China Economy Forum

[Beidou2020]

China is already the largest economy. The American economy is inflated due to the role of the dollar as reserve currency.

 

[AndrewJin]

Keep a low profile man!
China being the second biggest economy is seldom mentioned here.
If it is mentioned, per capita level will be empathised more.

 

[Martian2]

I thought China grows at 7% and US grows at 2.8% in the first half year of 2015.

You can't use quarterly figures. You have to use annual numbers.

When the US has a bad winter, the built-up GDP is shifted into the next quarter. This artificially boosts first-quarter (and first-half) economic growth.

When you analyze US GDP over a five or ten year period, the 2% rate becomes clear.

Take a look at the four-quarter moving average of US economic growth during the last seven years, it's usually 2% or less.

 

[Bussard Ramjet]

China is already the largest economy. The American economy is inflated due to the role of the dollar as reserve currency.

How?

 

[Martian2]

How?

China consumes 30% more energy annually than the US (source: BP).

China is on-track to buy 23.5 million light-vehicles (ie. cars, SUVs, and light trucks) this year. It is projected to grow to 25 million light-vehicles next year.
In comparison, the US only buys 17 million light vehicles per year.

Since China has a government-set currency, many people believe the real Chinese economy is larger than the US economy.

I could give you a whole list of smartphone sales, LCD displays, total computers bought, etc.
All of the indicators point towards a larger Chinese economy than the US.
----------

Hard Data indicates China's economy is larger than United States' economy

There are hard data available on China that everyone agrees upon.

According to BP (on page 40 for "Primary energy consumption") for the year 2013, China and the US are the world's two largest energy users.
#1 China: 2,852 Million Tonnes Oil Equivalent (MTOE)
#2 US: 2,266

According to the Wall Street Journal for year 2013, China and the US are the world's two largest electricity consumers.
#1 China: 5.3 trillion kilowatt-hours
#2 US: 3.8 trillion kilowatt-hours

China and the US are also the world's two largest car markets (sales from 2013).
#1 China: 22 million cars/light-vehicles
#2 United States: 15.6 million
----------
"China became top personal computer market in 2012
phys.org › Technology › Business

Apr 29, 2013 - ... PC shipments to China tallied 69 million units in 2012 while 66 million were shipped to the United States, ... Unlike other parts of the world where sales of desktop computers have lagged behind those of laptop ..."
----------
• LCD TVs sales to consumers worldwide 2013, by country | Statistic
#1 China: 42.5 million LCD TV sales in 2013
#2 United States: 33.7 million
----------
Chinese smartphone sales in 2013 were three times larger than US sales.
#1 China: 360 million smartphone sales in 2013
#2 US: 121 million smartphone sales in 2013

Sources: China smartphone shipments set to hit 450 million in 2014 - CNET
Apple Leads US Consumer Smartphone Sales with 45 Percent Share in 2013, According to NPD
----------
Wash, Rinse, Rebrand: Electrolux Spiffs Up Appliances in China - WSJ
"Electrolux China - Wall Street Journal

Sep 19, 2013 - ... China's appliance market, the world's largest in terms of unit sales, is growing faster than those of the U.S. or Western ..."

In conclusion, it should be obvious to everyone that China's overall economy is larger than the United States' economy. China consumes more total energy annually, more electricity, buys more cars, buys more personal computers, buys more LCD TVs, buys a lot more smartphones, and buys more appliances than the United States.

 

[Jlaw]

Why US manufacturers are nixing the US for China
Robotics and the devalued yuan are lowering manufacturing costs in this Asian production hub.

Elaine Pofeldt, special to CNBC.com
Monday, 21 Sep 2015 | 10:00 AM ETCNBC.com

On the hunt for a factory to manufacture her "smartwatch for Grandma," Jean Anne Booth headed to China recently to check out several facilities. "If you're going to build that level of technology, China is really the place to go for cost effectiveness and capability for what it is we're doing," said Booth, the CEO of four-employee UnaliWear, a two-year-old firm in Austin, Texas.

