China's Emergence As A Global Superpower
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may_wentee said:
Small problem with that logic. We want to take Iraq intact so we are slowly weeding out the insurgents. If China tries pull the conquer the neighbors thing we could decide to do anything from carpet napalming rice paddies, limitied nuclear strikes, to introducing a few virulent strains of the flu. China has a hard enough time just staying alive. Any of these would have them destroyed in a matter of weeks. It is a sad fact. The USA, Canada and Mexico are bound to be the world powers of the forseable future if only becuase of their barely tapped resources.
that may be correct, but if your time horizon is 4 or more years, I would bet that the decrease in dollar (if not near total collapse) would more than compensate for any small decrease in value of the Chinese currency. Three reasons why:valich said:
(1) I expect the "twin deficits" will sink the dollar soon.
(2) I expect the controlled currency of China will not appreciate significantly as that would hurt their exports and make serious social problems as the poor pour into the cities and find conditions even worse (no jobs) than the farms they left.
(3) I expect foreign capital now pouring into china, which buys local currency making it more valuable (i.e. would make Yuan appreciate if it were not controlled by government buying it with local currency & debt issue) will not increase significantly and may even decrease.
As China's government gains Dollars, (by both trade and influx) the thing I already fear, will be a more common fear. I.e. China can trigger a US depression any time it chooses. They will not do so until either (1) US interferes with their Taiwan plans or (2) the rapidly increasing prosperity of the growing middle class can purchase the full output of their factories and they no longer need to export because they are a closed economy, immune to the global depression they can make just by buying commodities at twice (or more than twice) their current prices ($20/gallon gas will stop Chinese sales to Wal -Mart because few Wal-Mart customers can afford to drive to the Wal-Mart, but the now rich Chinese population will buy the products previously sent to Wal-Mart.)
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Odin'Izm said:
Which would imply that the things we make are worth twice as much as the things China makes. Why else would anyone pay twice as much for them? Do you really think that someone who produces 100 $1 items has an advantage over someone who produces 2 $100 items? Putting it another way, would you rather eat 10 McDonald's hamburgers or 1 prime rib dinner?
Odin'Izm said:
What does that even mean? They sure produce more t-shirts and plastic knick-knacks, but so what? When comparing economic prowess, the appropriate measure is GDP. Where exactly the money is coming from is unimportant, as it can be used to import whatever is not being produced at home. And it is almost always cheaper to import such items, or they would have been produced internally in the first place. If you want to compare military power, then it becomes appropriate to compare specific production capacities, such as military hardware and food. But America is the winner in those categories as well, so....
Odin'Izm said:
Dude, that article is years out of date, and in particular predates the recent agreements signed with the US (which were only last year):
http://news.bbc.co.uk/2/hi/south_asia/4632635.stm
You may have noticed that India has elected a new government, with a pro-Western PM, since the publication of the article you referenced. He has also gotten a pact on nuclear cooperation:
http://news.bbc.co.uk/2/hi/south_asia/4695477.stm
and started joint military exercises:
http://news.bbc.co.uk/2/hi/south_asia/4406348.stm
Now, military contracts are long-term things, so it will certainly take a while for their older ones (largely from Russia) to expire and for the existing Russian hardware to be retired. And most of the actual contracts for specific US equipment haven't been hammered out yet; that's expected to occur over the coming year. But when a country signs deals on nuclear cooperation and airforce supply with the world's largest arm's supplier, and publicly trumpets a new era in their relations, you can be quite sure of their overall orientation. And it ain't towards Russia, who can't even keep their own advanced equipment operating safely these days.
