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Old Posted Jul 20, 2007, 10:58 AM
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Post China to join top 3 economies

http://www.latimes.com/news/printedi...tory?track=rss

From the Los Angeles Times


A crowd of people cross the street as they rush to work in central Beijing Thursday. China's economy expanded at a roaring 11.9 percent in the second quarter, official data showed.
(AFP)



China to join top 3 economies
The Asian giant is poised to overtake Germany this year as its growth soars. But challenges await.
By Don Lee
Times Staff Writer

July 20, 2007

SHANGHAI — China's economy grew at an extraordinary rate of 11.9% in the second quarter, the fastest clip in more than 12 years and a pace that puts the nation on track to overtake Germany this year as the world's third-largest economy.

For the last 35 years, the United States, Japan and Germany have ranked 1-2-3 in gross domestic product, but as growth in those mature economies has slowed, China's has accelerated, powered by foreign investments and trade amid a global shift in production activity to the Far East.

Just 12 years ago, China's economy ranked No. 8, behind Brazil's, and was less than one-third the size of Germany's.

But figures released in a report by China's government Thursday show increasing challenges ahead for Beijing: surging inflation, breakneck investments in factories and a dramatic jump in exports that is stoking tensions between China and its major trading partners, particularly the United States.

For the first half of the year, China's trade surplus with the rest of the world reached $115 billion, up 85% from a year ago.

In recent months, the U.S., Japan and Mexico have filed or joined complaints with the World Trade Organization that accused China of illegally subsidizing exporters.

Washington has also taken China to the WTO over piracy issues, and members of Congress are threatening to impose hefty tariffs on Chinese imports if Beijing doesn't change its currency policy, which some believe gives China an unfair advantage in global markets.

While China's economic transformation has lifted millions out of poverty, its 1.3 billion people have a long way to go before their standard of living catches up with those of the other top economies.

The government's intense focus on economic growth has led to environmental degradation and violent clashes as farmland is appropriated for development.

Shoddy manufacturing and tainted food products from China have recently damaged its reputation worldwide.

Ordinary Chinese were incredulous at the notion that China's economy, by any measure, could surpass Germany's.

"It's impossible," said a 42-year-old Shanghai merchant named Wang. "There is no way that China can compare with Germany. For example, I have an electric shaver my friend bought for me from Germany, and I have been using it for many years and it is still working well. But for domestic ones, no matter how many I buy, each one breaks soon."

Analysts said the latest statistics signaled an overheating Chinese economy that would probably prompt the government to raise interest rates and take other measures to slow growth. But rate hikes in the past and other top-down controls have had little effect.

In the second quarter, China's gross domestic product, or total value of goods and services generated, expanded by 11.9% from a year earlier, far higher than expectations and ahead of the 11.1% increase for all of last year.

By China's calculations, its GDP in 2006 was about $2.7 trillion. Germany's was $2.9 trillion, based on International Monetary Fund data, but its economy, like those of the U.S. and Japan, has been growing at a fraction of the rate China's has. The U.S. remains far ahead of the rest of the world in GDP, with $13.2 trillion in 2006.

Chinese leaders often have said they want more balanced and sustainable growth.

But at the local level, many officials seem to strive for the highest numbers they can achieve, seeing them as a key basis for their job evaluation and promotion. So they approve new plants and projects, sometimes indiscriminately, in an effort to boost tax dollars, employment and overall growth figures.

Through June of this year, investments in factories, roads and other real estate projects climbed by 26% from a year earlier. The new construction is soaking up more energy and adding to the pollution that is filling China's air and waters, and sometimes spreading beyond its borders.

In a report released this week, the Organization for Economic Cooperation and Development said Beijing had been ineffective in countering the negative effects of its rapid economic development and industrialization.

China's "air pollution levels in some cities are among the worst in the world, one-third of water courses are severely polluted, and illnesses and injuries are associated with poor environmental and occupational conditions," the report said, adding that China was poised to overtake the U.S. as the top emitter of greenhouse gases.

Rising inflation is another worry. Consumer prices jumped by 4.4% in June from a year earlier after moderate increases of about 2% last year.

Food prices have soared, largely a result of higher grain costs, a shortage of pork in the wake of a disease outbreak on pig farms, and greater demand by consumers for meat. Government statistics showed meat and poultry prices in June were up 20% from a year ago, and egg prices were 28% higher.