Booth, a veteran of the semiconductor industry, may soon find an even greater incentive to manufacture overseas if current economic trends continue. The recent devaluation of the yuan is expected to drive manufacturing costs lower in China, where average yearly wages in manufacturing rose from 15,757 renminbi in 2006 to 51,369 renminbi in 2015, according to Trading Economics, a global economics research firm in New York City. That is equivalent to a jump from $2,472 to $8,060.

"Chinese factories are cutting prices," said attorney Daniel Harris, a partner and founder at Harris Moure in Seattle, which advises manufacturing clients and others on doing business in China. Harris is also co-author of the popular China Law Blog. "Their costs are going down. People are upping their manufacturing in China. We see this in our practice."

In July the U.S. imported $41 billion worth of goods from China. That was up from $40.5 billion the same month last year. However, with China's manufacturers seeing new orders and exports dip in August and the steepest declines in new output since November 2011, softer demand led to "marked" falls in both costs and charges by factories, according to Markit, a provider of financial information services. The Producer Price Index, which tracks changes in manufacturing prices, fell by 5.9 percent in August from the same time in 2014, the biggest decline since the global financial crisis in 2009.

"The recent devaluation of the yuan is expected to drive manufacturing costs lower in China." -Trading Economics

One reason for declining manufacturing costs in China is that it is shifting more of its production to robots, counterbalancing the effects of rising wages. In a report to be released later this month, the International Federation of Robotics found that China accounted for 25 percent of industrial robot sales in the world in 2014 and had purchased about 56,000 units, with the automotive industry the leading buyer. China's share of the world's robots is up from last year's 20 percent, which made China the country with the largest percentage of the world's industrial robots.

That said, it may take a while before many U.S. manufacturers ramp up their production in China significantly. For one thing, many manufacturers in China aren't likely to dangle price breaks to U.S. firms easily, even when declining overhead justifies it, according to Gary Young, president of Avela, which has helped companies source products and services in China since 2002 and has offices in Houston and Shanghai. Often, he has found, U.S. firms find there is resistance when they try to renegotiate deals with Chinese manufacturers whose costs are declining.

"There's always pushback," said Young. "For the most part, manufacturers' profit margins are pretty small. They are anywhere from 4 percent to 12 percent. That's all the profit margin they have. They guard that. That's their lifeblood."

He added, "Everything is a negotiation. It can take a couple of days. They try to wear you down. Their attitude is, 'You're an American. You're rich. You really shouldn't even be doing this.'"

Certainly, even with the potential for lower costs, not every manufacturer wants to make products in China. "There is supply-chain risk," said Greg Cullison, a senior executive at Big Sky Associates, an operations management advisory firm in Charlotte, North Carolina, and Washington, D.C., and an expert in geopolitical risk analysis. "China is very far away. You have to consider the shipment costs. Are you going to be subject to export tariffs or delays, which are actually costly in shipping the goods?"

Nas Siqueira, co-founder of Los Angeles-based Nawi Kids, recently opted out of a potential deal to manufacture her stuffed toys, blankets and other baby products at about one-fourth of her current manufacturing costs, though she already had a Chinese factory lined up and samples made. "I didn't want to not know how it was made and who was making it," said Siqueira.

Instead, her three-person firm, founded about two years ago, contracts out the cutting, sewing and other production work to about 26 people who work locally. "I'm really lucky being in Los Angeles now," she said. "We have manufacturing coming back. I was really lucky to have found people who could do everything, including toys, which are hard to do. I couldn't really see myself putting my stuff in someone else's hands, not having met them."

Why US manufacturers are nixing the US for China

to summarize: China can do more for less with the same quality.

China's Internet of Things reaches 90 bln dollars in 2014

NANJING, Sept. 24 (Xinhua) -- The value of China's Internet of Things (IoT) industry reached 580 billion yuan (90 bln U.S. dollars) in 2014, a yearly increase of 18.46 percent, said a report issued on Thursday.


