China is economically WAY AHEAD of Vietnam and India

[Martian2]

The mainstream media mistakenly believes that Vietnam and India are only 10-20 years behind China in economic benchmarks.

In reality, Vietnam and India are 40-100 years behind TODAY's China.

Let's look at a recent Forbes' article.

Vietnam's GDP Is Just 11 Years Behind China, And Growing Rapidly | Forbes (November 9, 2017)

The Forbes writer's argument is: Vietnam's PPP per-capita GDP in 2017 ($6,800) is the same as China's in 2006 ($6,800). Therefore, Vietnam is 11 years behind China in PPP per-capita GDP.

This is clearly an incorrect conclusion.

The key distinction is the difference in the slopes of the two graphs.

The slope of China's graph is about $10,000 from 2007 to 2017. ChinaSlope = $10,000 / 10 years = $1,000 increase per year

The slope of Vietnam's graph is about $2,500 from 2007 to 2017. VietnamSlope = $2,500 / 10 years = $250 increase per year

According to Forbes, the unadjusted gap is 11 years (IF THE SLOPES, which is the rate of PPP per-capita GDP increase per year, WERE THE SAME).

Since China's slope is four times larger than Vietnam's, it means Vietnam is actually 44 years behind China in PPP per-capita GDP.

Vietnam is 11 years behind China in PPP per-capita GDP x 4 times higher Chinese PPP per-capita GDP growth = 44 years of Vietnamese catch-up to reach China's 2017 PPP per-capita GDP.

This means Vietnam in 2061 will have the same PPP per-capita GDP standards of living as China in 2017. Forbes erroneously believes Vietnam is only 11 years behind China. Actually, Vietnam is 44 years behind TODAY's China because the rates of PPP per-capita GDP growth are vastly different.
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Now, let's look at the belief among some people that India is only 20 years behind TODAY's China. You hear Indians say it all the time: India is only 20 years behind China and India will also become an economic superpower.

Beyond China and India, Energy Consumption in Non-OECD Asia Continues to Grow | The Energy Collective (September 20, 2017)

In 2015, China consumed 130 quadrillion BTUs (British Thermal Units) of energy.

In 2015, India consumed 30 quadrillion BTUs.

India's rate of increased energy consumption is much lower than China's. Looking at the EIA graph, you can see that India's slope is much flatter than China's.

From 2015 to 2040, the EIA projects Indian energy consumption will double to 60 quadrillion BTUs. This means India is increasing energy usage by 30 quadrillion BTUs over 25 years.

To match China's 130 quadrillion BTU consumption in 2015, India won't reach this milestone for another 83 years (which is the year 2100).

India's energy consumption in 2015 was 30 quadrillion BTUs + (83 years * 30 quadrillion BTUs/25 years) = 130 quadrillion BTUs

Thus, India will reach China's 2015 energy consumption in the year 2100. India is 83 years behind China in energy consumption.

India is NOT 20 years behind China. India is almost 100 years behind China in energy consumption.

 

[TaiShang]

The mainstream media mistakenly believes that Vietnam and India are only 10-20 years behind China in economic benchmarks.

In reality, Vietnam and India are 40-100 years behind TODAY's China.

Let's look at a recent Forbes' article.

Vietnam's GDP Is Just 11 Years Behind China, And Growing Rapidly | Forbes (November 9, 2017)

The Forbes writer's argument is: Vietnam's PPP per-capita GDP in 2017 ($4,800) is the same as China's in 2006 ($4,800). Therefore, Vietnam is 11 years behind China in PPP per-capita GDP.

This is clearly an incorrect conclusion.

The key distinction is the difference in the slopes of the two graphs.

The slope of China's graph is about $10,000 from 2007 to 2017. ChinaSlope = $10,000 / 10 years = $1,000 increase per year

The slope of Vietnam's graph is about $2,500 from 2007 to 2017. VietnamSlope = $2,500 / 10 years = $250 increase per year

According to Forbes, the unadjusted gap is 11 years (IF THE SLOPES, which is the rate of PPP per-capita GDP increase per year, WERE THE SAME).

Since China's slope is four times larger than Vietnam's, it means Vietnam is actually 44 years behind China in PPP per-capita GDP.

Vietnam is 11 years behind China in PPP per-capita GDP x 4 times higher Chinese PPP per-capita GDP growth = 44 years of Vietnamese catch-up to reach China's 2017 PPP per-capita GDP.

This means Vietnam in 2061 will have the same PPP per-capita GDP standards of living as China in 2017. Forbes erroneously believes Vietnam is only 11 years behind China. Actually, Vietnam is 44 years behind TODAY's China because the rates of PPP per-capita GDP growth are vastly different.
----------

Now, let's look at the belief among some people that India is only 20 years behind TODAY's China. You hear Indians say it all the time: India is only 20 years behind China and India will also become an economic superpower.

Beyond China and India, Energy Consumption in Non-OECD Asia Continues to Grow | The Energy Collective (September 20, 2017)

In 2015, China consumed 130 quadrillion BTUs (British Thermal Units) of energy.

