News When will China overtake the U.S, economically?

[Willowz]

What are the estimates when this will roughly happen? Are countries preparing for this transition?

http://www.bloomberg.com/news/2011-09-06/osama-bin-laden-fulfilled-his-one-true-ambition-noah-feldman.html" article prompted this question. And the recession.

One thing that makes me cringe is how in the future the blame game between Dems and Reps will grow much more heated.

 

[Greg Bernhardt]

On a side note, I am in Shanghai right now and even in china's most modern city the disparity is striking. At the center of the city it's a common occurance to see a sidewalk full of poor peasents wheeling a wooden cart with fruits right outside a sparkling Ferarri show room.

 

[mege]

What are the estimates when this will roughly happen? Are countries preparing for this transition?

http://www.bloomberg.com/news/2011-09-06/osama-bin-laden-fulfilled-his-one-true-ambition-noah-feldman.html" article prompted this question. And the recession.

One thing that makes me cringe is how in the future the blame game between Dems and Reps will grow much more heated.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal )

That has 3 different GDP by country calculations - the US still has 3x the GDP (~$15T US - ~$5T China), not to mention a higher per person GDP. Purchasing Power Pairity is a little closer (~$15T and ~$10T), but still the US has a sizably larger economy.

While it looks like no end is sight right now, I don't feel that the US will lose it's top spot in economic dominance in my life time without another 9/11-type 'game changing' event.

 

[chiro]

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal )

That has 3 different GDP by country calculations - the US still has 3x the GDP (~$15T US - ~$5T China), not to mention a higher per person GDP. Purchasing Power Pairity is a little closer (~$15T and ~$10T), but still the US has a sizably larger economy.

While it looks like no end is sight right now, I don't feel that the US will lose it's top spot in economic dominance in my life time without another 9/11-type 'game changing' event.

I'd be very interested in getting a detailed output that lists the contributions of GDP by industry and function.

You guys in the states have had your manufacturing base almost completely wiped out (sadly this is happening in a way in Australia, but not in the same magnitude, although I can see it happening like yours in the near future).

With all your manufacturing gone, I really wonder what portion of the GDP figures are tied to finance and the military industrial complex. If weapons creation was counted in the figures (and was significant), then I think it would be handy to know since historically the business of war is always a losing one.

 

[mege]

I'd be very interested in getting a detailed output that lists the contributions of GDP by industry and function.

You guys in the states have had your manufacturing base almost completely wiped out (sadly this is happening in a way in Australia, but not in the same magnitude, although I can see it happening like yours in the near future).

With all your manufacturing gone, I really wonder what portion of the GDP figures are tied to finance and the military industrial complex. If weapons creation was counted in the figures (and was significant), then I think it would be handy to know since historically the business of war is always a losing one.

To the statement in bold: why is that? It saved our bacon from the great depression.

The tricky part regarding manufacturing: as a workforce becomes more skilled, is there room for low-skill jobs? The competitive advantage is clearly elsewhere. This has an impact on my discussion above, because if it wasn't for the assembly lines which existed for other products, the US may not have been as successful during WWII to start up the war machine. So it's a balancing act of moving away from a low/semi-skilled workforce and move towards a high skill work force without jeopardizing that potential in case of emergency.

IMO before we can go towards a 'better society' (whatever that means), we need to have the proper jobs to support it. If the manufacturing industry was growing faster than the tech industry in the US, I would be a bit scared - as a country I think we'd rather have the higher paying tech jobs than low paying mfg jobs. When some industrys grow, others shrink neccessarilly.

 

[chiro]

To the statement in bold: why is that? It saved our bacon from the great depression.

Because an investment in war is not like an investment in something like infrastructure or similar development.

You make bombs, you blow people and buildings up, the bombs are gone and people die. The bomb doesn't have the longevity or even any parallel use that a new road, building, or other infrastructure project like a factory or some other related project does.

There are other reasons why this is a bad thing but they aren't purely economic.

