The meeting of the G20 was held in Argentina, the meeting between the United States and China being the most important at a global level. China being an economy that in recent years has accelerated the gap with the United States. This probable change of world leadership will provoke a series of accommodations in the different countries, as it believes that it will rebound, if this occurs, in the rest of the countries.
According to the World Bank and the IMF China's economy，measured by purchasing power parity (which is the gold standard for comparing the sizes of economies)，surpassed the U.S. economy in 2014. It is now 125% the size of the U.S. economy. Interestingly，the western media blowback at this revelation was so extreme that Chinese media stopped referring to China as the world's largest economy and western media began regularly referring to China as "the world's second largest economy" whenever they discussed China from 2014 onwards.
The US economy is larger than China's if it is compared in gross domestic product in current dollars. The power of purchasing parity is a measure of the internal welfare of a country, but outside of it it might be better to compare GDP. What do you think?
In 2011, when China surpassed Japan as the world's second largest economy, this measure was done using purchasing power parity. From what I can read, whenever economies are compared in terms of their sizes and the lists are created, this always tends to use purchasing power parity as the measure of choice. It was never controversial until China appeared to surpass the U.S. as the world's largest economy. I think that purchasing power parity seems to make more sense to understand what see actually occurring in China. It explains why the largest cinema market is in China and therefore why Hollywood movies are usually catering their films to Chinese audiences. It explains why China has the world's largest auto market, why China has the overall largest consumer market, and why foreign companies are flocking to China at present to take advantage of these markets. Looking at it from GDP in dollars, it seems like it would be a lot harder to explain what is going on.
Ruben, Excellent question. We know one thing; One day in the near future China will surpass the US and become the largest economy in the world. I think the Chinese people should be thankful to Deng Xiaoping whose visionary move from a central planned economy to a market based system unleashed the forces of the free-markets and the potential of the Chinese people. I think CHinese should erect a gigantic statue of him in the heart of Beijing and tear down Mao's statues. Deng is/was the mastermind behind the Chinese miracle. To answer your question I also check out the IMF, World Bank etc data. But, I also look at what's put out by the market practitioners. Here's an example from 2016 but it should give you a good idea: https://www.bloomberg.com/graphics/2016-us-vs-china-economy/
Thanks Jason Jean and Murat Doral
for their excellent contributions-
Sorry for the typos and messy grammar. But, I wanted to reply back to you before heading out for work. :-)
Best,
--
M.DORAL
Dear Ruben,
Excellent question! The answer is so multi-dimensional I don't even know where to begin. But, if we're going to think in a linear fashion, based on my estimation China will catch up with the US in 2029 and will surpass in 2030. However, I have serious doubts that things will move forward in a linear fashion in the future. Especially, for China the road ahead looks bumpier. Even if there will be a one percentage point drop in China's growth rate, then China and the USA will have equal GDP's in 2033 and China will surpass the US in 2034. As such, we can only say that in the near future and probably between 2030 and 2040, China will surpass the US in terms of GDP.
Best,
--
M.D.
Yukon Huang stated that，even if China's growth slows to 4%，it will still be twice the size of the U.S. economy by 2030.
I think that all is not economy, human rights are also very important because of what it serves "be rich" if one cannot be free to enjoy his benefits?
Probably yes, that is the trend, but we never know.
Wars happen in such cases, as history has shown...
Dear Ruben
I think no, because the flagrant violations of human rights by their government will impide that. I have not any direct contact with China but I think that your readers may take in count the opinion of an expert on China as Steve Mosher (author of Bully of Asia) and founder of Popultation Research Institute (https://www.pop.org/podcast/pri-review-steve-mosher-china-texas-abortion-case-confronting-islam/).
"For two thousand years, the Chinese Empire has sought to overawe visiting barbarians with the magnificence of the imperial court. It still does today.
As Air Force One lands at the dragon-shaped Beijing International Airport, President Trump will be treated to a skyline that didn’t exist until a few years ago.
Most of Beijing’s old residential neighborhoods — called hutung’s — were deliberately destroyed in the frenzied build-out that preceded the 2008 Olympics. They have been replaced by stadiums like the Bird’s Nest (which actually resembles a giant bird’s nest) and by high-rise office buildings.
Then there are the Leaning Towers. The headquarters of China Central Television — the Beijing regime’s primary propaganda outfit — the Leaning Towers consist of two towers leaning at different angles joined 36 stories up by a 250-foot, L-shaped overhang. Unlike the Leaning Tower of Pisa, which acquired its tilt naturally, the awkward structure was designed to look like it is falling over.