The IoT, which connects traditional devices, including home appliances, to the Internet, has become a powerful driving force of innovation and economic growth in China, said the report issued by Xinhua News Agency on an IoT expo in Wuxi City, east China's Jiangsu Province.

The report said China's IoT technologies have continued to integrate with both traditional industries like agriculture and manufacturing and rising industries such as new energy and new materials.

China has formed four IoT industry centers in Yangtze River Delta, Pearl River Delta, Bohai Rim, and central and western China, with Yangtze River Delta taking the lead in terms of industrial scale, it said.

The report also listed major challenges facing China's IoT, including its reliance on importation of sensor and chip technology, problems in application, information and data security.

-----------------------------------

The chip industry must progress faster

 

[Martian2]

I thought China grows at 7% and US grows at 2.8% in the first half year of 2015.

Proof that United States grows at 2% economically per year

Here is the US nominal GDP data from the IMF for the years 2010 to 2015.

----------

Here is a projection of US nominal GDP by calculating 2% economic growth + 2% inflation (for a total of 4% per annum) from 2010 to 2015.

Look at how closely the real-world US nominal GDP growth matches the projection.
US nominal GDP for 2015 will be about $18.12 billion.
The projection using a 2% economic growth + 2% inflation estimated $18.2 billion.

Over a five-year period, American nominal GDP has been shown to grow at 2% economically with another 2% of inflation. Thus, it is reasonable to use an estimated 2% US economic growth in projecting future American GDP from 2016 to 2024 (see original post).

 

[Shotgunner51]

China consumes 30% more energy annually than the US (source: BP).

China is on-track to buy 23.5 million light-vehicles (ie. cars, SUVs, and light trucks) this year. It is projected to grow to 25 million light-vehicles next year.
In comparison, the US only buys 17 million light vehicles per year.

Since China has a government-set currency, many people believe the real Chinese economy is larger than the US economy.

I could give you a whole list of smartphone sales, LCD displays, total computers bought, etc.
All of the indicators point towards a larger Chinese economy than the US.
----------

Hard Data indicates China's economy is larger than United States' economy

There are hard data available on China that everyone agrees upon.

According to BP (on page 40 for "Primary energy consumption") for the year 2013, China and the US are the world's two largest energy users.
#1 China: 2,852 Million Tonnes Oil Equivalent (MTOE)
#2 US: 2,266

According to the Wall Street Journal for year 2013, China and the US are the world's two largest electricity consumers.
#1 China: 5.3 trillion kilowatt-hours
#2 US: 3.8 trillion kilowatt-hours

China and the US are also the world's two largest car markets (sales from 2013).
#1 China: 22 million cars/light-vehicles
#2 United States: 15.6 million
----------
"China became top personal computer market in 2012
phys.org › Technology › Business

Apr 29, 2013 - ... PC shipments to China tallied 69 million units in 2012 while 66 million were shipped to the United States, ... Unlike other parts of the world where sales of desktop computers have lagged behind those of laptop ..."
----------
• LCD TVs sales to consumers worldwide 2013, by country | Statistic
#1 China: 42.5 million LCD TV sales in 2013
#2 United States: 33.7 million
----------
Chinese smartphone sales in 2013 were three times larger than US sales.
#1 China: 360 million smartphone sales in 2013
#2 US: 121 million smartphone sales in 2013

Sources: China smartphone shipments set to hit 450 million in 2014 - CNET
Apple Leads US Consumer Smartphone Sales with 45 Percent Share in 2013, According to NPD
----------
Wash, Rinse, Rebrand: Electrolux Spiffs Up Appliances in China - WSJ
"Electrolux China - Wall Street Journal

Sep 19, 2013 - ... China's appliance market, the world's largest in terms of unit sales, is growing faster than those of the U.S. or Western ...

In conclusion, it should be obvious to everyone that China's overall economy is larger than the United States' economy. China consumes more total energy annually, more electricity, buys more cars, buys more personal computers, buys more LCD TVs, buys a lot more smartphones, and buys more appliances than the United States.

