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China's Economy Will Overtake The U.S. In 2018

onebyone

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Each country measures economic growth by its gross domestic product or GDP. Negative or positive GDP indicates whether the economy is contracting or expanding. When you combine the total economic output of each country, the result is global GDP. In this article, we will reveal how America’s contribution to global GDP has been falling while China’s has been rising.

Changes in the Global Economy

The Conference Board estimates that by 2018, China’s contribution to global GDP will surpass that of the U.S. In other words, China’s economy will become more significant than America’s. How is this possible? Is the golden era of “Made in America” in our rearview mirror? Is China entering a modern-day economic dynasty? To find the answer, we will examine the period beginning in 1970 and the forecast through 2025.





960x0.jpg

The Standard Chartered Bank building, center, HSBC Holdings Plc headquarters building, center right, and other buildings standing illuminated and shrouded in clouds are seen from Victoria Peak at night in Hong Kong, China, on Wednesday, April 6, 2016. Cash is pouring into Hong Kong stocks from across the mainland border. Photographer: Justin Chin/Bloomberg

As the chart below indicates, the U.S. contributed 21.2% of total global economic output in 1970. This remained consistent until the year 2000. In every year since, with one exception, America’s percentage of the world’s economic output has declined. In 2015, the U.S. contributed 16.7% of the world’s economy. By 2025, this is expected to fall to 14.9%. Equally noteworthy is the exceptional rise in China’s economy. In 1970, China was responsible for a mere 4.1% of the total. This rose to 15.6% in 2015. In 2025, China’s contribution to the global economy is projected to be 17.2%. Since 1990, China’s percentage of total global output has risen every year with one exception (1998), when it fell by one percent. The vertical black-dotted line on the chart denotes the year (2018) that China’s economic contribution is projected to surpass the U.S.


Global-GDP-Regional-Distribution-1970-to-2025-1200x1050.jpg


There are some other notable conclusions we can make from the chart. Europe’s economic contribution to global GDP is rapidly declining. India is gaining economic influence but still has a long way to go. In 2015, India’s contribution to global GDP was 6.7%. This is expected to rise to 8.7% by 2025. One of the most significant observations is that large developed economies are becoming less significant while smaller, emerging economies are gaining power. This is not a complete surprise as smaller economies are much more nimble than large ones.

China’s Rise

How has China become such a dominant economic power? Part of the reason is its booming auto industry. To illustrate, the total number of autos sold last year in China was 24.6 million. This dwarfs total auto sales in the U.S. last year, which hit a record 17.5 million cars and trucks. In addition, SUV sales in China increased a whopping 52% in 2015. China’s auto industry is thriving and should provide stiff competition for U.S. auto manufacturers in the years ahead. Unless the U.S. government levies high tariffs on imports to equalize prices between Chinese autos and those made in America. It is important to remember that the cost of production (labor included) is much lower in China.

The world’s economy is changing and globalization is alive and well. There will likely be a large number of new trade agreements in the months ahead as well as an increase in U.S. based companies deriving revenue overseas. Gone are the days when it was sufficient for investment analysts to analyze trends in the U.S., to the exclusion of foreign markets. In the current “global” climate, we must recognize how foreign companies will compete with U.S. corporations. Rising globalization should result in greater competition. If the federal government does not levy new and increased tariffs on imported goods, the added competition will result in lower prices for the consumer. However, I wouldn’t get too optimistic about a lack of tariffs. The federal government will likely view this as a source of revenue and a way to help its constituents rather than allow cheap imports to flood the U.S. Perhaps Americans will be buying more goods online, directly from foreign companies. Does UPS or FedEx FDX -0.33% deliver cars? It could happen.

http://www.forbes.com/sites/mikepat...na-will-surpass-the-u-s-in-2018/#1cf44883474b
 
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Who exactly is the "conference board"?

