social Sciences (CASS).
Subramanian's conclusion is far from scientific and his claim "highly overestimates the Chinese Yuan purchasing power," said Chen Fengying.
No wonder, David Leonhardt said Arvind Subramanian "remains very much in the minority."
"Even if China's economy surpasses the U.S. by economic scale one day, in terms of total economic scale, there is a long way to go before China becomes as strong as the U.S.," Chen said.
Concerning GDP per capita, IMF figures show that the average American is six times better off than the average Chinese person, however Subramanian thinks the difference is only four times, according to Ranjit Lall's article.
Subramanian's conclusion aims to make China bear responsibilities far beyond its ability, Chen said.
Chen also downplayed a poll by the Washington-based Pew Research Center for the People and the Press, which revealed last week some 47 percent surveyed Americans said China is the leading economic power with 31 percent naming the U.S., saying that the majority of Americans do not know China in depth, and their judgments are still influenced by both countries' performances during the global economic downturn.

China overtakes U.S. as biggest economy?

USA bought land off the indigenous Indians for trinkets , glass beads etc
now they too are selling America to china for a huge pile of crap ,like $1 T shirts and plastic buckets.

I do think that one day there will be a few million Chinese that when they have accesss to this information, might wonder why they are living in the worlds biggest economy, as pesants.

Originally Posted by blue

USA bought land off the indigenous Indians for trinkets , glass beads etc
now they too are selling America to china for a huge pile of crap ,like $1 T shirts and plastic buckets.

It's called karma ...

Originally Posted by Bower

I do think that one day there will be a few million Chinese that when they have accesss to this information, might wonder why they are living in the worlds biggest economy, as pesants.

They may ask for advise their "cousin" living in trailer parks in the other biggest economy

Originally Posted by Bower

I do think that one day there will be a few million Chinese that when they have accesss to this information, might wonder why they are living in the worlds biggest economy, as pesants.

Depeg the Yuan and the Chinese will gain the purchasing power that the US loses.

Americans are not peasants but debt slaves

Originally Posted by Bower

I do think that one day there will be a few million Chinese that when they have accesss to this information, might wonder why they are living in the worlds biggest economy, as pesants.

As peasants? Been to China lately?

Originally Posted by Rural Surin

Originally Posted by Bower

I do think that one day there will be a few million Chinese that when they have accesss to this information, might wonder why they are living in the worlds biggest economy, as pesants.

As peasants? Been to China lately?

Yes.. certainly you've been outside the major cities? While there may be a 100 million people between Shanghai, Beijing, Shenzhen, Macau, HK, Guangzhou, etc.. that means theres 900,000,000 left elsewhere in China.

Hell, China still has their draconian immigration laws between provinces/cities, most of those people are still being kept away from such metropolises in some rural shanty town rather than some potemkin village outside of Beijing.

Originally Posted by HermantheGerman

in PPP terms, in the United States was about 14.6 trillion U.S. dollars in 2010, while China's was 10.1 trillion U.S. dollars.

Much more credible.

China is also the worlds largest creditor and has enormous currency reserves- and the US is the worlds largest debtor, and is sliding further into debt every day. The fact that China will replace the US as the worlds largest economy is basically a fait accompli. The military balance of power will inevitably follow suit.

Originally Posted by sabang

Originally Posted by HermantheGerman

in PPP terms, in the United States was about 14.6 trillion U.S. dollars in 2010, while China's was 10.1 trillion U.S. dollars.

Much more credible.

China is also the worlds largest creditor and has enormous currency reserves- and the US is the worlds largest debtor, and is sliding further into debt every day. The fact that China will replace the US as the worlds largest economy is basically a fait accompli. The military balance of power will inevitably follow suit.

Yeah, then everyone can hate China rather then the US.

I cant wait till China has their 9/11. They will turn the middle east into a lake and all the socialists will be begging for George Bush back.

Originally Posted by HermantheGerman

BEIJING, Jan. 19 (Xinhua) -- Though China is yet to release its annual economic data, a U.S. economist has already crowned China as the world's biggest economy in terms of purchasing power parity (PPP).

Sounds impressive, but as soon as Khun Chink leaves China he can not purchase at Chinese PPP and he is just another Chink with no money

Originally Posted by socal

Americans are not peasants but debt slaves

Quite- but turning your 'peasants' into debt slaves has marked the impending demise of most Empires. Imperialism and hegemony cost money, and when the monetary costs start to exceed the cash flow accruing this marks a sea change. Unnaddressed, it means decline. The US is still not addressing it's national slide towards insolvency, and this has been going on for many years.

keep in mind that those Chinese GDP figures are estimates, nobody knows exactly how much they make annually, since their stats office bureau is one big joke. They could claim a bigger number, nobody could verify that information. And their GDP growth is to be balanced with their massive inflation, so something also to take into consideration.

We all know that China is one big bubble ready to explode, they are the subprime market of the world. Once they implode, it's going to be as bad as the entire EU defaulting on their bonds.

The US don't need to default on their bonds, they just issue new ones, since the world is flooded with USD where nowhere to go except US Treasury.

Originally Posted by Butterfly

We all know that China is one big bubble ready to explode, they are the subprime market of the world. Once they implode, it's going to be as bad as the entire EU defaulting on their bonds.

One big bubble ?! Sorry but I been hearing this for the past 10-15 years, in the mean time .......the U.S. had its stock market bubble, real estate bubble and the next bubble is on the way.

Originally Posted by HermantheGerman

Originally Posted by Butterfly

We all know that China is one big bubble ready to explode, they are the subprime market of the world. Once they implode, it's going to be as bad as the entire EU defaulting on their bonds.

