China’s Economy Overtaking the U.S. Will Be Harder Than It Looks

[flowerfan2020]

As I’ve said for some time, it doesn’t matter if China passes US in a decade, we’ll just pass you again in the latter half of the century.

In reality, time is with US, not China.

Must the Covid mess up your head.

 

[tower9]

endia superpower 2030

****, we only have 9 years left.

 

[CAPRICORN-88]

If passing stimulus money is is US's idea of productivity then USA productivity is the highest in the world and no nation will ever surpassed it since USA is not into production nowadays.
The farmers in Ohio told Trump, we don't want your subsidies, we only want the orders and your tariffs are killing them.
There will be massive layouts ahead example Aerospace, Automobile, etc. Now the Trump policy has created artificial shortages in the supply of automotive grade IC, etc to these manufacturers.

Biden is starting his Presidency by pushing for another USD1.9 trillions.

US Administration make a serious mistake of mixing business with politic excerbated by Trump and now Biden as well will not fare well for the US economy.

Will Europe follows US into its model of isolation and protectionism?
I don't think so. Maybe the 5 eyes alliances will or is it 4 eyes since NZ appears to be heading for the exit.
Now that Australia is doing so great And in a recession, Scomo out of a sudden is open for talk with China and advise China not to interfere politics with business while he imposed discriminatory restriction only against Chinese businesses in the financial and telecommunications section.
That is hypocrisy and double standard.

 

[Paul2]

China’s relatively rapid recovery from the pandemic has prompted some accelerated predictions of when its economy will surpass that of the U.S. in size. That may be asking the wrong question—if China takes the top spot at all, it may struggle to keep it for long.

Researchers at investment bank Nomura recently suggested that if the yuan were to strengthen further and to hold at around 6 to the dollar, the U.S. economy would be eclipsed by the Chinese economy by 2026.

The estimate is based on extrapolating International Monetary Fund estimates of 7.9% nominal GDP growth in 2025 further out into the future, and depends on the assumption that the U.S. economy will remain permanently below its pre-pandemic path. Neither outcome, nor continued currency appreciation, is certain. But even leaving the path of the U.S. aside, demographics and productivity trendswill make sustaining China’s pre-pandemic growth rates increasingly difficult.


Even if fertility trends improve overnight, China’s 20-65 year old cohort will have shrunk in size by one-tenth by the late 2030s. Sometime between 2035 and 2040, China’s old-age dependency ratio—the proportion of people older than 65 compared with the working-age population—will surpass the U.S. equivalent, according to United Nations projections.

The components of growth are labor, capital and the elusive total factor productivity. The domestic working-age population, as discussed, will be contracting. That means that unless China manages to attract many more immigrants or dramatically boost labor-force participation, it will ultimately need to maintain growth with sustained productivity improvements. And that is precisely the element that will be most difficult.

The marginal benefit of new investment in China has been shrinking as debt has boomed. And TFP growth overall has slowed considerably, to just 0.7% a year between 2009 and 2018, from 2.8% on average in the decade before the global financial crisis, according to a June 2020 World Bank paper on the country’s productivity potential.


Convergence isn’t an economic law. At the end of 2019, the GDP per capita levels of Brazil, Mexico and Turkey were very moderately below their average for the period since 1980. There are other measures of income, which adjust for different purchasing power in different countries. But when measuring pure international heft, the fact that haircuts are cheaper in Chengdu than Cleveland means very little.

China’s surpassing of the U.S. looks likely from extrapolating recent trend lines, but entails some big assumptions—especially on productivity and currencies. Keeping ahead without a growing population might prove even harder.

https://www.wsj.com/articles/chinas...-u-s-will-be-harder-than-it-looks-11611571374

Credit defaults in China, and the average size of defaultee company are like hundredfold less than in USA.

China can go into debt to an equal extend as America, and more. Not saying it being a good thing though.

 

[ILC]

Pettis is crying foul with Chinese natural GDP growth being 2% if too much credit is stopped. Ok, China's natural GDP growth is the same as the USA with 60k GDP when Poland with a GDP of 15k had recently over last few years a 5% GDP growth every year.

https://twitter.com/x/status/1354368444255379457

Pettis face

 

[大汉奸柳传志]

need I remind you your pile of debt?

 

[FuturePAF]

China has by far the biggest manufacturing base in the world, and that is good base for biggest economy. US economy is mainly small business service, not very stable.

The US is a key leader in core technologies. If China can master those technologies at a competitive quality level, such that it takes great market share of sales, then yes it will become the dominant economy and have a global reserve currency status. Until then it will still have to play by the US rules.

Case in point is Comac. If China can build a competitive engine with the likes of GE or Rolls Royce, it will be a true peer competitor. According to the following Wall Street journal video, that might happen within a decade.

China has over $3 Trillion in reserves it can pour into R&D, and the pandemic is making it even more possible they can purchase global firms and hire global talent to catch up. China 2025 maybe pushed back to China 2030 or 2035, but it’s still possible they can catch up. Although it looks like the west will be more vigilant now to guard their Intellectual Property. Let’s wait and see.