According to IMF:

http://www.imf.org/external/pubs/ft...=country&ds=.&br=1&c=924,111&s=NGDPD&grp=0&a=

In 2021 US GDP will be 22.8 trillion, China will be 17.8 trillion...so the surpassing will be some years further in the future from that. Definitely not 2018....or is this board talking about PPP total....but in that case China has already surpassed the US some years back.
 
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Who exactly is the "conference board"?

According to IMF:

http://www.imf.org/external/pubs/ft/weo/2016/01/weodata/weorept.aspx?pr.x=99&pr.y=15&sy=2014&ey=2021&scsm=1&ssd=1&sort=country&ds=.&br=1&c=924,111&s=NGDPD&grp=0&a=

In 2021 US GDP will be 22.8 trillion, China will be 17.8 trillion...so the surpassing will be some years further in the future from that. Definitely not 2018....or is this board talking about PPP total....but in that case China has already surpassed the US some years back.

I don't see it happening in 2018 either, but well into the future. We're currently in 2016 and China's economy is retrenching, and will so for some time to come.
 
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build more apartments or house, road and bridges ... For 1/5 of global pop. China could take 1/5 of global GDP
 
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In terms of GDP? Yes.

In terms of GDP PER-CAPITA? China is no where near close.
 
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In nominal terms, the gap between US and China is too big to close in just 2 years.

China had a chance to overtake the US economy in nominal terms in 2018, but that depended on the Renminbi appreciating every year about 5%.

But in 2015 the Renminbi depreciated which killed off any chance of China surpassing the US economy in 2018.
 
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Each country measures economic growth by its gross domestic product or GDP. Negative or positive GDP indicates whether the economy is contracting or expanding. When you combine the total economic output of each country, the result is global GDP. In this article, we will reveal how America’s contribution to global GDP has been falling while China’s has been rising.

Changes in the Global Economy

The Conference Board estimates that by 2018, China’s contribution to global GDP will surpass that of the U.S. In other words, China’s economy will become more significant than America’s. How is this possible? Is the golden era of “Made in America” in our rearview mirror? Is China entering a modern-day economic dynasty? To find the answer, we will examine the period beginning in 1970 and the forecast through 2025.





960x0.jpg

The Standard Chartered Bank building, center, HSBC Holdings Plc headquarters building, center right, and other buildings standing illuminated and shrouded in clouds are seen from Victoria Peak at night in Hong Kong, China, on Wednesday, April 6, 2016. Cash is pouring into Hong Kong stocks from across the mainland border. Photographer: Justin Chin/Bloomberg

As the chart below indicates, the U.S. contributed 21.2% of total global economic output in 1970. This remained consistent until the year 2000. In every year since, with one exception, America’s percentage of the world’s economic output has declined. In 2015, the U.S. contributed 16.7% of the world’s economy. By 2025, this is expected to fall to 14.9%. Equally noteworthy is the exceptional rise in China’s economy. In 1970, China was responsible for a mere 4.1% of the total. This rose to 15.6% in 2015. In 2025, China’s contribution to the global economy is projected to be 17.2%. Since 1990, China’s percentage of total global output has risen every year with one exception (1998), when it fell by one percent. The vertical black-dotted line on the chart denotes the year (2018) that China’s economic contribution is projected to surpass the U.S.


Global-GDP-Regional-Distribution-1970-to-2025-1200x1050.jpg


There are some other notable conclusions we can make from the chart. Europe’s economic contribution to global GDP is rapidly declining. India is gaining economic influence but still has a long way to go. In 2015, India’s contribution to global GDP was 6.7%. This is expected to rise to 8.7% by 2025. One of the most significant observations is that large developed economies are becoming less significant while smaller, emerging economies are gaining power. This is not a complete surprise as smaller economies are much more nimble than large ones.