As for manufacturing, this is not purely a low/semi-skilled area. Manufacturing and particularly innovation has a strong link with intellectual property. If you look at what is happening in China, they want this piece of the pie from the US. They say "We will manufacture your goods for you at cheap labor, but we want to have your intellectual property", and you are giving it to them. They are now becoming a powerhouse for research and innovation and now that rug is being pulled from under your feet.

In terms of having jobs, the best way for a country to do that is to allow anyone to be able to create their own job or business. In this model, anyone who has a good business succeeds and the one who does not fails. This is not the case in the US anymore. Certain people get favorable treatment, and others get shafted severely.

Also you need to look at how the whole system of credit is managed. It's very hard under the current system for people to build something from scratch and make it on their own. It's a lot easier for the big players to get bigger, and in contrast it becomes really hard for the people down the bottom.

The thing is that most of the jobs out there are not in General Electric or Microsoft, they are in your local restaurants, or clothes shops, or corner stores, and other kinds of small to medium businesses.

Due to the fact that credit is a really hard thing to get hold of, businesses will go out of business simply because they do not have the credit that they need. If you really want to build a nation that gets people jobs, you have to start by looking at the current credit system and make some significant changes to that.

Also with regard to your thinking about low paying and high paying tech jobs, this is the thinking that is destroying your middle class. The thinking was to send all the menial jobs to places where the labor is cheap and the skillset required is low enough so that pretty much anybody could do it. The simple idea was that you make it over there and then ship it back and bag the difference.

But this has a domino effect. The people that were employed are now unemployed. Your country becomes a service economy more so than a manufacturing economy. So you have to buy more and more stuff from elsewhere. Meanwhile places like China are getting the infrastructure from other companies for free, taking the IP, building their own domestic economy, and getting bigger and bigger. Your middle class gets wiped out, and the disparity between the rich and poor gets wider.

Add to the fact that as a result more people are forced to get into debt for whatever reason be it education, or just to get through the week for groceries and electricity bills, and you have a very serious problem.

If you still want to think that war is profitable, maybe you should look at your current debt and how much your military system spends on the wars you are fighting right now.

 

[MarcoD]

What are the estimates when this will roughly happen? Are countries preparing for this transition?

On Dutch radio the prediction was between 2030 (very unlikely) and 2050 (with normal trends.)

 

[Newai]

There are "normal trends"?

 

[MarcoD]

There are "normal trends"?

I guess they assume certain growth percentages for both nations and extrapolate from that.

 

[Jimmy Snyder]

About 6 months ago I heard some talking head say China would overtake the US by 2020 and that India wouild overtake China by 2030. Just a rumor.

 

[Pengwuino]

I'll consider China and India to be real players when they start creating Microsofts and General Electrics and IBMs.

http://money.cnn.com/magazines/fortune/global500/2011/countries/China.html

If you discount energy companies (which obviously would be massive in China/India), China doesn't even have a top 50 company in the world in revenue. Expand to the top 500 and they do have a lot of big companies, but I don't see the world looking at them as "the economy" unless we see a real modernization of that nations economy (which may very well happen) and move away from these companies who are big only because of the sheer number of people they serve.

India, on the other hand, I think will never be a contender at this rate. They have 8 in the top 500 and they're almost all energy.

 

[russ_watters]

Are countries preparing for this transition?

What transition? Other than a ranking on a particular statistical table, what do you think will happen?

 

[mheslep]

China has little chance of surpassing the US per capita GDP in this century.

 

[Willowz]

What transition? Other than a ranking on a particular statistical table, what do you think will happen?

Well for starters changing the global currency.

 

[Willowz]

China has little chance of surpassing the US per capita GDP in this century.

Yeah but that's like comparing apples with oranges.

 

[mheslep]

Yeah but that's like comparing apples with oranges.

No, apples with apples. Comparing 1.2 billion people to 300 million people collectively is the apples to oranges comparison.

 

[Willowz]

No, apples with apples. Comparing 1.2 billion people to 300 million people collectively is the apples to oranges comparison.

The point you made doesn't take under consideration that fact. So, why point it out?

 

[russ_watters]

Well for starters changing the global currency.

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]

The point you made doesn't take under consideration that fact. So, why point it out?

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]

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.

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

 

[Willowz]

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 is not useful for many purposes.