Thanks for your data! If the subject of discussion is real economy, i.e. "brick & mortar", measured in "Tonnage" or "kWh" or "Number of XXX" or other non-currency units, then yes, China is already larger than US. Note, even in currency value (using the prevailing RMB:US$ exchange ratio in the market), China is already a lot bigger in industrial production and agricultural production.

However it's also obvious that two sectors of economy - services (high end in particular e.g. banking, accounting, stock/bond/derivatives market, legal, movie/entertainment) and domestic consumption (contrary to high Gross Domestic Savings) - are seriously underdeveloped. Economic reforms on these two sectors are still in early stage, and until some solid results are seen the overall economy is still imbalanced no matter how big is the absolute size.

Bigger than US in GDP calculation or not isn't an important economic benchmark, the top agenda is to complete a strong & healthy economic ecosystem, benchmarking KPI's against fellow East Asian countries. Just some thoughts, critics welcome bro!

 

[Indus Pakistan]

Let's not become Indianize. Let's wait and see.

My ribs are about to crack with laughter - That one liner deserves a positive.

 

[Martian2]

Thanks for your data! If the subject of discussion is real economy, i.e. "brick & mortar", measured in "Tonnage" or "kWh" or "Number of XXX" or other non-currency units, then yes, China is already larger than US. Note, even in currency value (using the prevailing RMB:US$ exchange ratio in the market), China is already a lot bigger in industrial production and agricultural production.

However it's also obvious that two sectors of economy - services (high end in particular e.g. banking, accounting, stock/bond/derivatives market, legal, movie/entertainment) and domestic consumption (contrary to high Gross Domestic Savings) - are seriously underdeveloped. Economic reforms on these two sectors are still in early stage, and until some solid results are seen the overall economy is still imbalanced no matter how big is the absolute size.

Bigger than US in GDP calculation or not isn't an important economic benchmark, the top agenda is to complete a strong & healthy economic ecosystem, benchmarking KPI's against fellow East Asian countries. Just some thoughts, critics welcome bro!

There's a problem in the current calculation of services. Per capita nominal GDP for an American is seven times higher than a Chinese.

An American truck driver is currently valued 7 times more than his Chinese counterpart.

Similarly, an American teacher counts 7 times as much in services than his/her Chinese counterpart.

An American railway person is paid 7 times as much as his Chinese counterpart.

Who believes that Americans engaged in the service sector should be counted 7 times more towards nominal GDP?

You can't argue that an American is seven times more productive than his/her Chinese counterpart.
An American teacher does not teach 7 times more pupils.

The only conclusion that you can draw is that there is a flaw in measuring the service economies of the United States and China. Since the service economies cannot be accurately compared to one another, it is better to just throw out the service sectors and look strictly at the real Chinese and US economies.

 

[Martian2]

CSIS (Center for Strategic and International Studies) 224 page report that China's nominal GDP is actually 15% larger than reported.

Link: http://csis.org/files/publication/150824_Rosen_BrokenAbacus_WEB.pdf

 

[Beidou2020]

China consumes 30% more energy annually than the US (source: BP).

China is on-track to buy 23.5 million light-vehicles (ie. cars, SUVs, and light trucks) this year. It is projected to grow to 25 million light-vehicles next year.
In comparison, the US only buys 17 million light vehicles per year.

Since China has a government-set currency, many people believe the real Chinese economy is larger than the US economy.

I could give you a whole list of smartphone sales, LCD displays, total computers bought, etc.
All of the indicators point towards a larger Chinese economy than the US.
----------

Hard Data indicates China's economy is larger than United States' economy

There are hard data available on China that everyone agrees upon.