As such, it could stand as a metaphor for the reckless building boom that has plunged China into a level of debt that few nations have ever recovered from. Without going through a devastating economic meltdown, that is.
For the past twenty years, China has kept roughly half of the world’s cranes busy turning wheat fields and peasant huts all over China into skyscrapers. For someone like myself, who first visited China in 1979, the transformation is almost miraculous.
The luster begins to fade when you realize that the land was stolen by rapacious Communist officials from poor workers and peasants who had lived in these huts, and farmed these lands, for centuries. It disappears entirely when you understand that many of these new apartment and office buildings are often nearly devoid of tenants. This means that the soft construction loans that were so generously doled out by the Party’s managers of state-owned banks to their Party comrades who run construction companies will never be paid back.
China’s Xi Jinping should have asked Donald Trump what happens when you overbuild.
Instead, back in at the 2012 Party Congress, the newly installed Party Supremo announced that he intended to double the size of the economy by 2020. The regime’s central planners swiftly calculated that this required an annual GDP growth of 6.5 percent, and ordered everyone to fall in line. In order to hit this target, the state has been recklessly printing money and rolling out debt ever since.
As a result of these practices, the country’s debt has been ballooning in recent years. The Institute of International Finance estimates that “China’s total debt surpassed 304 percent of GDP as of May 2017.”
Knowing something about Chinese accounting practices, I would guess that even this startling number is a gross underestimate.
Consider that most Chinese businesses keep three sets of books. The first two are cooked, one to convince the government that the company owes no taxes, the other to mislead business partners (especially foreign partners) that it is barely turning a profit. The only accurate accounting of revenues and expenses is to be found in the third set, which the proprietor keeps carefully hidden away from prying eyes.
It is a safe bet that many local, city, and provincial governments are fudging the numbers, or keeping bad loans off the books entirely, in the accounting they send up the chain of command to Beijing.
The China that Xi Jinping will showcase to the American President thus contains lots of beautiful new buildings, and cranes that are busy constructing even more.
The builder in Donald Trump will probably be impressed by all the new construction, but the businessman may question whether such an overheated economy can long survive.
Trump knows that the Chinese economy is essentially derivative. It feeds parasitically off of the U.S. consumer economy, soaking up $500 billion a year in foreign currency, which it then uses to prop up its failing state-owned enterprises.
He also knows, thanks in part to Peter Navarro, all about the “dizzying array of illegal export subsidies, currency manipulation, intellectual property theft, sweatshop labor, and pollution havens” that China has used to seize market share from both Europe and North America.
Finally, he knows that America’s ruling class – that loose coalition of Globalists and Progressives also known as the Washington Establishment – literally sold out America when it allowed China to join the World Trade Organization. As Lenin might have said, the Establishment “sold China the rope that it is using to hang us.”
But if the Establishment made the classic Capitalist blunder, Comrade Xi may have made the classic Communist one.
Like all good Communists, Xi apparently believes that he can simply command the economy to grow … and grow it will.
Acting on the belief that the economy was his to command, the late Chairman Mao nearly destroyed it. He launched the Great Leap Forward in the late Fifties, ordered his people into communes, and commanded them to catch up to Great Britain in steel production in three years.
Xi Jinping, acting out of the same belief, has set the Chinese economy on a similarly dangerous course. He is so bent on surpassing the United States and achieving his “China Dream” of world hegemony, that he ordered the Chinese economy to double in size in eight years.
Mao’s blunder led to a massive famine costing 45 million lives. Xi’s blunder has led to a debt bubble so massive that it may turn China’s beautiful new façade of modernity into nothing more than a world-class Potemkin Village.
Last year, for the first time in our nation’s history, the American people elected as president someone with no experience in government. Trump has never been a senator, a congressman, or a governor, nor even a cabinet secretary or a general. What he does bring to the table is the acumen of an entrepreneur who has spent his life in construction and finance.
If anyone understands that China is sitting on a mammoth debt bubble of its own making, it is Donald Trump.
The President needs to make clear to Xi that he holds a very, very sharp pin.
Then he needs to begin to do what he does best: negotiate in earnest.
++
Right now Steve’s important new book, Bully of Asia, is just coming off the presses at Regnery publishers. Here’s your chance to get that landmark book and helpy PRI as well.
Steve is an internationally recognized authority on China. He is also the author of numerous books on China, among them Broken Earth: The Rural Chinese, A Mother’s Ordeal: One Woman’s Fight Against China’s One-Child Policy, and Hegemon: China’s Plan to Dominate Asia and the World. He’s written hundreds of scholarly articles, editorials, and opinion pieces. This book, The Bully of Asia, is indispensable to understanding America’s greatest foreign policy challenge today.