In 2015, India consumed 30 quadrillion BTUs.

India's rate of increased energy consumption is much lower than China's. Looking at the EIA graph, you can see that India's slope is much flatter than China's.

From 2015 to 2040, the EIA projects Indian energy consumption will double to 60 quadrillion BTUs. This means India is increasing energy usage by 30 quadrillion BTUs over 25 years.

To match China's 130 quadrillion BTU consumption in 2015, India won't reach this milestone for another 83 years (which is the year 2100).

India's energy consumption in 2015 was 30 quadrillion BTUs + (83 years * 30 quadrillion BTUs/25 years) = 130 quadrillion BTUs

Thus, India will reach China's 2015 energy consumption in the year 2100. India is 83 years behind China in energy consumption.

India is NOT 20 years behind China. India is almost 100 years behind China in energy consumption.

India is near impossible to consume as much energy as China does, given its primitive manufacturing, inefficient energy infrastructure, and logistics.

 

[azesus]

More importantly China's GDP is "real" investment GDP, unlike USA is consumption GDP and abstract service based and it's rigged market, for example healthcare is much more expansive and is 18% of USA GDP

 

[TaiShang]

More importantly China's GDP is "real" investment GDP, unlike USA is consumption GDP and abstract service based and it's rigged market, for example healthcare is much more expansive and is 18% of USA GDP

Still, their energy consumption per capita is quite high, which, I guess, indicates a higher level of prosperity.

I am not sure if it is technically possible to reach their level of consumption without drying the world resources out. But, obviously, there is a huge gap, which needs to be capped.

 

[Mista]

画蛇添足。Your thesis for Vietnam is extremely flawed. Why are you beating around the bush and use what slope, 4x, hence 44 years? Makes exactly no sense. Just calculate it straight away.

2016 GDP per capita PPP;

China: 15,399
Vietnam: 6,429

At average of 6% growth, Vietnam will reach $15,407 in 15 years. Vietnam doesn't need 44 years to reach China's per capita GDP today.

 

[Martian2]

画蛇添足。Your thesis for Vietnam is extremely flawed. Why are you beating around the bush and use what slope, 4x, hence 44 years? Makes exactly no sense. Just calculate it straight away.

2016 GDP per capita PPP;

China: 15,399
Vietnam: 6,429

At average of 6% growth, Vietnam will reach $15,407 in 15 years. Vietnam doesn't need 44 years to reach China's per capita GDP today.

My method is not flawed. I am simply extrapolating the data shown in Forbes' graph.

Vietnam will have to grow by 6% in PPP per-capita GDP terms for 15 years.

I don't think that is its historical growth rate in PPP terms.

To grow for 15 years at 6% in PPP per-capita GDP, Vietnam's growth chart will have to angle upwards sharply and sustain it. I think that's unlikely considering the large $4 billion Vietnamese trade deficit in 2015 and smaller $2.8 billion trade surplus in 2015.
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There is another factor at work. A PPP dollar is worth more today than a less-valuable PPP dollar in the future due to inflation.

I am arguing constant 2017 PPP dollars.

 

[GeraltofRivia]

I think we need to agree what exactly by saying "country A is x years behind country B" means. To me, and hopefully most would agree, it implies A will reach parity with B by some measures.

If this is what we are looking at here, it doesn't take a economist to figure out Vietnam will not reach parity in 10 years. When the absolute value is multiple times smaller, you need to grow multiple times more to stop the gap widening. In the case of Vietnam, it needs to grow like 20%+ per year to begin with, before any catch up taking place.

 

[Martian2]

I've thought it over and I am retracting my claim about Vietnam.

Vietnam's economic growth is an exponential function (e.g. growth rate at around 6% per year). I extrapolated the Forbes' graph and treated it as a linear function.

Without adjusting for inflation, Vietnam will approach China's current PPP per-capita GDP in 15 years.

After accounting for inflation, Vietnam will equal China's 2017 PPP per-capita GDP in about 20 years. It won't take 44 years.

However, I am maintaining my claim on India. India's energy consumption is showing linear growth, because India's construction of new nuclear power and coal plants per year is a linear addition.

 

[AndrewJin]

I've thought it over and I am retracting my claim about Vietnam.

Vietnam's economic growth is an exponential function (e.g. growth rate at around 6% per year). I extrapolated the Forbes' graph and treated it as a linear function.

Without adjusting for inflation, Vietnam will approach China's current PPP per-capita GDP in 15 years.

After accounting for inflation, Vietnam will equal China's 2017 PPP per-capita GDP in about 20 years. It won't take 44 years.

However, I am maintaining my claim on India. India's energy consumption is showing linear growth, because India's construction of new nuclear power and coal plants per year is a linear addition.

India’s social diameters are like 20-30 years behind China. But that 20-30 years are for China, maybe will be 40-80 years for India.

How about clean streets? Several centuries?