According to BP (on page 40 for "Primary energy consumption") for the year 2013, China and the US are the world's two largest energy users.
#1 China: 2,852 Million Tonnes Oil Equivalent (MTOE)
#2 US: 2,266

According to the Wall Street Journal for year 2013, China and the US are the world's two largest electricity consumers.
#1 China: 5.3 trillion kilowatt-hours
#2 US: 3.8 trillion kilowatt-hours

China and the US are also the world's two largest car markets (sales from 2013).
#1 China: 22 million cars/light-vehicles
#2 United States: 15.6 million
----------
"China became top personal computer market in 2012
phys.org › Technology › Business

Apr 29, 2013 - ... PC shipments to China tallied 69 million units in 2012 while 66 million were shipped to the United States, ... Unlike other parts of the world where sales of desktop computers have lagged behind those of laptop ..."
----------
• LCD TVs sales to consumers worldwide 2013, by country | Statistic
#1 China: 42.5 million LCD TV sales in 2013
#2 United States: 33.7 million
----------
Chinese smartphone sales in 2013 were three times larger than US sales.
#1 China: 360 million smartphone sales in 2013
#2 US: 121 million smartphone sales in 2013

Sources: China smartphone shipments set to hit 450 million in 2014 - CNET
Apple Leads US Consumer Smartphone Sales with 45 Percent Share in 2013, According to NPD
----------
Wash, Rinse, Rebrand: Electrolux Spiffs Up Appliances in China - WSJ
"Electrolux China - Wall Street Journal

Sep 19, 2013 - ... China's appliance market, the world's largest in terms of unit sales, is growing faster than those of the U.S. or Western ..."

In conclusion, it should be obvious to everyone that China's overall economy is larger than the United States' economy. China consumes more total energy annually, more electricity, buys more cars, buys more personal computers, buys more LCD TVs, buys a lot more smartphones, and buys more appliances than the United States.

Don't forget that China is also the largest trading nation in the world and the biggest trading partner for 124 countries compared to around 75 for the US.

China is also the largest manufacturing nation.

In service sector, Chinese tourists are bigger spenders than the US. Chinese movie market is rapidly closing the gap with the US.

Chinese fiscal revenues are over $2 trillion too which is bigger than the size of many economies.

China is either ahead or very close to the US in many categories but the biggest gap is in the size of the economy.

The bottom line is the Chinese economy is bigger than officially reported. Even the Chinese military budget is between $250-$300 billion in annual spending.

 

[TaiShang]

to summarize: China can do more for less with the same quality.

China's Internet of Things reaches 90 bln dollars in 2014

NANJING, Sept. 24 (Xinhua) -- The value of China's Internet of Things (IoT) industry reached 580 billion yuan (90 bln U.S. dollars) in 2014, a yearly increase of 18.46 percent, said a report issued on Thursday.


The IoT, which connects traditional devices, including home appliances, to the Internet, has become a powerful driving force of innovation and economic growth in China, said the report issued by Xinhua News Agency on an IoT expo in Wuxi City, east China's Jiangsu Province.

The report said China's IoT technologies have continued to integrate with both traditional industries like agriculture and manufacturing and rising industries such as new energy and new materials.

China has formed four IoT industry centers in Yangtze River Delta, Pearl River Delta, Bohai Rim, and central and western China, with Yangtze River Delta taking the lead in terms of industrial scale, it said.

The report also listed major challenges facing China's IoT, including its reliance on importation of sensor and chip technology, problems in application, information and data security.

-----------------------------------

The chip industry must progress faster

IoT is an important aspect of Taiwan's Internet 4.0 strategy. Especially with respect to work stations. China's own 2025 strategy has IoT at its heart, as well.

 

[badguy2000]

Right now, the IMF nominal GDP numbers for China and the United States are misleading. It is a comparison of apples to oranges. China is still using the antiquated SNA 1993 (System of National Accounts) method. The US is using the SNA 2008.

According to a September 22, 2015 Wall Street Journal article, China's nominal GDP for 2014 was $11.5 trillion (see citation below) under the SNA 2008 method.

We want to conduct an apples-to-apples comparison of Chinese and US nominal GDP using the same SNA 2008 method.
For 2014, US nominal GDP under SNA 2008 was $17.4 trillion (see IMF data).
For 2014, China's nominal GDP under SNA 2008 was $11.5 trillion (see The Wall Street Journal article below).

