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CASS: China's GDP surpasses US by 2020

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Can anyone throw some light on this? Why is a fast growth rate not favorable and why the Chinese government tried to slow it down?
Thanks.

Fast growth rate may prevent necessary economical restructuring and ultimately lead to a crash. It may also lead to inefficient allocation of capital and natural resources (as everyone is rushing to the new hottest growth spot). Thus a slower but more sustainable growth is preferable.

Premier Wen recently warned Chinese companies to prepare for hard times as the government is applying brakes to cool down the economy. I'm not sure he can succeed, ADB recently predict a 9.6% growth rate for 2011, far higher than the 7.5% official target. But if Wen can engineer a soft landing during the last two years of his term then I think he will leave behind a positive legacy, despite his many other failings.
 
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It also depends on if this 5th generation leaders are any good.
If they love themselves or love China.

I'm sure they work better than those executives and CEOs of America's big banks that needed tax payers money to bail their "too big to fail" arses .
 
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GDP which we are talking about here is nominal GDP, why everyone is using real GDP 9-10% rate to project future? The average nominal GDP growth of china over past ten years is more than 14%. If both china and USA keep their growth rates of past ten years, even with current exchange rate, China's GDP will surpass USA by 2020 for sure
 
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GDP which we are talking about here is nominal GDP, why everyone is using real GDP 9-10% rate to project future? The average nominal GDP growth of china over past ten years is more than 14%. If both china and USA keep their growth rates of past ten years, even with current exchange rate, China's GDP will surpass USA by 2020 for sure

So let me get this right: China's recorded GDP growth rate is the real GDP rate excluding inflation but our nominal is larger. Calculations of GDP/capita are nominal. That should mean the gap between PPP and nominal GDP/capita is reducing per year, r ight?
 
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So let me get this right: China's recorded GDP growth rate is the real GDP rate excluding inflation but our nominal is larger. Calculations of GDP/capita are nominal. That should mean the gap between PPP and nominal GDP/capita is reducing per year, r ight?

No, the nominal GDP figures you see thrown around are real GDP, adjusted for inflation. The gap between PPP GDP and nominal GDP is introduced by exchange rates and inflation of domestic prices. At this time, most countries' PPP and nominal gap are closing as the value of the dollar is falling against almost all other global currencies and due to the fact that inflation in the US is significantly lower than developing countries.

PS: The gap between PPP and nominal GDP is the largest determinant to weighing the value of a currency. The fact that India has a smaller gap (but still exists because of the cheap labor and environmental costs of producing some basic goods vs-a-vs the global market) than China means that the Rupee is more fairly weighed than the Yuan.
 
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PPP is a math game of the economists. They believe some services is not able to trade through the borders, e.g. hair cut, housework and a visit to the Great Wall etc. They put a single price for those services in different countries and weighed it into the GDP calculation and call it PPP.
 
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So let me get this right: China's recorded GDP growth rate is the real GDP rate excluding inflation but our nominal is larger. Calculations of GDP/capita are nominal.

Yes, the real GDP rate we are mentioning excludes inflation.

Instead of cutting and pasting what are Real vs Nominal GDP from Wiki, just do a simple math: if using 10% as growth rate per year, starting from china's 2000 GDP (1.19 billion), total of ten year's growth does not add up to 2010's 5.87 billions GDP

1.19X1.1^10=1.19X2.59=3.08

That should mean the gap between PPP and nominal GDP/capita is reducing per year, r ight?

Not necessarily, if other countries have the same inflation rate as china. The gap will be the same
 
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No, the nominal GDP figures you see thrown around are real GDP, adjusted for inflation. The gap between PPP GDP and nominal GDP is introduced by exchange rates and inflation of domestic prices. At this time, most countries' PPP and nominal gap are closing as the value of the dollar is falling against almost all other global currencies and due to the fact that inflation in the US is significantly lower than developing countries.

PS: The gap between PPP and nominal GDP is the largest determinant to weighing the value of a currency. The fact that India has a smaller gap (but still exists because of the cheap labor and environmental costs of producing some basic goods vs-a-vs the global market) than China means that the Rupee is more fairly weighed than the Yuan.

the nominal GDP number and growth rate are NOT adjusted for inflation rate
 
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the nominal GDP number and growth rate are NOT adjusted for inflation rate

The GDP growth rate numbers are definitely after inflation.
Otherwise, you'll get Zimbabwe reporting 1,000% GDP growth when real GDP growth is actually negative.
 
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The GDP growth rate numbers are definitely after inflation.
Otherwise, you'll get Zimbabwe reporting 1,000% GDP growth when real GDP growth is actually negative.

i mean nominal growth rate is not adjusted for inflation rate which is 1000% in your example. That is the reason we are using real GDP growth rate.
 
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China's real growth rate is about 10%, with appreciation and inflation of 7~8%, the annual nominal growth in USD is 18%, enabling GDP to double every 5 years.
 
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PS: The gap between PPP and nominal GDP is the largest determinant to weighing the value of a currency. The fact that India has a smaller gap (but still exists because of the cheap labor and environmental costs of producing some basic goods vs-a-vs the global market) than China means that the Rupee is more fairly weighed than the Yuan.

According to IMF

nominal Indian GDP $1.43 trillion
PPP $4 trillion
4/1.43=2.8

nominal Chinese GDP $5.75 trillion
PPP $10.1 trillion
10.1/5.75= 1.76

What's your point again?
 
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