China set to overtake Japan as World's second largest economy

vivatifosi

From the Associated Press:

BEIJING — China is set to overtake Japan as the world's second-largest economy in a resurgence that is changing everything from the global balance of military and financial power to how cars are designed.

By some measures it has already moved to second place after the U.S. in total economic output — a milestone that would underline a pre-eminence not seen since the 18th century, when the Middle Kingdom last served as Asia's military, technological and cultural power.

China is already the biggest exporter, auto buyer and steel producer, and its worldwide influence is growing. The fortunes of companies from Detroit automakers to Brazilian iron miners depend on spending by China's consumers and corporations. And rising wealth brings political presence: Chinese pressure helped to win developing countries a bigger voice in the World Bank and International Monetary Fund.

"Japan was the powerhouse driving the rest of Asia," said Rob Subbaraman, chief Asia economist for Nomura Securities. "Now the tide is turning and China is becoming a powerful influence on the rest of Asia, including Japan."

China's rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world's lowest. Beijing has launched two manned space missions and is talking about exporting high-speed trains to California and Europe while families in remote areas live in cave houses cut into hillsides.

Japan's people still are among the world's richest, with a per capita income of $37,800 last year, compared with China's $3,600. So are Americans at $42,240, their economy still by far the biggest. But Japan is trapped in a two-decade-old economic slump, the U.S. is wrestling with a financial crisis, and China's sheer economic size and the lure of its vast consumer market adds to its clout abroad.

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http://www.google.com/hostednews/ap/article/ALeqM5jAsY1t2QoZISK7tGlmPJUHBpPXXQD9HA539G0

Malcolm.

Cheap Chinese goods => help keep inflation down, allow interest rates to stay low.
China buying raw materials => commodity costs up, some inflationary pressure.

Swings and roundabouts.

vivatifosi

I think there's more to it with China, and possibly with India too. 1 in 5 people in the world are Chinese and whatever I think of its regime, its ability to raise standards of living for many of its people over the past 60 years have been staggering.

We in the west have had a very long period of continued growth since Fukyama's pronouncement of the "End of History", but I can't help thinking that once the Chinese overtake the USA as the world's largest economy (in sheer GDP terms rather than per capita) it will have a profound effect on the world economy, which after hundreds of years of being occident-centric will become orient-centric.

Malcolm.

vivatifosi wrote: »

I think there's more to it with China, and possibly with India too. 1 in 5 people in the world are Chinese and whatever I think of its regime, its ability to raise standards of living for many of its people over the past 60 years have been staggering.

We in the west have had a very long period of continued growth since Fukyama's pronouncement of the "End of History", but I can't help thinking that once the Chinese overtake the USA as the world's largest economy (in sheer GDP terms rather than per capita) it will have a profound effect on the world economy, which after hundreds of years of being occident-centric will become orient-centric.

Agreed, there is more to it, however I'm not in the habit of writing multi-page posts. I try to keep it simples so everyone can understand regardless of ability (else there's a group of usual suspects o here who feign ignorance as a weapon).

Maybe I should come back as a women, and have the protection of the coven.

vivatifosi

Malcolm. wrote: »

Maybe I should come back as a women, and have the protection of the coven.

No don't do that! You're fine the way you are.

I just wanted to pick up on a story about something other than house prices. I like looking at and unpicking broader economic issues. Ultimately they could impact on house prices in the longer run. I wish there were more economy-based stories or business-based ones, which is why I read threads started by IM, Gen et al so voraciously.

Malcolm.

vivatifosi wrote: »

No don't do that! You're fine the way you are.

I just wanted to pick up on a story about something other than house prices. I like looking at and unpicking broader economic issues. Ultimately they could impact on house prices in the longer run. I wish there were more economy-based stories or business-based ones, which is why I read threads started by IM, Gen et al so voraciously.

Understood vivaifosi. Men aren't so good at reading between the lines.

I'll write something about the economic and political impacts...

China having increased wealth is assisting countries which the west will historically not deal with due to human rights abuses and/or the need for political reform. China's deal with anyone policy, gives them a huge advantage over the west. The top-down centralised power also allows the Chinese to make mass purchases of foreign resources that other countries are not politically positioned to make.

Thrugelmir

vivatifosi wrote: »

I think there's more to it with China, and possibly with India too. 1 in 5 people in the world are Chinese and whatever I think of its regime, its ability to raise standards of living for many of its people over the past 60 years have been staggering.

We in the west have had a very long period of continued growth since Fukyama's pronouncement of the "End of History", but I can't help thinking that once the Chinese overtake the USA as the world's largest economy (in sheer GDP terms rather than per capita) it will have a profound effect on the world economy, which after hundreds of years of being occident-centric will become orient-centric.

This change has been many years in the making. My late father worked for the last quoted London stock exchange company to own rubber plantations in Malaysia. The Chinese bought the Company in the 60's.

More recently they have switched their attention from commodities to technology. With the acquisition of Volvo Cars from Ford.

Ultimately they have will sufficent domestic demand to keep their economy their going. Will they need the Western economies at all?

An interesting thought.

Malcolm.

vivatifosi wrote: »

No don't do that! You're fine the way you are.

If I come back as a coven member, I'll receive thanks from mrs carolt (who seems to thank almost all women). At present, even when I agree with her, she takes umbrage.

Oops, I appear to be off topic again.

Malcolm.

Thrugelmir wrote: »

Ultimately they have will sufficent domestic demand to keep their economy their going. Will they need the Western economies at all?

An interesting thought.

China's a developing country which means it needs to buy in lots of resources to build infrastructure. While it requires resources, it needs to export, otherwise it will run up a large budget deficit.

Thrugelmir

Malcolm. wrote: »

China's a developing country which means it needs to buy in lots of resources to build infrastructure. While it requires resources, it needs to export, otherwise it will run up a large budget deficit.

You missed my point. The Chinese have had a long term strategy of acquiring these raw resources and investments through direct ownership, joint ventures or strategic investment. This in itself generates revenue streams. One day the Bank of China maybe one of the big 6 mortgage lenders in the UK.

Since the early 90's the West has been transfering technology in the form of plant and machinery. Progressively the Chinese have learnt from operating the factories etc. Now they are acquiring the technology. As is the case with Volvo that gives them ownership of interlectual property and patents to use.

More likely the case will be that a large section of the UK population will end being sub-contract labour / assembly labour for the Chinese . A reversal of roles.

Malcolm.

Thrugelmir wrote: »

You missed my point. The Chinese have had a long term strategy of acquiring these raw resources and investments through direct ownership, joint ventures or strategic investment. This in itself generates revenue streams. One day the Bank of China maybe one of the big 6 mortgage lenders in the UK.

Since the early 90's the West has been transfering technology in the form of plant and machinery. Progressively the Chinese have learnt from operating the factories etc. Now they are acquiring the technology. As is the case with Volvo that gives them ownership of interlectual property and patents to use.

More likely the case will be that a large section of the UK population will end being sub-contract labour / assembly labour for the Chinese . A reversal of roles.

All of the above was in your earlier post, wow, I really did miss it.

I think political strategic barriers will come up to too much Chinese control, as they have in Oz.