Let's project US and Chinese nominal GDP into the future.

For the United States, the economic growth has historically been 2% (e.g. 1% for technological improvement and 1% for labor force growth). US inflation averages 2%. Thus, the US will grow by 4% annually over the long term.

For China, the new economic growth is 7%. The years of 10% economic growth is over, because all of the low-hanging fruit has been plucked (when China joined the WTO in December 2001). We expect China to maintain an economic growth of 7% for the next ten years, because the Belt-and-Road initiative should integrate the Southeast Asian, Central Asian, and Russian economies with China's.

Chinese inflation averages about 3% (e.g. typically 1% higher than US inflation). Thus, China will grow by 10% annually (e.g. 7% economic growth + 3% inflation) over the next ten years.

By projecting US 4% and Chinese 10% economic growth into the future, we see that China will surpass the US in nominal GDP by 2022. The IMF says that China's currency is fairly valued. I am assuming a stable Chinese Yuan-US Dollar exchange rate at 6.4 Yuans to the Dollar.

----------

What If China’s Economy Is Even Bigger Than It Seems? - WSJ

----------

Yearly Comparison of US and Chinese Nominal GDPs under SNA 2008

Right now, the IMF nominal GDP numbers for China and the United States are misleading. It is a comparison of apples to oranges. China is still using the antiquated SNA 1993 (System of National Accounts) method. The US is using the SNA 2008.

According to a September 22, 2015 Wall Street Journal article, China's nominal GDP for 2014 was $11.5 trillion (see citation below) under the SNA 2008 method.

We want to conduct an apples-to-apples comparison of Chinese and US nominal GDP using the same SNA 2008 method.
For 2014, US nominal GDP under SNA 2008 was $17.4 trillion (see IMF data).
For 2014, China's nominal GDP under SNA 2008 was $11.5 trillion (see The Wall Street Journal article below).

Let's project US and Chinese nominal GDP into the future.

For the United States, the economic growth has historically been 2% (e.g. 1% for technological improvement and 1% for labor force growth). US inflation averages 2%. Thus, the US will grow by 4% annually over the long term.

For China, the new economic growth is 7%. The years of 10% economic growth is over, because all of the low-hanging fruit has been plucked (when China joined the WTO in December 2001). We expect China to maintain an economic growth of 7% for the next ten years, because the Belt-and-Road initiative should integrate the Southeast Asian, Central Asian, and Russian economies with China's.

Chinese inflation averages about 3% (e.g. typically 1% higher than US inflation). Thus, China will grow by 10% annually (e.g. 7% economic growth + 3% inflation) over the next ten years.

By projecting US 4% and Chinese 10% economic growth into the future, we see that China will surpass the US in nominal GDP by 2022. The IMF says that China's currency is fairly valued. I am assuming a stable Chinese Yuan-US Dollar exchange rate at 6.4 Yuans to the Dollar.

----------

What If China’s Economy Is Even Bigger Than It Seems? - WSJ

----------

Yearly Comparison of US and Chinese Nominal GDPs under SNA 2008

GDP does not matter.it includes too much useless or even harmful sections such as overpriced lawsuit/medical care service,wall street poisonous bonds and virtual rent.
What matters is "real wealth sections",such as manufacturing,mining,agriculture and construction.
Those sections provide necessory foods,industry products and house for people while providing weapons and infrastructure for countries.
China now has much larger manufacturing,construction and agriculture than USA now,although its GDP is less.
It means CHINA's economy is more mighty than USA Alrealdy.

 

[AndrewJin]

GDP does not matter.it includes too much useless or even harmful sections such as overpriced lawsuit/medical care service,wall street poisonous bonds and virtual rent.
What matters is "real wealth sections",such as manufacturing,mining,agriculture and construction.
Those sections provide necessory foods,industry products and house for people while providing weapons and infrastructure for countries.

America spends way too much in medicine, but their life expectancy is not that long.
Efficiency matters, but it is not considered in GDP.