One big bubble ?! Sorry but I been hearing this for the past 10-15 years, in the mean time .......the U.S. had its stock market bubble, real estate bubble and the next bubble is on the way.

Thats right, the bubble that has been before our eyes for all to see for a couple years now is the US dollar and US debt market.

And sure, China owns allot of these dollars but when the shit hits the fan, China will not get 100 cents on the dollar but they will get something.

Originally Posted by Butterfly

keep in mind that those Chinese GDP figures are estimates, nobody knows exactly how much they make annually, since their stats office bureau is one big joke. They could claim a bigger number, nobody could verify that information. And their GDP growth is to be balanced with their massive inflation, so something also to take into consideration.

We all know that China is one big bubble ready to explode, they are the subprime market of the world. Once they implode, it's going to be as bad as the entire EU defaulting on their bonds.

The US don't need to default on their bonds, they just issue new ones, since the world is flooded with USD where nowhere to go except US Treasury.

The US debt market is the subprime of the world. China is a CREDITOR nation. CREDITOR, CREDITOR,CREDITOR, get in through your scull.

Originally Posted by robuzo

Robert Reich: The Real Economic Lesson China Could Teach Us
Here's the real story. China has a national economic strategy designed to make it, and its people, the economic powerhouse of the future. They're intent on learning as much as they can from us and then going beyond us (as they already are in solar and electric-battery technologies). They're pouring money into basic research and education at all levels. In the last 12 years they've built twenty universities, each designed to be the equivalent of MIT.

Their goal is to make China Number one in power and prestige, and in high-wage jobs.

Reich is a good advocate for labor particularly unions but he does not understand business economics.

In simple language China is investing in the most productive people in China, scientists, engineers and their businesses. They contribute to the success of the economy.

The US, through direct spending, labor laws, civil rights laws and government mandates "invests" in the least productive members of society - blacks, minorities, women, the handicapped, public sector workers, unionized workers etc. These people have the least potential to contribute to the US economy and are in fact a ball and chain holding back the most productive.

Additionally, it turns out my fellow Americans are not very bright - on average. They may have the best and the brighest in an individual case but on average not impressive compared to China.

Originally Posted by Butterfly

We all know that China is one big bubble ready to explode

Their massive cash reserves and internationally competitive exports are certainly not.
But their domestic banking system and real estate market may well be.
In some ways, China now reminds me of the USA in the 1890's.

If the US continues to neglect it's mounting debt problems, there really is no alternative but decline. 'Tis as simple as that really.

There basically seems no more "USA Inc." to me. The Corporate sector and the rich are mostly doing fine, but they apparently care nothing about the deteriorating state of the nation.

Originally Posted by sabang

China is also the worlds largest creditor and has enormous currency reserves

Reducing albeit very slowly since I cancelled all my Chinese takeaways!

Originally Posted by Rural Surin

As peasants? Been to China lately?

no shortage of underclass / peasants in China , tis not all middle class with beemers , far from it .

Originally Posted by Mid

no shortage of underclass / peasants in China , tis not all middle class with beemers , far from it .

Agreed and it's a well known fact that should the Chinese economy falter and depsite their comfortable position today it could do. The "underclass peasants" will not be happy bunnies and there's a lot more poor bunnies than there are Chinese Yuppies, will be interesting to see what happens in the near future.

Originally Posted by sabang

Their massive cash reserves and internationally competitive exports are certainly not.

their massive foreign cash reserve aren't going to mean much once those major currencies go into a massive deflation mode over the RMB, they will actually "worsen" the net balance of the National Capital accounts

competitive exports ? they are the source of the problem, I am not sure those chinese companies are factoring all their costs and that means capital depletion over the long run until they go broke. How far are we from that ? another 20 years maybe, less with rampant inflation, the cost of replacing those manufacturing tools will become overly expensive eventually.

Originally Posted by sabang

But their domestic banking system and real estate market may well be.

you think ? you are only noticing this because their beta exposure is twice the reality of the manufacturing sector, but the bubble is also in the production business, which is directly reflected by the large local inflation

Originally Posted by sabang

If the US continues to neglect it's mounting debt problems, there really is no alternative but decline. 'Tis as simple as that really.

there are still manufacturing being done in the US, a lot of it, unlike other European partners. As long as they have that, they should be ok. Eventually, globalization will make producing goods in the US as expensive as producing goods in China. Isn't this great ?

Originally Posted by sabang

There basically seems no more "USA Inc." to me. The Corporate sector and the rich are mostly doing fine, but they apparently care nothing about the deteriorating state of the nation.

the extremely rich need to be taxed more heavily, that's the only problem

Originally Posted by Butterfly

there are still manufacturing being done in the US, a lot of it, unlike other European partners. As long as they have that, they should be ok. Eventually, globalization will make producing goods in the US as expensive as producing goods in China. Isn't this great ?

America still has one big advantage compared to Europe: natural resources, big farmlands. But manufacturing made in U.S. .... not realy.

Originally Posted by HermantheGerman

Originally Posted by Butterfly

there are still manufacturing being done in the US, a lot of it, unlike other European partners. As long as they have that, they should be ok. Eventually, globalization will make producing goods in the US as expensive as producing goods in China. Isn't this great ?

America still has one big advantage compared to Europe: natural resources, big farmlands. But manufacturing made in U.S. .... not realy.

Europe has a neutral trade balance, the US has the biggest trade deficit in history. Thats a huge advantage for Europe. I dont know why butterfly got that exactly backwards, maybe because he doesn't know wtf he is talking about.

Also, a country does not need a weak currency to stay competitive if they have capital infrastructure.

Germany has higher wages then the US does, yet it has trade surpluses with China.

^
Maybe he bought U.S. Treasury Bonds.
His pro-U.S. view is confusing me, usually he's the opposite.