You make some very good points, but I repeat, they are under tremendous pressure to bring their exchange rate inline with world currency and abandon their controlled currency: this will happen. They got on their hands and knees to begged to be accepted into the World Trade Organization (WTO) to boost their exports; and now, after just being accepted into the group, they are under a lot of pressure to lower those rates. When I lived in China two years ago it was 8.7 RMB:1 US; now it is 8.0:1, but the pressure is on for a drastic lowering. Personally, I'd hate to see it as it would cost me a lot more to live there, but if it does happen, that means more jobs for Americans. Wal-Mart imports from China would cost too much to import.Billy T said:
As far as the Wal-Marts in China, keep in mind how huge China is. Wal-Mart only has stores in the center of densely populated urban areas. These are easily accesible to both the rich and the poor due to their extremely cheap mass transportation systems. Bus fare is 1 yuan (1 Renminbi - RMB). That's like 12 cents. The Wal-Marts in China are already crowded but the Chinese are smart. They immediately saw how successful Wal-Mart has quickly become and now are opening copycat stores that do the same. And this is not a trademark infringement: they just operate the same way. The Wal-Marts in China are different than those in the U.S. in that the products that you buy there are all made in China! So they keep they're inventory prices low, but offer the most variety. This has what has caught on with the imitation Wal-Mart stores that are currently popping up nearby: and they are equally - if not more - successful.
A big problem China faces with increased car purchases is to keep up with the infrastructure. As it is now, they are not doing so. Traffic accidents and deaths are so common that newspapers don't even bother reporting them anymore - just trivial events. In some cities, like Xiamen where I lived, they impose restrictions on driving depending on your license plate number: even numbers can only drive on city streets one day, odd numbers the next - every-other day. Works pretty good. Along the outer beach road: no motorcycles allowed. This keeps the traffic down and makes it a lot safer for the masses to cross the streets to enjoy the beach.
I find that extremely hard to believe. Are you sure that it's not 160,000 yuan a year (160,000 Renminbi)? That would be more like it, and still a lot of money in China! (US$20,000).Odin'Izm said:
China, and even more so India, are educating and putting out about ten times more scientists and engineers than the U.S. is now. They would only be interested in very very highly educated world scientists, but then again, you say your grandfather is famous. Well. If that's true, then I guess it could be believable?
There's not going to be a war. China IS a peace-loving nation. Except, however, for their longterm disputes with Taiwan and a few outlying islands now claimed by numerous countries (Japan, Russia, Indonesia...). China will not go to war without a cause. Likewise, no one in their right mind is going to attack China. Then there would be a cause for defense and possible retaliation.android said:
The fact is that Mainland China has far too many internal political problems that the government is struggling to cope with for them to even think about attacking another country and adding to its instability. However, if there were a cause that occurred that would unconditionally unite the population against another country, then that would be a different matter. Right now there is no such cause. China is a friend of the United States, and likewise.
There's not going to be a war. China IS a peace-loving nation. Except, however, for their longterm disputes with Taiwan and a few outlying islands now claimed by numerous countries (Japan, Russia, Indonesia...). China will not go to war without a cause. Likewise, no one in their right mind is going to attack China. Then there would be a cause for defense and possible retaliation.android said:
The fact is that Mainland China has far too many internal political problems that the government is struggling to cope with for them to even think about attacking another country and adding to its instability. However, if there were a cause that occurred that would unconditionally unite the population against another country, then that would be a different matter. Right now there is no such cause. China is a friend of the United States, and likewise, we are their friend.
crazy151drinker
Registered Senior Member
Ch
Militarily stronger?? Are you on crack?? Are you trying to play the numbers game? IE China has more troops so they must be stronger? China's Air Force and Navy are CRAP. They dont have enough equipment to transport their troops.
Militarily stronger?? Are you on crack?? Are you trying to play the numbers game? IE China has more troops so they must be stronger? China's Air Force and Navy are CRAP. They dont have enough equipment to transport their troops.
I had a friend I once met who served in the Korean War. He kept laughing about all the Chinese soldiers coming down the mountain and they'd just shoot them all - no logistics.
Beyond any doubt the United States is militarily the strongest country in the world - mostly due to our very highly advanced technology. We are THE "World Leader" - at least right now. No other country even comes close.
