China's (US$8,480) nominal per-capita GDP surpasses Mexico (US$7,993)

[Martian2]

This year is coming to a close. So what's new in economic news? Well, China's US$8,480 nominal per-capita GDP has moved beyond Mexico's US$7,993 (see IMF citation below). This is interesting for a variety of reasons.

Mexico joined NAFTA in 1994. Mexico had 23 years to develop its industries. Nothing happened. Instead, only maquiladora "screwdriver" plants were built along the US-Mexico border.

Some Mexicans had been resentful of China. They thought that if China had never joined the WTO in 2001 then Mexico would have taken China's current position as a great industrial power. This kind of Mexican-nationalist reasoning is delusional.

Firstly, China is a top-ten annual holder of USPTO patents. In sharp contrast, Mexico has only held a negligible number of USPTO patents. There is a stark difference between Chinese innovation (e.g. Huawei in telecom, DJI in drones, Alibaba in online sales, SANY in construction equipment, etc.) and Mexican stagnation.

Secondly, China created a positive feedback loop from its exports. Chinese USPTO patents allowed China to charge above-market prices for its products. The surplus profits were plowed back into the businesses and this created national champions over time. Huawei dominates the worldwide telecom equipment business by being a pioneer in SDN (Software-Defined Networking). DJI has a dominant 70% of the worldwide consumer drone market. I bet you can't name a single Mexican company that dominates its business segment.

Thirdly, China conducts a large amount of basic science research. China is world #2 on the NATURE INDEX for published peer-reviewed scientific research papers. In comparison, Mexico is ranked at a dismal #35. According to the NATURE INDEX, China's science output is almost 100 times the Mexican output.

In conclusion, Mexico can no longer complain that Chinese wages are lower and create unfair competition. Mexico is now the lower-wage country. Unfortunately for Mexico, China will prove that wages are only a small component in manufacturing. China is investing heavily in industrial robotics and the Chinese manufacturing economy will continue to boom. Mexico's problem is that it always tried to blame others for its own failure to innovate and roboticize. A country's destiny has always been in its own hands. If you're willing to work hard and industrialize, it will happen. China has proved it in the last 40 years.
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World Economic Outlook Database, April 2017 | IMF

 

[Figaro]

@Martian2, the GDP nominal reference is unfair. It is rigged in favor of the US dollar as the world's reserve currency and does not take into account the different costs per country. China's GDP PPP is around 17000 in 2016, which is not bad. And we shouldn't compare Mexico to China even on a per capita level; that's equivalent to comparing the US with Brazil.

 

[Martian2]

@Martian2, the GDP nominal reference is unfair. It is rigged in favor of the US dollar as the world's reserve currency and does not take into account the different costs per country. China's GDP PPP is around 17000 in 2016, which is not bad.

I understand your point of view.

According to BP, China consumed 34% more total energy than the United States in 2016.

I suspect China's economy is larger than the United States.

However, nominal GDP is the best standard measure that is available. It's an imperfect tool, but it's close enough.

PPP is harder to justify in comparing countries' economic strength. PPP was designed to more accurately measure the standards-of-living. However, in the unusual case of comparing China and the US, PPP could very well be a more accurate measure of their real relative economic sizes.

 

[Figaro]

I understand your point of view.

According to BP, China consumed 34% more total energy than the United States in 2016.

I suspect China's economy is larger than the United States.

However, nominal GDP is the best standard measure that is available. It's an imperfect tool, but it's close enough.

PPP is harder to justify in comparing countries' economic strength. PPP was designed to more accurately measure the standards-of-living. However, in the unusual case of comparing China and the US, PPP could very well be a more accurate measure of their real relative economic sizes.

We have differing view-points and that's fine. I still believe in emphasizing one country's advantage with regards to costs but there are advantages for nominal as well. Either way, China's GDP nominal is going to surpass that of the United States by 2028, assuming the Yuan doesn't depreciate further ...

 

[AndrewJin]

This year is coming to a close. So what's new in economic news? Well, China's US$8,480 nominal per-capita GDP has moved beyond Mexico's US$7,993 (see IMF citation below). This is interesting for a variety of reasons.

