China grows stronger. The US grows weaker. Why?

[Mista]

I'm saying China's situation is completely different from India's.

The Chinese nominal GDP and nominal per-capita GDP figures don't look right when you compare it to the actual energy and electricity consumption comparison between China and the US.

Nominal GDP is related to nominal per-capita GDP. Per-capita GDP is calculated by dividing nominal country GDP by the population.

If China's nominal GDP is wrong due to China's pegged currency then it means the per-capita GDP gap between China and the US is also much smaller.

And that's why it's called nominal. Otherwise we should just use PPP per capita, which is more accurate to reflect living standards.

 

[Martian2]

China has failed to close the GDP gap in any significant way going on 4 years now. The US economy just added another $245 billion in the 3rd quarter, with an overall GDP of $19.5 trillion. The US is on pace to surpass $20 trillion by the 2nd or 3rd quarter next year. China simply isn't gaining enough ground on the US economy right now.

The Chinese economy is in long term steady decline. China won't be able to sustain these high growth rates due to an outdated model consisting of debt fueled growth, and a looming demographic crisis. In about 10-15 years, China will begin aging rapidly, putting significant pressure on the Chinese economy. You can expect declining growth rates, and social spending to soar, thereby diverting money from defense and S&T accounts. By around 2050, the Chinese population will then decline in huge numbers. The Chinese population is expected to decline by near 400 million people by 2100. China will essentially go through what Japan is now, just on a much larger scale.

US demographics, on the other hand, are much healthier. The US population is expected to grow to around 450 million by 2100. China will only be a little over twice as large then, and very old. China won't be able to sustain their current model. That is practically guaranteed.

China depreciated its currency, because the Euro fell dramatically.

China was trying to preserve its competitiveness against European companies.

All of the bad news for Europe is over. European sanctions against Russia have happened. Brexit is old news.

Thus, China's currency will no longer fall against the US dollar.

We will see a resumption of China closing the gap with the US in nominal GDP.

And that's why it's called nominal. Otherwise we should just use PPP per capita, which is more accurate to reflect living standards.

No. You're getting confused. Nominal means determined by the marketplace. China has a "pegged' currency. The Chinese currency and Chinese "nominal" GDP are not determined by the marketplace. It is determined by the Chinese government.

I am not talking about PPP. I am talking about an inaccurate nominal GDP.

The Chinese government used to peg its Yuan at 8.26 per US dollar. It unilaterally adjusted the exchange rate down to 6 Yuans per US dollar.

To preserve competitiveness against Europe, the Chinese government moved the Yuan back up.

The moving of China's currency by the Chinese government is not indicative of a free-market exchange rate. It is a reflection of the Chinese government setting of its currency value.

I'm saying the Chinese government could move its currency down to 5 Yuans per US dollar if it wanted to. There is nothing "nominal" about China's GDP.

 

[F-22Raptor]

Then let's wait for that moment?

Otherwise it's the same as the Indians who claim they will surpass China because they have higher projected growth rates in the future, despite just 1/5 of China's size.

Funny you mention India's population. There population is expected to reach 1.7 billion by 2070. By 2100, India will have 600-700 million more people than China. Whether they can successfully sustain high growth rates is yet to be seen, but India may very well surpass China's economy over time.

 

[Mista]

China has failed to close the GDP gap in any significant way going on 4 years now. The US economy just added another $245 billion in the 3rd quarter, with an overall GDP of $19.5 trillion. The US is on pace to surpass $20 trillion by the 2nd or 3rd quarter next year. China simply isn't gaining enough ground on the US economy right now.

The Chinese economy is in long term steady decline. China won't be able to sustain these high growth rates due to an outdated model consisting of debt fueled growth, and a looming demographic crisis. In about 10-15 years, China will begin aging rapidly, putting significant pressure on the Chinese economy. You can expect declining growth rates, and social spending to soar, thereby diverting money from defense and S&T accounts. By around 2050, the Chinese population will then decline in huge numbers. The Chinese population is expected to decline by near 400 million people by 2100. China will essentially go through what Japan is now, just on a much larger scale.

US demographics, on the other hand, are much healthier. The US population is expected to grow to around 450 million by 2100. China will only be a little over twice as large then, and very old. China won't be able to sustain their current model. That is practically guaranteed.

I think China will still surpass the US in total GDP, maybe around 2027. But beyond that, whether China will have a significant lead in GDP, I'm not so sure. China is projected to grow around 3-4% around 2030 and maybe 2% by 2050.

I agree that aging population is a huge challenge for China's future global economic dominance. They really should abandon any form of family planning right now.

 

[Martian2]

Funny you mention India's population. There population is expected to reach 1.7 billion by 2070. By 2100, India will have 600-700 million more people than China. Whether they can successfully sustain high growth rates is yet to be seen, but India may very well surpass China's economy over time.

During the last 40 years, India has shown no ability to dramatically increase its energy consumption or technological upgrade.

India is far behind Brazil in terms of development.

In contrast, China has proven it is the world's largest exporter, largest energy consumer, largest car market, about to become the world's largest aviation market, etc.

China is a proven industrial behemoth. India is just a country with zero improvement. It's silly to compare India to China.

China has an annual trade surplus of $500 billion to fund its dramatic technological upgrade.

India runs an annual trade deficit of $100 billion. There is no money in India to fund any technological upgrade.

China grows stronger. India grows weaker. It is laughable to suggest India will catch China in our lifetime.

 

[Adam WANG SHANGHAI MEGA]

Funny you mention India's population. There population is expected to reach 1.7 billion by 2070. By 2100, India will have 600-700 million more people than China. Whether they can successfully sustain high growth rates is yet to be seen, but India may very well surpass China's economy over time.