But as stated above, China WILL most likely overtake us economically, and this may be a greater power concern than military might.
Beyond any doubt the United States is militarily the strongest country in the world - mostly due to our very highly advanced technology. We are THE "World Leader" - at least right now. No other country even comes close.
But as stated above, China WILL most likely overtake us economically, and this may be a greater power concern than military might.
valich said:
I wish people would quantify this statement in some way. Do you mean that the total GDP of China will eventually exceed that of the United States? That seems reasonable. China has a huge population, and if they can attain anything like the productivity of Japan or South Korea, the total GDP will be a whopper. As impressive as that is, it has to feed a lot more mouths before there's anything left over for projecting strategic power outside the borders of China. To enjoy the same standard of living, China's GDP would need to be four times the GDP of America, as they have four times the population. It may well be that GDP per capita is a better measure of economic prowess; it's certainly a better measure of standard of living. And while China is second only to America (and the EU if you count them together) in terms of total GDP:
http://www.cia.gov/cia/publications/factbook/rankorder/2001rank.html
it ranks 121st in per capita GDP:
http://www.cia.gov/cia/publications/factbook/rankorder/2004rank.html
just behind the terrifying superpower known as Turkmenistan. Mexico, Saudi Arabia and South Africa each have around twice the per capita GDP of China. The US ranks second (behind Luxembourg), with roughly 7 times the per capita GDP. Supposing that the populations and total GDPs of each country continue to grow at current rates, it will take China 10 years to match the total GDP of America, but 27 to match the per capita GDP. But China is growing at a very rapid pace right now, and you have to wonder if it can be kept up for another decade, let alone three. China seems to be really maxing out its natural resources, while the US still has lots of spare land and water.
valich said:
People said the same thing about Japan ten years ago, and their GDP is extremely impressive. Yet they haven't proven to be a "greater concern" in world affairs than the US. Again, the EU has a larger economy than the US, and where does it get them? Moreover, the rise to prominence of China's economy is part of a larger global trend of development and deconcentration of wealth. That is to say that while the future looks good for China in terms of development, the rest of the world isn't exactly sitting still in the water either. You have to expect India to get its act together in the near future, and Eastern Europe, South and Central America and the Middle East aren't sitting on their hands either. I just can't envision China ever possessing a big enough chunk of the pie to really boss the world around, the way the US has done the past decade or five.
More than that, I'd be willing to bet money that the per capita GDP of China never exceeds that of America in my lifetime. And I plan to live for quite a few more decades.
Below are some of results of a survey of 6,000 consumers in 30 Chinese cities representing about 60% of the country’s population, 90% of its GDP, and 80% of its disposable income. Though China’s savings rate is high (most Chinese save to pay for health care and pensions) and most Chinese see creating a cash cushion as their #1 priority McKinsey reported a strong appetite for consumer goods. Here are some of McKinsey’s findings:
Consumers intend to buy the following big-ticket items over the next 12 months: new cars, appliances, and the latest consumer electronics.
43% of respondents agreed or strongly agreed that “having a private car is my biggest dream” (slightly more than 2% planned to purchase a car in the next 12 months).
At the top of many Chinese consumers’ shopping lists is a new apartment or house.
Nearly 75% of respondents had plans to upgrade appliances and furniture upon moving into a new apartment or house.
8% said that their next major purchase would be a flat-screen television.
20% of respondents in rural county seats plan to buy mobile phones over the next year vs 10% in top-tier cities and vs 15% in second-tier cities.
12% of respondents in small towns said they were likely to purchase new washing machines in the next year vs 5% in top-tier cities.
If you register, can read full report for free at:
https://www.mckinseyquarterly.com/register.aspx?ArtID=1717
Consumers intend to buy the following big-ticket items over the next 12 months: new cars, appliances, and the latest consumer electronics.
43% of respondents agreed or strongly agreed that “having a private car is my biggest dream” (slightly more than 2% planned to purchase a car in the next 12 months).