Mexico joined NAFTA in 1994. Mexico had 23 years to develop its industries. Nothing happened. Instead, only maquiladora "screwdriver" plants were built along the US-Mexico border.

Some Mexicans had been resentful of China. They thought that if China had never joined the WTO in 2001 then Mexico would have taken China's current position as a great industrial power. This kind of Mexican-nationalist reasoning is delusional.

Firstly, China is a top-ten annual holder of USPTO patents. In sharp contrast, Mexico has only held a negligible number of USPTO patents. There is a stark difference between Chinese innovation (e.g. Huawei in telecom, DJI in drones, Alibaba in online sales, SANY in construction equipment, etc.) and Mexican stagnation.

Secondly, China created a positive feedback loop from its exports. Chinese USPTO patents allowed China to charge above-market prices for its products. The surplus profits were plowed back into the businesses and this created national champions over time. Huawei dominates the worldwide telecom equipment business by being a pioneer in SDN (Software-Defined Networking). DJI has a dominant 70% of the worldwide consumer drone market. I bet you can't name a single Mexican company that dominates its business segment.

Thirdly, China conducts a large amount of basic science research. China is world #2 on the NATURE INDEX for published peer-reviewed scientific research papers. In comparison, Mexico is ranked at a dismal #35. According to the NATURE INDEX, China's science output is almost 100 times the Mexican output.

In conclusion, Mexico can no longer complain that Chinese wages are lower and creates unfair competition. Mexico is now the lower-wage country. Unfortunately for Mexico, China will prove that wages are only a small component in manufacturing. China is investing heavily in industrial robotics and the Chinese manufacturing economy will continue to boom. Mexico's problem is that it always tried to blame others for its own failure to innovate and roboticize. A country's destiny has always been in its own hands. If you're willing to work hard and industrialize, it will happen. China has proved it in the last 40 years.
----------

World Economic Outlook Database, April 2017 | IMF

Wages are not important when you move to a higher level in the supply chain.
Latin countries are struggling.

@Martian2, the GDP nominal reference is unfair. It is rigged in favor of the US dollar as the world's reserve currency and does not take into account the different costs per country. China's GDP PPP is around 17000 in 2016, which is not bad. And we shouldn't compare Mexico to China even on a per capita level; that's equivalent to comparing the US with Brazil.

When you talk about GDP per capita in terms of PPP is fine, it shows living standards. But not the aggregate power of a country, international trades are about real dollars.

 

[Jlaw]

This year is coming to a close. So what's new in economic news? Well, China's US$8,480 nominal per-capita GDP has moved beyond Mexico's US$7,993 (see IMF citation below). This is interesting for a variety of reasons.

Mexico joined NAFTA in 1994. Mexico had 23 years to develop its industries. Nothing happened. Instead, only maquiladora "screwdriver" plants were built along the US-Mexico border.

Some Mexicans had been resentful of China. They thought that if China had never joined the WTO in 2001 then Mexico would have taken China's current position as a great industrial power. This kind of Mexican-nationalist reasoning is delusional.

Firstly, China is a top-ten annual holder of USPTO patents. In sharp contrast, Mexico has only held a negligible number of USPTO patents. There is a stark difference between Chinese innovation (e.g. Huawei in telecom, DJI in drones, Alibaba in online sales, SANY in construction equipment, etc.) and Mexican stagnation.

Secondly, China created a positive feedback loop from its exports. Chinese USPTO patents allowed China to charge above-market prices for its products. The surplus profits were plowed back into the businesses and this created national champions over time. Huawei dominates the worldwide telecom equipment business by being a pioneer in SDN (Software-Defined Networking). DJI has a dominant 70% of the worldwide consumer drone market. I bet you can't name a single Mexican company that dominates its business segment.

Thirdly, China conducts a large amount of basic science research. China is world #2 on the NATURE INDEX for published peer-reviewed scientific research papers. In comparison, Mexico is ranked at a dismal #35. According to the NATURE INDEX, China's science output is almost 100 times the Mexican output.