China’s Rise

How has China become such a dominant economic power? Part of the reason is its booming auto industry. To illustrate, the total number of autos sold last year in China was 24.6 million. This dwarfs total auto sales in the U.S. last year, which hit a record 17.5 million cars and trucks. In addition, SUV sales in China increased a whopping 52% in 2015. China’s auto industry is thriving and should provide stiff competition for U.S. auto manufacturers in the years ahead. Unless the U.S. government levies high tariffs on imports to equalize prices between Chinese autos and those made in America. It is important to remember that the cost of production (labor included) is much lower in China.

The world’s economy is changing and globalization is alive and well. There will likely be a large number of new trade agreements in the months ahead as well as an increase in U.S. based companies deriving revenue overseas. Gone are the days when it was sufficient for investment analysts to analyze trends in the U.S., to the exclusion of foreign markets. In the current “global” climate, we must recognize how foreign companies will compete with U.S. corporations. Rising globalization should result in greater competition. If the federal government does not levy new and increased tariffs on imported goods, the added competition will result in lower prices for the consumer. However, I wouldn’t get too optimistic about a lack of tariffs. The federal government will likely view this as a source of revenue and a way to help its constituents rather than allow cheap imports to flood the U.S. Perhaps Americans will be buying more goods online, directly from foreign companies. Does UPS or FedEx FDX -0.33% deliver cars? It could happen.

http://www.forbes.com/sites/mikepat...na-will-surpass-the-u-s-in-2018/#1cf44883474b

Ouch OnebyOne, even the Chinese here are disavowing this article :D

You must be having it hard these days.
 
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GDP matters over everything. Per capita is nothing. If per capita is important , Luxembourg will be superpower by now.
Both are important, ignoring one renders the other meaningless.

Per capita measures how much money the average citizen makes a year. If your nation's GDP is $1 trillion, but your per capita is $100, that usually indicates higher levels of poverty (depending on inflation, cost of living..etc), thus more money is being spent on raising people out of poverty, and less on things like infrastructure development, security...etc.

On the other hand, if your GDP is $1 trillion, and your per capita is $1000, your country has less poverty and higher standard of living than the first example given. Thus, your country will need to spend less on poverty reduction measures, and can spend more on infrastructure, security, civil services...etc.

Look at Israel, it has a similar GDP to Egypt, yet it is economically far stronger, due to a number of factors, one of them being a smaller population which has lead to a higher per capita. This is why Israel is considered a strongest regional power, and not Egypt.

If China wants to move towards a consumerist economy, which it is trying to do, it will have to raise it's GDP per capita, so average citizens have more money to spend.
 
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I think the article is saying that China will contribute more in the World economy than USA in 2018 and that's the main point of this article. Its not about China overtaking USA in terms of GDP nominal.
 
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Both are important, ignoring one renders the other meaningless.

Per capita measures how much money the average citizen makes a year. If your nation's GDP is $1 trillion, but your per capita is $100, that usually indicates higher levels of poverty (depending on inflation, cost of living..etc), thus more money is being spent on raising people out of poverty, and less on things like infrastructure development, security...etc.

On the other hand, if your GDP is $1 trillion, and your per capita is $1000, your country has less poverty and higher standard of living than the first example given. Thus, your country will need to spend less on poverty reduction measures, and can spend more on infrastructure, security, civil services...etc.

Look at Israel, it has a similar GDP to Egypt, yet it is economically far stronger, due to a number of factors, one of them being a smaller population which has lead to a higher per capita. This is why Israel is considered a strongest regional power, and not Egypt.

If China wants to move towards a consumerist economy, which it is trying to do, it will have to raise it's GDP per capita, so average citizens have more money to spend.
But China do not need to match US per capita. People who claimed China needs to match US per capita to be super power are just sour graped. It is the overall whole economy that makes you the most powerful nation that matters. Of cos China needs to increase per capita but it did not need to match US. China has 4 times the population and just USD15000 per capita is enough for China to topple US out of the top.
 
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Yeah, it's the old prediction, now depend on the situation, it's delayed. Not possible even after 2020.

China should solve the internal problems first, focus on structure reform, rather than talk about overtaking the US.
 
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