At the top of many Chinese consumers’ shopping lists is a new apartment or house.
Nearly 75% of respondents had plans to upgrade appliances and furniture upon moving into a new apartment or house.
8% said that their next major purchase would be a flat-screen television.
20% of respondents in rural county seats plan to buy mobile phones over the next year vs 10% in top-tier cities and vs 15% in second-tier cities.
12% of respondents in small towns said they were likely to purchase new washing machines in the next year vs 5% in top-tier cities.
If you register, can read full report for free at:
https://www.mckinseyquarterly.com/register.aspx?ArtID=1717
Your point is well taken. But I think of greater importance than per capita GDP is level of "essential economic activity," EEA, which I admit is an ill defined concept I am inventing and difficult to measure.quadraphonics said:
EEA would include: measures of concrete, steel, aluminum, generation capacity, square feet of new buildings, miles of roads, vehicles, rails and rolling stock, refrigerators, per capital educational level advancement*, etc. produced annually.
EEA would NOT include: value of beverages drunk, value of event tickets sold, CD & video sales, high fashion clothes, vacation expenditures, etc.
That is, I think only that component of GDP which continues to contribute to the wealth, strength, productive capacity, etc. of a society for at least 5 years is important.
If the US's very large non-EEA items of GDP are stripped out of total GDP, it may be that China has already passed the USA in what is important for the future. If anyone has this type of comparison, please post a reference.
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*Not to be measure by funds expended, but by results achieved in tests etc.
PS - At your second web site, I learned that Brazil is ranked 92. - I saw that yesterday in my newspaper (Up nine slots from 2004) But in a society like Brazil (and especially China), where many are very poor and some are very rich, one must also look at the "rich component of GDP."
For example, last year in fancy imported cars (price near US$100,000) Brazil was the world's main market. The number of privately owned helicopters in Sao Paulo exceeds all other cities as we have bad traffic jams. etc.
If 2.5% of China's population has income 10 times that of average American (probably true soon as US average has been going down for 4 years and wealth is getting more concentrated in China), their demand is something to be reckoned with, even if the per capita GDP of China remains below that of US for decades. (As it probably will if NFL games and rock concerts remain popular.) Note that with population 4 times larger, 0.025x4x10 = 1, that is, the purchasing power of that 2 ½ percent is equal to that of ALL Americans. This is why I think the GDP per capita is of little importance.
I do not think China will significantly change the value of the Yaun (3 reasons given in recent post) but if it should, then even fewer Chinese can buy more than all Americans!
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Billy T said:
Well, I don't think there's a lot of support for this position in the economics, but earlier this morning John Snow, the US Treasury Secretary, was on C-SPAN's Washington Journal responding to phone-in questions from viewers. One caller was concerned about the implications of China's rising prominence in manufacturing. He, like many on this forum, was under the impression that China has already surpassed the US in terms of manufacturing capabilities. Mr. Snow responded that the size of the manufacturing sector of the US economy surpasses the size of the *total* Chinese GDP. So there you have it.
Billy T said:
China may not *want* to change the yuan's value very significantly, but in the long run there's only so much they can do. It's a fallacy to think that China can somehow excercise exact control of the value of its currency indefinitely, especially when undergoing rapid development. And not just because whatever international institution or foreign country is going to exert diplomatic pressure on them. Development in China is going to lead to greater demand for the yuan worldwide, driving up the cost of the dollars they'd have to buy up to keep the exchange rate fixed. Eventually they'll no longer be able to afford it, and the yuan will go through the roof. China can't both grow into an economic giant and have a third-world exchange rate, in the long run. Which do you think they'll choose?