In conclusion, Mexico can no longer complain that Chinese wages are lower and creates unfair competition. Mexico is now the lower-wage country. Unfortunately for Mexico, China will prove that wages are only a small component in manufacturing. China is investing heavily in industrial robotics and the Chinese manufacturing economy will continue to boom. Mexico's problem is that it always tried to blame others for its own failure to innovate and roboticize. A country's destiny has always been in its own hands. If you're willing to work hard and industrialize, it will happen. China has proved it in the last 40 years.
----------

World Economic Outlook Database, April 2017 | IMF

NAFTA is being renegotiated as we speak. Trump will lean hard on Mexico

 

[Bussard Ramjet]

This year is coming to a close. So what's new in economic news? Well, China's US$8,480 nominal per-capita GDP has moved beyond Mexico's US$7,993 (see IMF citation below). This is interesting for a variety of reasons.

Mexico joined NAFTA in 1994. Mexico had 23 years to develop its industries. Nothing happened. Instead, only maquiladora "screwdriver" plants were built along the US-Mexico border.

Some Mexicans had been resentful of China. They thought that if China had never joined the WTO in 2001 then Mexico would have taken China's current position as a great industrial power. This kind of Mexican-nationalist reasoning is delusional.

Firstly, China is a top-ten annual holder of USPTO patents. In sharp contrast, Mexico has only held a negligible number of USPTO patents. There is a stark difference between Chinese innovation (e.g. Huawei in telecom, DJI in drones, Alibaba in online sales, SANY in construction equipment, etc.) and Mexican stagnation.

Secondly, China created a positive feedback loop from its exports. Chinese USPTO patents allowed China to charge above-market prices for its products. The surplus profits were plowed back into the businesses and this created national champions over time. Huawei dominates the worldwide telecom equipment business by being a pioneer in SDN (Software-Defined Networking). DJI has a dominant 70% of the worldwide consumer drone market. I bet you can't name a single Mexican company that dominates its business segment.

Thirdly, China conducts a large amount of basic science research. China is world #2 on the NATURE INDEX for published peer-reviewed scientific research papers. In comparison, Mexico is ranked at a dismal #35. According to the NATURE INDEX, China's science output is almost 100 times the Mexican output.

In conclusion, Mexico can no longer complain that Chinese wages are lower and creates unfair competition. Mexico is now the lower-wage country. Unfortunately for Mexico, China will prove that wages are only a small component in manufacturing. China is investing heavily in industrial robotics and the Chinese manufacturing economy will continue to boom. Mexico's problem is that it always tried to blame others for its own failure to innovate and roboticize. A country's destiny has always been in its own hands. If you're willing to work hard and industrialize, it will happen. China has proved it in the last 40 years.
----------

World Economic Outlook Database, April 2017 | IMF

You need to decide once and for all, which economic metrics you are going to use.

Here you use nominal dollars per capita. Fine.

Mexico's currency depreciated in between 2014 and 2016. But the depreciation has stopped! Now nominal dollar GDP is unlikely to decline, since the GDP growth rate is still there.

Apart from that, these are estimate figures. Estimating nominal dollars is very very hard, since it is very hard to predict currency movement. I assume they estimated based on past track record. But that past track record has reversed, since the currency has been appreciating since 2017.

Apart from that, look at actual nominal figures for China in 2015, and 2016.

It declined!

Now will you ask your countryman to stop their constant posting about China adding a trillion or so dollars to its GDP every year?

Start with @AndrewJin

When I brought this to the notice of your fellow compatriots, they started saying that currency movements don't matter.

So finally tell me which metrics you wanna use?

When you talk about GDP per capita in terms of PPP is fine, it shows living standards. But not the aggregate power of a country, international trades are about real dollars.

I am honestly asking, would you than accept that China's GDP and economy declined in 2016?

 

[AndrewJin]

You need to decide once and for all, which economic metrics you are going to use.

Here you use nominal dollars per capita. Fine.

Mexico's currency depreciated in between 2014 and 2016. But the depreciation has stopped! Now nominal dollar GDP is unlikely to decline, since the GDP growth rate is still there.

Apart from that, these are estimate figures. Estimating nominal dollars is very very hard, since it is very hard to predict currency movement. I assume they estimated based on past track record. But that past track record has reversed, since the currency has been appreciating since 2017.

Apart from that, look at actual nominal figures for China in 2015, and 2016.

It declined!

Now will you ask your countryman to stop their constant posting about China adding a trillion or so dollars to its GDP every year?