 

[Mista]

Pettis is crying foul with Chinese natural GDP growth being 2% if too much credit is stopped. Ok, China's natural GDP growth is the same as the USA with 60k GDP when Poland with a GDP of 15k had recently over last few years a 5% GDP growth every year.

https://twitter.com/x/status/1354368444255379457

Pettis face

He's a finance professor in Beijing University. From a strictly economic POV, he's not wrong. But in reality, the real world isn't just about economics and most countries have unproductive debt.

His line of thinking is basically, a debt is unproductive when $1 of debt creates less than $1 of value, and thus the unproductive debt is value destroying and the debt % of GDP will rise. It's a sound economic principle and this thinking is a basis of corporate finance theory.

But in reality, most countries take on unproductive debt because not everything is measured through the lens of cost vs returns.

Eg; a country spending on healthcare for the elderly. The economic cost is very high and the economic return is very low. But why are there still so many countries going into deficits to fund their healthcare, when the economic cost is clearly higher than the economic returns? In fact you can argue that China's building binge is actually more productive than most countries' spending on healthcare from a strictly economic POV.

Pettis is being too academic. In the real world there's no such thing as 'natural GDP growth'.

The only country I know of which have productive debt is Singapore, due to her strict constitutional restrains. Debt can only be used for productive investment purposes, and the investment income is much higher than the debt servicing costs. It is why Singapore has high debt to GDP ratio and is still rated AAA by all rating agencies.

 

[GeraltofRivia]

The debt and demographics of Japan in the late 80s mirrors China today, but you are right, China won’t compromise its economic independence to America. In that regard and technology acquisition, it is more akin to America in the 1870s, overtaking European countries, namely Britain as the rising economic juggernaut.

If the Chinese economy allows the Chinese currency to be the reserve currency of the world, and China can reverse its demographic decline, it will grow considerably faster then the US. It truly is a Thucydides trap.

Although, China will need to reset the global order to serve its needs. Europe is just trying to play both the US and China to maintain their standard of living, but may side with the US on the basis of their common culture.

what does China plan to do to reshape the global order in its long term favor?

I think many intellectuals in China has expressed their view of future world being a multipolar world with China being one of the polar. A key pillar of the world order is still globalization. Globalization has always been China’s long term favor, right from beginning of this civilization state with long running schemes Silk Road. China sees it as fundamental to its future growth and it is the idea underpinning her flagship project in the next 100 years - BRI.

On a side note about demographics. While it is true that China’s demographics has been aging but one should recognize that in the next few decades demographics will play a reduced role with China becoming a more advanced economy. Many still has the static and flawed view in that demographics will be the fundamental driver of future growth in China. It won’t. Basically it won’t be driven by millions of young people in the assembly line like in the 90s and 00s but by a smaller and highly qualified workforce.

 

[ILC]

https://twitter.com/x/status/1354703238902263808

charts & data | 2020.12.3

HSR is increasingly affordable in China

lukecapital.substack.com

Pettis can't stand that his neoliberal ideas are just ideas, one of many.

 

[FuturePAF]

I think many intellectuals in China has expressed their view of future world being a multipolar world with China being one of the polar. A key pillar of the world order is still globalization. Globalization has always been China’s long term favor, right from beginning of this civilization state with long running schemes Silk Road. China sees it as fundamental to its future growth and it is the idea underpinning her flagship project in the next 100 years - BRI.

On a side note about demographics. While it is true that China’s demographics has been aging but one should recognize that in the next few decades demographics will play a reduced role with China becoming a more advanced economy. Many still has the static and flawed view in that demographics will be the fundamental driver of future growth in China. It won’t. Basically it won’t be driven by millions of young people in the assembly line like in the 90s and 00s but by a smaller and highly qualified workforce.

Perhaps the growing the rapidly GDP per capita (along with the high savings rate, home ownership, and relatively low personal debt of average Chinese) will mean even though the age of the average Chinese is increasing they will still grow through more exports of higher value products and a consumer market of more and more made in China higher value items. Let’s see

 

[OBLiTeRate TrumpTurd]

de Deadly Lesson to all humans is ... ...

de Western whitey FAKE * Freedom & Backward DemoCrazy
governments * ( 5 eyes nations ) have proven to ALWAYS
* FAIL ... time and time again.

~ UPDATE: ... ...

Meanwhile, on the Land of the very RACIST Snakes n
STUPID n DESTRUCTIVE Freedom, ... ...

As of this minute, the Snakes USA already has 464,445 COVID deaths and
the death numbers are growing astronomically every day.

The undeniable Scientific fact has shown that the COVID viruses were
originated and fabricated in Fort Derrick Lab, Maryland, USA on APR 2018.

ProoF: ~ Go read the LANCET & NATURE journal.


@Hamartia Antidote ,, @striver44 ,, @F-22Raptor