The signs are everywhere.
China unilaterally claims the entire South China Sea as sovereign territory, then builds artificial islands to bolster its claim. It suddenly activates an air defense identification zone over the East China Sea, and threatens to down any aircraft that does not report its position. It builds roads into Indian territory, then redraws the maps to show that it is actually Chinese territory. China is still forcibly aborting millions of its children, leaving tens of millions of Chinese men without spouses, ripe for the military conquest of countries where women are more plentiful.
The People’s Republic under President Xi Jinping is quickly becoming The Bully of Asia. Here’s your chance to learn more about the threat China poses to global security. "
I find it simply fascinating that discussions of China's debt are now only discussed as a 'total' amount (including federal, provincial, corporate, and private) as being around 300% of GDP but America's debt is never discussed in this manner. The only estimate I've ever heard by an economist stated that America's total debt was roughly 500% of GDP (but he admitted that it was a rough estimate). It is interesting how America's federal government is coming close to going into almost a trillion dollars of debt every year now, individual states such as California are almost bankrupt, America has a student debt bubble, a sub-par automotive financing bubble, but instead of addressing these concerns, its media and government point to China as having unsustainable debt, even though China has no external debt (debt owed to other countries). It just sounds like yet another propagandistic smear campaign to distract that American population from their problems at home. Similar to the critiques of the Belt and Road Initiative. The message being: China builds infrastructure incorrectly, America can do it correctly...but they don't have the political will or the monies to do so (i.e. the now failed attempt to make America's first high-speed railway between Los Angeles and San Francisco; or the trillion dollar infrastructure deficit in the U.S. which has been widely recognized in the U.S. media).
The standard practice when discussing China, from what I've been able to observe, in the media and academic circles is to attack and critique China with as many bullet points as possible, as fast as possible. This wouldn't be necessarily problematic except that the points made are often very vague, problematic or ambiguous. Statements such as 'there are human rights issues in China' are supposed to somehow be meaningful, when all countries, with the possible exception of small and rich European countries, have human rights issues. This, I submit, is a form of propaganda meant to suggest to the average person that there are no human rights in China (which is, if course, nonsense). This isn't to suggest that there are not issues with human rights in China either, just that simply making the ambiguous statement that 'there are human rights issues in China' isn't a particularly meaningful statement, which is why it isn't used in such a manner to refer to western countries such as the U.S., despite there being a wide variety of human rights issues in that country.
Dear Rubén
I think that this news may be relevant to yours question:
http://time.com/5523805/china-aging-population-working-age/
The dispute over mobile phone companies and internet use rights are part of this leadership confrontation
I think that all ones like prosperity for China and proximities, but money does not make culture necessarily and real welfare. In certain sense China seems Europe culturally more than thousand years ago. I believe that I am certain in this. I appreciate Chinese people but religious liberty in China seems impossible yet. And true religion makes to prosper people.
Thank you Rubén Corvalán for your Question. The edicts for religious freedom in Roman Empire were since fourth century after Christ. But in the world religious freedom is not a right of fact in many places yet. I think that development of peoples have place with a responsible liberty that true religion can provide.
The change of mood of investors due to new certainties about economic policy and the closure of the first phase of the China-United States negotiation. they push up capital market assets.
Who will lead the world: The model of Beijing where a party, authoritarian State, with determination, extols an economic improvement over free political choice, may look attractive to some, but it cannot be emulated in a generalized way. As it depends on the history and the particular culture of China, the model can only work there. In contrast, democracy like that of the United States is based on universal principles that can be followed everywhere and can be followed by all people, provided that it is based on universal equality between people and states.
The economic rise of China to the top is tarnished by two major problems: (1) excessive fossil fuel energy use fallout visible as a pollutant-contamination cloud that obscures Continental China from view on satellite cameras; and (2) violations of human rights. While China is mimicking the United States, China's 1.4 billion population dwarfs the U.S.A.'s mere 300 million, which fact has not been adequately computed by Chinese officials, who ought to accept their moral and ethical responsibilities if they expect to be respected at home and abroad. Do they recognize the fact that economic world leadership carries with it added responsibility for the health and well being of less fortunate nations, including the U.S., Brazil, and other countries that are suffering much hardship caused by the novel corona virus?
Dear Colleagues
China goes on with its genocide political on minorities of their own people. See the las report of Population Research Institute:
https://www.pop.org/genocide-in-china/?eType=EmailBlastContent&eId=d476e118-5ad0-4dd6-b177-2621ae49f4b8
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