In the last two decades, economists said, almost every inflationary crisis began with food price hikes. And it is starting to pinch consumers.

"It's not like food prices suddenly rose, but little by little," said Qu Xilin, 25, a newspaper vendor in Shanghai who said he earned almost $400 a month but spent less than $1.25 a day on meals. "But what can I do? I have to eat every day."

It isn't just food. The cost of textiles, home appliances and services such as education and medical care are moving a bit too fast as well, said Zhu Baoliang, chief economist for the State Information Center Economy Forecast Department, a government-affiliated group.

"There is excessive demand … we should be wary of such a trend," he said.

Beijing has taken steps to keep inflation in check, discouraging certain investments and bank-lending through a variety of measures. The government this month cut or abolished a variety of rebates for exporters.

The United States, China's largest trading partner, reported a $232.5-billion trade deficit with China in 2006, and this year's figure was expected to be higher.

That has led to sharp calls from some American business groups and politicians to step up pressure on China to revalue its currency, the yuan, which it allows to trade only in a narrow range. The yuan has risen about 7.5% against the dollar in the last two years, but critics say it is undervalued by as much as 30%, giving Chinese exporters an advantage in global markets.

Beijing has insisted on maintaining its currency strategy, not wanting to jolt exporters and risk the loss of jobs and rising incomes.

Despite China's overall size and growing clout in the global economy, Chinese officials and scholars say the country is still developing and grappling with critical issues of lifting millions out of poverty and reducing the widening income gap between the city and countryside, where most Chinese live.

The figures released Thursday showed retail sales in the first half of the year jumped by 15% from a year earlier. Average incomes after taxes also rose briskly during the period. For the first six months, average disposable income for urban dwellers rose 14% to $921. For rural residents, it rose 13% to about $276, the government said.

"Being the world's third-largest is not that significant," said economist Zhu. "It's the quality of life."

--


--------------------------------------------------------------------------------
don.lee@latimes.com

Cao Jun of The Times' Shanghai bureau contributed to this report.

--

(INFOBOX BELOW)

Rising dragon

China is among the biggest economies, but with a huge population, individual incomes are low.

2006 GDP (in trillions)

U.S. -- $13.2

Japan -- $4.4

Germany -- $2.9

China -- $2.7*

*China's estimate

--

GDP per capita for selected countries ('06 estimates)

U.S. -- $44.190

Germany -- $35,204

Japan -- $34,188

China -- $2,001

--

Sources: International Monetary Fund, Chinese government
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  #2  
Old Posted Jul 25, 2007, 10:25 AM
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trade surplus
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RMB Issuing too much
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inflation
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  #3  
Old Posted Jul 30, 2007, 5:44 AM
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I actually believe that China is already the 3rd largest economy and its economy might even be close quite close to Japan's 4+ trillion. I based my assumption on China's underground economy; lots of unreported income and black market activity that was not reported to the government.
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Old Posted Aug 6, 2007, 11:54 AM
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China will become the next superpower, there is no doubt about it.
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  #5  
Old Posted Aug 11, 2007, 3:32 PM
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it is just arithmatic....my dear Watsons....

with such a vast population and a CAN DO attitude.....how long will it takes ?
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  #6  
Old Posted Sep 5, 2007, 5:12 PM
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it's not surprise any more.
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Old Posted Sep 5, 2007, 11:06 PM
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Not a surprise.

How ever, China is headed for disaster if they don't increase the speed of their social and economic reforms. Japan grew at this rate for a long time, but eventually it caught up with them and triggered a decade long financial crisis there. The same thing will happen if China doesn't let their currency rise in value against other currencies, hence increasing the value of the Yuan and fighting inflation. They are lucky they haven't gotten sucked into an inflationary deathtrap yet, but it becomes increasingly likely every day they try to fight the market forces...
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Old Posted Sep 5, 2007, 11:33 PM
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  #9  
Old Posted Sep 14, 2007, 11:00 PM
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Unfortunately, China remains a poor country. Its average income is $2000 a year, compared to about $45000 in the United States.

