For all those people who think China will soon become a superpower.
It has a loooong way to go!
Same for India.
JAPAN is far ahead of these two nations and if any nation which will become a super power any soon is JAPAN
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Despite the government's hype, China has a long way to go to reach prosperity
China claims that its economy is growing at a rate of 10 percent to 11 percent a year, and China's official analysts say that their country will catch up with the United States long before the 22nd century arrives. Don't believe it.
First, let's deal with the implausibility of the official Chinese statistics. Mathematically, if the overall economy were to grow 10 percent annually, and the 70 percent of the economy that is based in rural areas was not growing, as stated by the Chinese government, the economy in Chinese cities would have to be growing by 33 percent a year. The urban economy is growing rapidly, but not at a 33 percent pace.
Furthermore, Chinese statistics conflict with those of Hong Kong, the semiautonomous territory that serves as the financial capital of much of southern China. In 2001, Hong Kong had a recession, which is to say that it reported that its gross domestic product fell.
Guangdong, the adjacent Chinese province, reported that its GDP in 2001 grew 10 percent.
What are the chances that this number is correct? Very slim.
Economic growth rates can be inferred from electricity consumption.
In every country in the world, electricity use has generally grown faster than the gross domestic product. Electricity is necessary for nearly all productive activities, and because of inefficiencies, the consumption of electricity has generally outstripped economic growth. Rising energy costs have resulted in more efficient use of electricity, but especially in the developing world, economic growth has still generally lagged behind growth in electricity.
But if China's official numbers are to be believed, there are provinces in China where the GDP has been growing faster than energy use. That is unlikely, since the government's statistics also say that energy use per unit of gross domestic product is going up - not down, as claimed in provincial GDP statistics.
Among the world's 12 most rapidly growing economies during the past 10 years, the gross domestic product has grown only 45 percent as fast as electricity consumption. In the early 1970s, Japan was shutting down its electricity-guzzling aluminum industry. During this period, the gross domestic product grew 60 percent as fast as electricity consumption, the highest recorded level among industrialized countries.
Using those numbers as a guide, if we consider China's actual electricity use, which is relatively easy to measure, and do a little math, we come up with this estimate: The GDP in China has been growing somewhere between 4.5 percent, using the average for a rapidly growing country, to 6 percent a year, using the highest rate for Japan, not at the 10 percent rate claimed in official statistics.
The official statistic for China's overall growth rate is best regarded as an approximate growth rate of the economy of its cities.
China also claims that it will catch up with the United States and become the world's largest economy well before the turn of the next century.
There is an equally simple reason that neither of these predictions is likely to be realized. It simply takes more than 100 years for a large, less economically developed country to catch up with the world leader in per capita income.
One need look only at the history of the United States, which had a much higher growth rate than Britain in the 19th century, yet did not catch up until World War I. Or consider Japan and the United States.
Now, about 150 years after Japan started to modernize during the Meiji restoration, Japanese per capita GDP is still only 80 percent of that of the United States in terms of purchasing power parity - although, in nominal terms, it has caught up.
The United States is not standing still. In fact, its per capita income grew faster than nearly all other big countries from 1990 to 2007. Europe's per capita income fell from 85 percent of that of the United States in 1990 to 66 percent in 2007, according to International Monetary Fund statistics.
So let's say that the inflation-adjusted growth rate for China is 4 percent a year. This is optimistic, because China will certainly have some bad years in the next century. Every country does - remember the Great Depression in the United States. A 4 percent rate is faster than any big country has ever grown for 100 years. But assume that China can do it. Assume, too, that the United States grows at the 3 percent rate it has averaged for the past 15 years.
Now project the two growth rates forward: the inflation-adjusted per-capita GDP of China would be less than $40,000 in 2100, versus almost $650,000 in the United States. That's because China starts at $1,000 per capita and the United States at $43,000. If, in 2100, China has four times as many people as the United States, as it does now, China would still not have a total GDP equal to that of the United States.
But it is unlikely to have four times as many people. It is always a mistake to project population growth rates for a century, but let's do it anyway: With a one-child policy and a sex ratio that favors boys (many men won't find wives), China should experience a decline in population in the 21st century.
Yet let's assume for a moment that the population of China remains constant, at 1.3 billion.
If immigration to the United States continued at the current rate, the U.S. population would rise. If the population grew at 1 percent a year, as it has recently, it would more than double by 2100, reducing the enormous population gap between the two countries. Are these projections likely to be realized? Who knows?
What is clear is that China is unlikely to surpass the United States in GDP in absolute or relative terms anytime soon.
There may be a Chinese century, but it will be the 22nd century - not the 21st.
Lester Thurow is a professor of management and economics at the Massachusetts Institute of Technology. He is also on the board of Taiwan Semiconductor, which does business in mainland China.
http://www.nytimes.com/2007/08/20/business/worldbusiness/20iht-econview.4.7188362.html
As I See Japan...from L.A.: China has a long way to go
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