In your dream maybe,but as long as the below problems exist india,i would say never:
Caste system;
Gender inequality;
Comprehensive corruption；
Far more backward infrastructure;
Inefficient workers;
Lazy people;
Deterioration of public security;
Chaotic government controls;
800 millions illiterates(i can not believe it after 70 years independence the illiteracy rate is still so high and the population who are too poor to go to school is still growing while illiterates are growing as well)
etc.........

 

[Mista]

Funny you mention India's population. There population is expected to reach 1.7 billion by 2070. By 2100, India will have 600-700 million more people than China. Whether they can successfully sustain high growth rates is yet to be seen, but India may very well surpass China's economy over time.

Maybe. If India can overcome the middle income trap.

But 2100 is too far in the future to make any meaningful prediction.

 

[F-22Raptor]

China depreciated its currency, because the Euro fell dramatically.

China was trying to preserve its competitiveness against European companies.

All of the bad news for Europe is over. European sanctions against Russia have happened. Brexit is old news.

Thus, China's currency will no longer fall against the US dollar.

We will see a resumption of China closing the gap with the US in nominal GDP.


No. You're getting confused. Nominal means determined by the marketplace. China has a "pegged' currency. The Chinese currency and Chinese "nominal" GDP are not determined by the marketplace. It is determined by the Chinese government.

I am not talking about PPP. I am talking about an inaccurate nominal GDP.

The Chinese government used to peg its Yuan at 8.26 per US dollar. It unilaterally adjusted the exchange rate down to 6 Yuans per US dollar.

To preserve competitiveness against Europe, the Chinese government moved the Yuan back up.

The moving of China's currency by the Chinese government is not indicative of a free-market exchange rate. It is a reflection of the Chinese government setting of its currency value.

I'm saying the Chinese government could move its currency down to 5 Yuans per US dollar if it wanted to. There is nothing "nominal" about China's GDP.

Whatever makes you feel better Marty. I remember a year or two ago, you tried to convince people that the US military had no major strategic defense programs under development. You failed miserably.

You also tried to convince us that the FBI showed up at your door because you were posting pro-Chinese messages. That was a lie.

Take his predictions with a grain of salt, folks.

 

[Adam WANG SHANGHAI MEGA]

I think China will still surpass the US in total GDP, maybe around 2027. But beyond that, whether China will have a significant lead in GDP, I'm not so sure. China is projected to grow around 3-4% around 2030 and maybe 2% by 2050.

I agree that aging population is a huge challenge for China's future global economic dominance. They really should abandon any form of family planning right now.

China current policy is every family is allowed to have 2 children

 

[beijingwalker]

China's strength lie with her people, culture and hardworking ethnics. barely 20 years ago China's GDP ranked barely top 10 and now the second still gaining ground. Both UK and US climbed to the top through manufacturing and trade, so as long as China holds on to those two top spots China holds all the cards now and in the future, other than that, China now is trying to undermine dollar based global economy, if that can be changed, US will go down the drain very fast.

Once US doesn't produce anything and has nothing to offer to this world, US dollars will lose its appeal. US is obvious down this path.

 

[Martian2]

Whatever makes you feel better Marty. I remember a year or two ago, you tried to convince people that the US military had no major strategic defense programs under development. You failed miserably.

You also tried to convince us that the FBI showed up at your door because you were posting pro-Chinese messages. That was a lie.

Take his predictions with a grain of salt, folks.

I have no idea what you are talking about.

Regarding the FBI, I think I said the US government. They never showed me an FBI badge. They kept knocking on my door over many weeks and what I said was true.

Getting back on topic, it is silly for you to compare India to China.

China's SMIC currently manufactures semiconductor logic chips at 28nm. SMIC has announced it is moving to 14nm in the first quarter of 2019.

India has ZERO commercial semiconductor manufacturing.

It is absurd to suggest India will overtake China anytime this century.

 

[F-22Raptor]

Maybe. If India can overcome the middle income trap.

But 2100 is too far in the future to make any meaningful prediction.

Maybe, but India's population is expected to surpass China's in 5 years. There economy will almost assuredly become the third largest in the world in the next decade or two, thereby more money for defense, S&T, etc.

India will be a huge headache for China for a long time, given projected demographics. An there right at China's doorstep.

 

[Mista]

China current policy is every family is allowed to have 2 children

I know but it's still not enough. You need 2.1 for replacement rate.

And because there will definitely be people who choose to be single, have no kids, or just 1 kid, the other remaining couples need to have 3 or more children to reach 2.1 TFR. Which means China will never be able to reach replacement fertility rate as long as the two child policy remains.

 

[Martian2]

Maybe, but India's population is expected to surpass China's in 5 years. There economy will almost assuredly become the third largest in the world in the next decade or two, thereby more money for defense, S&T, etc.

India will be a huge headache for China for a long time, given projected demographics. An there right at China's doorstep.

No. You need money.

India is dirt-poor and bleeding hard currency.

China has accumulated large trade surpluses since 2004.

Also, China has demonstrated its continued dominance of world trade.

China has maintained its status as the world's largest exporter and having the largest trade surplus.

China's dominance of world exports in manufactured goods leaves no room for India to climb the economic and technological ladder.

 

[beijingwalker]

Over the past 30 years, western economists gradually learned that whatever they learned from their western economics books doesn't apply to China. China is unique, what always works in the west doesn't work in China. That is the main reason that they kept predicting China's imminent crash for over 3 decades.