Also, social inequality, environmental damage, and government corruption prevents China from rivaling the U.S. or the E.U. any time soon.
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Old Posted Sep 19, 2007, 12:32 AM
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Many of you make valid statements.
However, I can easily discredit them as none of you have experienced what you know.
This is the void.
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  #11  
Old Posted Sep 22, 2007, 11:28 PM
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Quote:
Originally Posted by ioaz10 View Post
Many of you make valid statements.
However, I can easily discredit them as none of you have experienced what you know.
This is the void.
How wrong you are grasshopper.... how wrong you are.
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  #12  
Old Posted Oct 1, 2007, 7:19 AM
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but China's still miles behind the US tho! it has taken China 12 years to close the China-Germany GDP gap and Germany was only 66% more than China. The current gap between the US and China is enormous man - around 430%. it is going to take China at least another half a century before it is any way near the US! and by then China's average GDP person is going to be just over $10K.
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Old Posted Nov 20, 2007, 5:00 PM
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Quote:
Originally Posted by Australiasian View Post
but China's still miles behind the US tho! it has taken China 12 years to close the China-Germany GDP gap and Germany was only 66% more than China. The current gap between the US and China is enormous man - around 430%. it is going to take China at least another half a century before it is any way near the US! and by then China's average GDP person is going to be just over $10K.
Not according to Goldman Sachs:

Quote:
Originally Posted by dimondpark View Post
Here are 3 graphs that illustrate the world's economic powers based on their Gross Domestic Product and Per Capita Gross Domestic Product for 1990, 2005 and estimates for 2050.


The World in 2005
China has risen to the ranks of a global economic power and sets out on a course to surpass other nations in terms of economic might. Russia lags, India starts to develop, even if only gradually.


The World in 2050
The investment bank Goldman Sachs peers into the time machine: China has soared above the United States. Europe, once the motor of industrialization, has fallen markedly behind — even India is ahead. Resource rich Russia has reestablished itself as a global player.


According to Goldman Sachs
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Old Posted Nov 24, 2007, 5:28 PM
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21世纪中国的世纪,我顶
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  #15  
Old Posted Feb 8, 2009, 2:19 PM
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China still has a long long way to go despite of what it did in the past 30 years.
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Old Posted Mar 1, 2009, 12:44 PM
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Any time we see economic projections beyond two or three years we should be very skeptical. Anything can happen and there's no way to imagine what that 'anything' might be. Yes, as long as things keep going the way they're going China might have a larger economy than the U.S. by 2050. I wonder though what the economists would have forecast for China forty years ago ? Japan , Ireland , Argentina , etc. ?

Assuming that China isn't forced to reign in its growth model due to pressure from abroad or at home then yes, it could be number one in forty years. Considering that it's destroying itself to achieve this end though , it seems highly unlikely that it will be able to sustain the kind of growth that it has experienced over the last two-three decades. Something's gotta give.
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Old Posted Mar 12, 2009, 7:28 PM
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The numbers in those maps are based on purchasing power parity not actual wealth of the nations. Purchasing power parity is good way to compare standards of living when per-capita-GDP or per-capita-GNP is concerned but is not a good way to compare the actual total wealth of nations. But undoubtedly China will be the world's largest economy in actual dollars some time this century. Since China's population is about four times that of the US, China will need an actual (not purchasing power parity) per-capita one fourth that of the US to draw even in terms of total actual GDP.
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Old Posted Oct 16, 2009, 6:26 PM
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So if China reaches the US 44,000 gdp per capita which is considered a mature market, it will have $59 trillion gdp per year.
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Old Posted Mar 27, 2010, 7:32 AM
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im not so sure I agree with you all and economists, who say that China will be the largest in 30-50 years.

I think everyone is making a gross mis-assumption that the US will not grow or will not experience another boom. Beware!

Look at the US from 1990's to the 2000's. We doubled GDP.

We are in a slump now, but the US is still $14T and over 3 times ahead of the nearest country. China is rising at roughly 8-9% annually, yes - but will that continue? And even if it does, as we all can assume - there would need to be much more significant annual growth before China can even double GDP, much less 'catch' the US.

Also, the US will grow once economic incentive matches the will for new development. I suspect 2011 will be a banner year for the US, as Obama's policies begin to mature moreso and America gets rid of many of the stalemates that have held up true economic growth (recless taxation to pay for medicare/medicaid-broken inefficient medical system).

Also, to me - Goldman's chart loses significant credibility; since in 2005 China was nowhere near $9T in GDP that is shown on that chart just like today China still isnt anywhere near that. Isn't that model fundamentally flawed? China is closing in on $3T in 2009 guys, not $9T in 2005.

I suspect China will be at $9T in 2050, more than triple the current economy.
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