Perhaps, Perhaps NOT:quadraphonics said:
On 2 Jan06 Odin'Izm posted the following:
$ 7,262,000,000,000 - China
$ 11,750,000,000,000 - US
I do not know where his data came from, but if it correct and if (my estimate) 1/3 of US GDP is “non EEA,” but only 10% of China’s is non EEA (They spend very little on things like NFL games, rock concerts, annual vacations, movies, CD & videos, high fashion clothes, etc.) then the important/permanent 2004* GDP (I.e. GDP which will still be useful to society a few years later) becomes:
2004*
$6,535,800 - China
$7,833,333 - US
11.9% advantage to USA
Now lets grow these numbers at 9% and 3% respectively:
2005-----------2006---------2007---------2008---------2009
$7,123,315---7,764,233---8,463,015---9,224,686---10,054,907
$8.068,333---8.310,383---8.559,695---8,816,485---9,080,980
11.1% advantage to China in 2009.
I have learned that spokes persons for this US administration can not be trusted to tell the truth, especially when they make only vague claims (no numerical data). Thus mere word of the Treasury Secretary, spoken on TV show, does not count for much with me.
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*I assume that GDP for 2005 is not yet known, if wrong add one year to all dates.
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Billy T said:
Nevertheless, it would behoove you to come up with some actual statistics instead of just guessing that arbtitrary percentages of each nation's economy are "useless." I have even less reason to believe your unsubstantiated figures than those of the Treasury Secretary, whose department has surely conducted extensive economic surveys of production, manufacturing, etc., and who has something to lose by giving out false information in a public forum.
Also, you realize that ALL of the GDP numbers you're using come from the US government, right? The ones you used are out of the CIA World Factbook. It should be mentioned that most other sources estimate China's GDP as being much smaller than the $7.2 Trillion figure in the CIA data.
China's economy is based on US spending. When oil supplies start failing to meet demand, the US economy will tank, and the Chinese will be screwed. They are closer to the middle east, and they have a huge army, but the US already has a base in Iraq.
You are correct, but we may not agree on how far into the future "eventually" is.quadraphonics said:
The reason why all that money is headed to China is not to help the "poor starving Chinese" but because China is the fastest growing and most consistent center of global growth, with a huge potential domestic demand, and a saving/ investing population*. US population savings rate is slightly negative, but very close to zero. To repost part of recent extensive study / survey:
"...China’s savings rate is high (most Chinese save to pay for health care and pensions) and most Chinese see creating a cash cushion as their #1 priority. ..."
If domestic saving is not enough for China to buy up all incoming dollars, China could require that 30% of all bank deposits purchase low or zero interest government bonds. (Brazil does this. This makes the interest credited to your saving account much less than what is charged for a loan as banks need to stay solvent. - Even a good-credit loan application, has a "spread" of about 15%. The high cost of loans helps to limit inflation as well as provide the government with domestic capital to buy up the dollar influx for the nation's "reserves." The Brazilian central bank admits it is buying dollars, almost daily, but denies it is doing so to control of the exchange rate. They are even paying off all World Bank loans etc. China’s demand for commodities gave Brazil a trade surplus of 45 billion dollars in 2005, a historic record. 2006 looks even better if US keeps supplying China with dollars. We will take Yuan also, if US goes bust, same as Arabs will for their oil when Americans can not afford it.)
SUMMARY: With a population naturally disposed to be strong savers, control of the banking system, excellent credit for issuing bonds, (both domestic and international), desire to be in a position to "break the US" economically any time it chooses, there is every reason to believe China will continue to add to its reserves in dollars, with little effect upon the Yuan, as it has for more than 20 years. So I think "eventually" means more than 20 years, by which time the US dollar will have been broken, oil sold only in Yuans, trade with US negligible, (US can not buy much with near worthless dollars and China is hard pressed to meet its rich population's domestic demand. - It is truly amazing what US's steadily growing "twin deficits" and China's 9% growth rate does in 20 years.)
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*I do do not know if China even needs to issue bonds to foreigners, or who buys them if it does. Perhaps Valich can tell us something on this, and confirm (or refute) that the Chinese, like the Japanese, are very different from Americans in that they save a significant part of their income.
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