When will China overtake the U.S, economically?

russ_watters

I highly doubt that China overtaking the US in total gdp would prompt other countries to change their reserve currency. There are more important factors in the choice than total gdp.

mheslep

My point is that per capita statistics make total population details go away. For GDP total, raised in your OP, population is a driver. So comparing the US to, say, Norway (5M) is not useful for many purposes.

Willowz

So, what I'm getting from what you're saying regarding China overtaking the U.S economically is, "so what?".

Willowz

So, the U.S from the get-go couldn't compete with China economically-once China got on it's feet?

mheslep

The US competes well with China now, having an overwhelming comparative advantage in many areas like software high tech (Google, Apple) and finance, and not in others like industries dominated by simply labor costs.

Another consideration for the future that reflects a population dependency, suppose China breaks up into 4-5 countries some decades hence.

russ_watters

Precisely. You asked "what changes..." based on the assumption that there would be changes. I'm saying (as are others) that that premise is faulty.

russ_watters

You still seem to have it backwards: "getting on its feet" means having a comparable per capita gdp. This "get-go" is 100 years away!

MarcoD

This implies a point in time where China would be a bigger economy than the US and EU combined. That's also valid, but I guess most people in the US are interested in the point in time where China overtakes the US as an economic superpower, also breaking the US's perceived hegemony on the world, and that point is much nearer.

russ_watters

Neither of us speak for "most people", but in this thread you are interested in that point because you believe those implications necessarily follow from it, while pretty much everyone else in the thread is trying to explain to you why your belief is wrong.

Jimmy Snyder

This wiki page shows that several countries already have higher per capita GDP than the US.

wiki and therefore unreliable.

I don't know what impact that has had on the US. Considering that Luxembourg is high up there, I would guess none whatever. However, when the GDP of China surpasses that of the US, it will be a different kind of event. Apples and oranges different. I have no clue what the political and economic implications will be. At some point the US surpassed some other country (perhaps England) to become the largest economy. What was the effect on that country?

mheslep

For that matter the European Union's GDP (PPP) is 1-4% larger than the US, but I am unaware of any serious threat of the Euro becoming the world's reserve currency. Maybe the Swiss Franc has a shot though.

MarcoD

Duh. This was my second post in this thread. I don't think anybody was talking to me, at this point in time, except for you. And of course there will be a change in balance of power in the world. If China would be bigger than the US and EU combined, most nations in the world would, pragmatically, take a bigger interest and sometimes have little choice in following its judgements.

mheslep

The UK's relative influence diminished after WW1 and 2 because of its precarious financial situation after those wars and not the relative size of economies per se. The issue had a practical realization in the Suez Crises, when Eisenhower used the threat of selling off UK debt owned by the US to stop further UK action in Suez. That I would think, financial soundness and not size, is the lesson to take from the episode.

MarcoD

The Swiss will never want that. There are benefits to being the world's reserve currency but also disadvantages, especially for small countries (bad for export, tourism, local economy, defining one's own monetary policy). At the moment, the Swiss are only trying to have the Franc devaluated against other currencies. I guess it's roughly the same reason why the Chinese don't push forward towards strengthening the Renminbi.

mheslep

My earlier post was for fun, but valuation does not necessarily the reserve currency make, obviously.

Proton Soup

i think china has a couple of entry points to establishing itself as a world power. one is africa, where china needs raw materials. in this respect, africa is a prime colonial opportunity. the trick is for china to set itself up as the primary product and services provider for its raw materials countries. then it's a short jump to paying them in yuan so that they can turn around and buy chinese products in that same currency. china would also want to establish banks in these countries to facilitate the transactions. they would probably be so good at it that they could bank in the nations' local currencies.

the other opportunity is the economic development zones that will be popping up around the caspian region, the TAPI pipeline in particular. maybe even china would find that some items could be manufactured cheaper in afghanistan and start becoming a bit more like the US?

not sure if china has its fingers in south america, but it wouldn't surprise me.

MarcoD

It's a bit odd, but at the moment I consider China the best capitalists in the world. They strongly set on a route of state-led mercantilism against open free-market economies. It's the darned Dutch East India Company again, with a Chinese flag on it.

I don't, with my limited information and little economic knowledge, see them making a lot of mistakes. (Except for holding on to too much US debt. They could have traded that in for resources directly. But that also would have weakened international trade.)

It's an interesting soccer match; I am not sure who'll win this game.