China's Comment Entirely Correct - India Is Some 13 Years Behind China

[nang2]

I do not want to get into that debate in this thread. I guess Chinese on this forum have some built in repulsion for GDP PPP because they do not understand it. It is classical 'Asian Parent' syndrome. If something 'appears' harder, it should be real or better. When their GDP PPP conversion factor will be less than 1, they will harp that GDP PPP is the real measure of the economy.

Think about it. Russia's nominal GDP crashed or halved after trade restrictions. Do you really think that production in Russia actually decreased by that amount. Nope! not even close!

GDP PPP is useful to evaluate the market vitality of a country. But it is fairly useless for outsiders. Therefore, the comparison of this number only gives a sense (that is why I used the word "feel-good") but doesn't lead to actions (international trade/migration/investment, etc).

Growth rate has a lot to do with the developmental levels of a country. A sustained 6-7% growth rate for a developed country is very hard to achieve. The growth rate doesn't exist in a vacuum.

As a Chinese proverb says, even a tiger will doze off from time to time.

 

[Sully3]

What i like about the Chineese economic revolution was that it also made the poor people richer and their standard of life got better. Obvisouly the top tier got extra rich but unlike USA it seems like China shared its wealth with its poorest.

I hope India follows suit and helps its millions of poor citizens living below the poverty index.

 

[EndangeredSpecies]

GDP PPP is useful to evaluate the market vitality of a country. But it is fairly useless for outsiders. Therefore, the comparison of this number only gives a sense (that is why I used the word "feel-good") but doesn't lead to actions (international trade/migration/investment, etc).

Question, what does GDP measure?

GDP PPP, GDP Nominal, GDP Nominal adjusted to inflation. They all are matrices of something, what is that?

Btw, since we are talking about Russia and its nominal GDP going down by almost 50% in the period 2012 to 2014 or so. Here is even better data to support this - Electricity consumption. If economy has halved, electricity consumption will also go down, right?

http://www.indexmundi.com/g/g.aspx?c=rs&v=81

It doesn't in that period 2013-14.

This is why like of Li Kiequin prefers these real commodity matrices than Dollar GDP.

GDP PPP is not feel good, it is real because it reflects reality of economy.

 

[nang2]

GDP PPP is not feel good, it is real because it reflects reality of economy.

You are right if a single country is all you care for. But the world is made of many countries.

What i like about the Chineese economic revolution was that it also made the poor people richer and their standard of life got better. Obvisouly the top tier got extra rich but unlike USA it seems like China shared its wealth with its poorest.

I hope India follows suit and helps its millions of poor citizens living below the poverty index.

China example also illustrates that more often than not, the best to alleviate poverty is not to take from the rich and give it to the poor, but rather to give everyone the freedom to enrich themselves.

 

[Peshwa]

Yeah I saw that part, so they say India's GDP is likely to grow at around 3 times rather than 5 times for China during the same time frame.

So India's GDP is around $2 trillion now, three times that would be $6 trillion in the next 13 years.

Which is similar to other predictions I've seen for India's GDP in 2030:

http://www.independent.co.uk/news/b...ggest-economies-in-2030-will-be-10178587.html



Oh you mean the Middle income trap.

Interestingly, the only countries that have successfully beaten the Middle income trap in the last few decades were in East Asia, such as the Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan).

China's GDP per capita is also starting to approach the level where we will be considered as an entry-level developed country, should happen within the next few years as long as nothing goes seriously wrong.

Obviously assuming the high growth trajectory remains...not as easy as pie!
The stars need to align!

 

[EndangeredSpecies]

You are right if a single country is all you care for. But the world is made of many countries.

I guess then what you should be more worried about is your current account balance NOT GDP.

Current Account Balance captures difference between your in and out of your country.

GDP is a measure of your economy's size.
GDP Nominal under estimates the value of non-traded goods and services of your economy.

 

[nang2]

I guess then what you should be more worried about is your current account balance NOT GDP.

Current Account Balance captures difference between your in and out of the economy.

GDP is a measure of your economy's size.
GDP Nominal under estimates the value of non-traded goods and services of your economy.

If I were the leader of China, I wouldn't worry too much about the trade balance. The emphasis on trade balance was the standard practice of mercantilism, which was refuted hundreds of years ago. It is only practical in a hostile environment. I would rather pay close attention to the GDP growth in local currency and the investment growth in local currency.

 

[EndangeredSpecies]

If I were the leader of China, I wouldn't worry too much about the trade balance. The emphasis on trade balance was the standard practice of mercantilism, which was refuted hundreds of years ago. It is only practical in a hostile environment. I would rather pay close attention to the GDP growth in local currency and the investment growth in local currency.

If you are interested in your own economy primarily then GDP PPP makes more sense

IMHO, I will like to have a Li Kiqaong index/growth rate of the economy which gives the real feel of on ground realities instead of manipulable things like Currency rate etc.

 

[nang2]

If you are interested in your own economy primarily then GDP PPP makes more sense

Yes, in that case, GDP PPP is the same as GDP in local currency.

 

[EndangeredSpecies]

Yes, in that case, GDP PPP is the same as GDP in local currency.

Actually thats what was my initial point, when the right time comes and appreciation of Yuan will not impact China as much, Chinese government will let currency appreciate more and GDP PPP and GDP Nominal will converge to a point more near to GDP PPP. And that will show the real size of Chinese GDP to the world. At that time China will be likely to be twice or more size of US GDP even in nominal. That time IMHO, is near 2030 and not that far as BBC thinks it is.

 

[nang2]

Actually thats what was my initial point, when the right time comes and appreciation of Yuan will not impact China as much, Chinese government will let currency appreciate more and GDP PPP and GDP Nominal will converge to a point more near to GDP PPP. And that will show the real size of Chinese GDP to the world. At that time China will be likely to be twice or more size of US GDP even in nominal. That time IMHO, is near 2030 and not that far as BBC thinks it is.

Yes, we are not too far apart. The issue I have with GDP PPP is that it is denominated by US dollar and intended for comparison with other countries, which I found is not so useful. You see. You just compared Chinese GDP with the that of US. But GDP in local currency is only used for self reference and comparison. It is very useful for evaluating progress. Number-wise, they are essentially not so different. But purpose-wise, they are quite different.

BTW, your signature looks weird. I couldn't understand the Chinese part.

 

[MultaniGuy]

I doubt India will ever reach China's economic level.

China is much more advanced than India.

 

[nang2]

I doubt India will ever reach China's economic level.

China is much more advanced than India.

Never underestimate anyone. 30 years ago, nobody believed that China could achieve what she has achieved 30 years later, including Chinese. China has been truly blessed during this period. But God is fair. Every country gets its fair share of blessing. Just a matter of time.

 

[EndangeredSpecies]

Yes, we are not too far apart. The issue I have with GDP PPP is that it is denominated by US dollar and intended for comparison with other countries, which I found is not so useful. You see. You just compared Chinese GDP with the that of US. But GDP in local currency is only used for self reference and comparison. It is very useful for evaluating progress. Number-wise, they are essentially not so different. But purpose-wise, they are quite different.

Comparing is a hard task. Single numbers are even harder to use. Ultimately, it is hard to capture something as complex as an economy in a single number.

BTW, your signature looks weird. I couldn't understand the Chinese part.

It is nothing. It is a subtle/not so subtle troll attempt. In chinese it will translate to nothing in particular, just Bottom wind invite the worm dynamics. meaning nothing.

 

[Chinese-Dragon]

BTW, your signature looks weird. I couldn't understand the Chinese part.

It's a joke, look at his username.