 

[Unknown-V]

Hmm.. Every Indonesians who ever travel to Vietnam say that Hanoi is like Jakarta in 90s. I don't know whether it's true or not since I never travel to Vietnam. @Daniel808 @antonius123 ??

 

[andylrd]

画蛇添足。Your thesis for Vietnam is extremely flawed. Why are you beating around the bush and use what slope, 4x, hence 44 years? Makes exactly no sense. Just calculate it straight away.

2016 GDP per capita PPP;

China: 15,399
Vietnam: 6,429

At average of 6% growth, Vietnam will reach $15,407 in 15 years. Vietnam doesn't need 44 years to reach China's per capita GDP today.

Agree with you.
Been to Vietnam myself, it looks quite like China 10-15 years ago.
Some of my friends (who been there also) argues it looks more like China 20-30 years ago, which I can not agree. I guess it is that we forget how poor we were 20-30 years ago? or just our superiority sense haunts?

 

[Mista]

My method is not flawed. I am simply extrapolating the data shown in Forbes' graph.

Vietnam will have to grow by 6% in PPP per-capita GDP terms for 15 years.

I don't think that is its historical growth rate in PPP terms.

To grow for 15 years at 6% in PPP per-capita GDP, Vietnam's growth chart will have to angle upwards sharply and sustain it. I think that's unlikely considering the large $4 billion Vietnamese trade deficit in 2015 and smaller $2.8 billion trade surplus in 2015.
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There is another factor at work. A PPP dollar is worth more today than a less-valuable PPP dollar in the future due to inflation.

I am arguing constant 2017 PPP dollars.

Dude, do you even study economics? Growth are always counted in constant dollar terms. A 6% growth means the growth in constant PPP dollars of a given year, not future inflated PPP dollars or nominal USD.

Vietnam chart will start to increase in an increasing rate; exponentially. Because that's what percentage is about. You're exaggerating when you say Vietnam's 'growth chart will have to angle upwards sharply'.

I've thought it over and I am retracting my claim about Vietnam.

Vietnam's economic growth is an exponential function (e.g. growth rate at around 6% per year). I extrapolated the Forbes' graph and treated it as a linear function.

Without adjusting for inflation, Vietnam will approach China's current PPP per-capita GDP in 15 years.

After accounting for inflation, Vietnam will equal China's 2017 PPP per-capita GDP in about 20 years. It won't take 44 years.

However, I am maintaining my claim on India. India's energy consumption is showing linear growth, because India's construction of new nuclear power and coal plants per year is a linear addition.

Sorry I didn't see this. Ignore the above.

But you're still wrong regarding constant PPP dollars and inflated PPP dollars. Growth are always measured in constant PPP dollars.

 

[Martian2]

Dude, do you even study economics? Growth are always counted in constant dollar terms. A 6% growth means the growth in constant PPP dollars of a given year, not future inflated PPP dollars or nominal USD.

Vietnam chart will start to increase in an increasing rate; exponentially. Because that's what percentage is about. You're exaggerating when you say Vietnam's 'growth chart will have to angle upwards sharply'.



Sorry I didn't see this. Ignore the above.

But you're still wrong regarding constant PPP dollars and inflated PPP dollars. Growth are always measured in constant PPP dollars.

No.

A PPP dollar will buy more today than in the future.

When you calculate the PPP dollars, you will end up comparing Vietnam's per-capita PPP in 2037 to China's per-capita PPP in 2017.

There are two different types of growth.

There is nominal growth and inflation-adjusted growth.

Show me a citation to prove that Vietnam's growth is inflation-adjusted in PPP terms at 6% over the last five years.

 

[Mista]

When you calculate the PPP dollars, you will end up comparing Vietnam's per-capita PPP in 2037 to China's per-capita PPP in 2017.

In terms of constant 2017 PPP dollars.

Seriously, just go to the WB or IMF websites to compare the figures and you will realize growth are always stated in constant PPP dollars, not future inflated PPP dollars.

 

[Martian2]

In terms of constant 2017 PPP dollars.

Seriously, just go to the WB or IMF websites to compare the figures and you will realize growth are always stated in constant PPP dollars, not future inflated PPP dollars.

I'm going to ignore you.

I asked you for a citation to prove your point.

I didn't ask you to say it again. I heard you the first time.
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In this citation, PPP dollars look like they're dependent on the year of the US dollar conversion, whether 2017 or 2037.

Purchasing Power Parity 2005 | World Health Organization

"Results of WHO-CHOICE's analyses are presented in current international dollars of 2005. An international dollar has the same purchasing power as the U.S. dollar has in the United States. Costs in local currency units are converted to international dollars using purchasing power parity (ppp) exchange rates. A ppp exchange rate is the number of units of a country's currency required to buy the same amounts of goods and services in the domestic market as U.S. dollar would buy in the United States. An international dollar is, therefore, a hypothetical currency that is used as a means of translating and comparing costs from one country to the other using a common reference point, the US dollar. The ppp exchange rates used in this analysis were developed by WHO and are listed in the table below."