Start with @AndrewJin

When I brought this to the notice of your fellow compatriots, they started saying that currency movements don't matter.

So finally tell me which metrics you wanna use?



I am honestly asking, would you than accept that China's GDP and economy declined in 2016?

China is adding an entire indian GDP every 3 years, not my creation.

 

[Bussard Ramjet]

China is adding an entire indian GDP every 3 years, not my creation.

Please explain me how.

China's GDP at MER declined from 2015, to 2016.

 

[AndrewJin]

What's your point on economy growth in Western China?
Now a 2-trillion dollars economy growing at around 8% annually.

@Martian2

How about top two provinces?
When will the combined GDP of Guangdong and Jiangsu double to 5 trillion?

 

[Bussard Ramjet]

What's your point on economy growth in Western China?
Now a 2-trillion dollars economy growing at around 8% annually.

@Martian2

How about top two provinces?
When will the combined GDP of Guangdong and Jiangsu double to 5 trillion?

All of the above is true only for Chinese economy measured in Yuan, or in terms of PPP.

NOT in terms of GDP at MER.

Western China (which has a GDP of 2 trillion according to MER) didn't grow at 8% in terms of MER.

 

[Martian2]

What's your point on economy growth in Western China?
Now a 2-trillion dollars economy growing at around 8% annually.

@Martian2

How about top two provinces?
When will the combined GDP of Guangdong and Jiangsu double to 5 trillion?

I think China's western provinces will do well economically, because conditions are favorable.

Xinjiang province has a resource-based economy. Oil, natural gas, coal, and precious metals form the base of Xinjiang's economy. China's demand for petroleum will only increase over time as per-capita energy consumption keeps rising. Thus, Xinjiang should continue to grow economically for decades.

Tibet and Xinjiang both benefit from China's Belt-and-Road project. As neighboring countries are opened up and becom more interconnected with China by modern rail and roadways, the broader economies of western China should boom.

 

[Bussard Ramjet]

What's your point on economy growth in Western China?
Now a 2-trillion dollars economy growing at around 8% annually.

@Martian2

How about top two provinces?
When will the combined GDP of Guangdong and Jiangsu double to 5 trillion?

Do you see @Martian2 ?

People use metrics as they like them.

In fact here is the irony. Western China's GDP is 2 trillion dollars using MER (Market Exchange Rate), however that 2 trillion dollar economy didn't grow 8% at MER. It would have grown only about 2% during 2016 because Yuan declined.

 

[karl wang]

You need to decide once and for all, which economic metrics you are going to use.


Apart from that, look at actual nominal figures for China in 2015, and 2016.

It declined!
I am honestly asking, would you than accept that China's GDP and economy declined in 2016?

Please show me your source. It's the first time I hear such comment. If you mean increasing speed changes from 7.x to 6.x, yes, you are right. But it's still one of the best increasing speed in the world.

 

[Bussard Ramjet]

China is adding an entire indian GDP every 3 years, not my creation.

You are yet to explain to me how China is adding an India in 3 years?

At GDP at MER, China's economy stagnated or declined in 2016.

At GDP at PPP, China's economy is only around 2.5 times that of India, and both are growing at roughly the same rates.

Please show me your source. It's the first time I hear such comment. If you mean increasing speed changes from to 7.x to 6.x, yes, you are right. But it's still one of the best increasing speed in the world.

Look at Martian's own screenshot.

Look at China's GDP per capita in nominal dollars.

It Declined!

While China's population increased.

Here it is straight from IMF.

China's GDP declined from 2015 to 2016.

https://www.imf.org/external/pubs/f...=country&ds=.&br=1&c=924,534&s=NGDPD&grp=0&a=

Please show me your source. It's the first time I hear such comment. If you mean increasing speed changes from 7.x to 6.x, yes, you are right. But it's still one of the best increasing speed in the world.

Those speeds of growth that you mentioned are for GDP in domestic currency at constant prices.

However, the metric that people use most often, (specially here to show how China is 5 times that of India's size), is GDP in USD at current prices. (Also called nominal dollars)

In nominal dollar terms, China's GDP actually declined in absolute value in 2016.

I'm still waiting @AndrewJin
Please tell me how China is adding one India every 3 years?