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 http://en.wikipedia.org/wiki/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]

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

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]

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

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]

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!

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]

... 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...

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.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita"

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 http://en.wikipedia.org/wiki/List_of_countries_by_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]

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

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita"

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?

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, whenhttp://en.wikipedia.org/wiki/Suez_Crisis#Financial_pressure" That I would think, financial soundness and not size, is the lesson to take from the episode.

 

[MarcoD]

For that matter the http://en.wikipedia.org/wiki/List_of_countries_by_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.

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]

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.

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.

 

[apeiron]

This is a Chinese view of the current world ranking, and it puts them down at 6th with a long way to go yet.

http://en.wikipedia.org/wiki/Comprehensive_National_Power

And...

http://www.fgu.edu.tw/~academic/up1/malayconference1/paperscollection.files/conferefncepapers/chang.pdf

 

[WhoWee]

Can anyone name a product that was conceived of - developed from the ground up (100% of the original R&D), including prototypes, testing, and with a comprehensive marketing strategy that now leads the world in it's category?

Please don't argue fortune cookies or other nonsense - think modern consumer product.

 

[CAC1001]

I question whether China has actually even surpassed Japan in GDP. As I've said before, I think China is a ticking time bomb that is in the midst of a massive bubble right now. Quite a few others believe this too, two prominent ones being Jim Chanos (who forsaw Enron's collapse) and economist Nouriel Roubini (http://www.project-syndicate.org/commentary/roubini37/English" ).

The concern over China acquiring an overall larger GDP than the U.S. is that they can fund a very large military for what they want to do (control that region of the world). That said, I do not think they will surpass the U.S.'s GDP. All of these nations, during their growth phases, can gain an aura of invincibility. It happened to the United States even during the 2000s, when economist Ben Bernanke gave a speech talking about how we had entered a "new era" in which major recessions were a thing of the past and so forth, Dubai thought they were invincible, Japan thought they were invincible during the 1980s, Ireland thought they were invincible, etc...people thought the Soviet Union was leaving us in the dust even. I also do not buy that the Chinese government takes into account the long-term as opposed to the short-term as our politicians do. Enacting such a big stimulus as they did, the fact that the local Chinese governments have economic growth targets to meet, along with corruption in the Chinese government and state-run Chinese enterprises, etc...none of that indicates taking into account the long-term. Recently, China's government has had to assume the liability for about $308-$463 billion worth of bad loans from the local and regional Chinese governments (http://www.cnbc.com/id/43228404/China_s_Enormous_Local_Government_Bailout" )

I think China's government is scared to death of a major uprising in the country. That is why it pushed through that massive infrastructure stimulus and why they have been censoring heavily in the country regarding the uprisings in the Middle East. China has no social safety nets of any kind. They have ethnic tensions in the country as well. If the economy stalls big time, then things could really explode beyond the ability of the Communist Party to control them.

An interesting "bubble indicator" as well is those who say it is not a bubble. Well, they "could" be right, but I mean that is whwat has been said about almost every major bubble in history. You look at Japan in the 1980s, the Soviet Union, the Dot Com bubble, the real-estate bubble of the 2000s, etc...you could find very smart people (economists, investors, traders, etc...) who could give a good, detailed argument on why "This time, it's different!" We see some doing the same with China right now.

Another interesting thing regards skyscrapers and art. Alongside Japan's real-estate bubble during the 1980s was a massive art bubble. And, in addition to an apparent massive real-estate bubble, China also is undergoing a big art bubble as well: http://www.thedailybeast.com/articl...about-to-burst-says-vikram-mansharamani.html"

Regarding skyscrapers, the construction of very tall skyscrapers has also often served historically as a great bubble indicator. Right now, five of the ten tallest buildings are under construction in China:

http://www.forbes.com/2011/03/10/skyscrapers-burj-dubai-leadership-leaders-bubbles.html"

http://finance.yahoo.com/tech-ticker/look-out-below-why-skyscrapers-are-classic-bubble-indicators-536048.html"

Here are some interesting reads on China:

http://www.zerohedge.com/article/gmos-edward-chancellor-discusses-chinas-red-flags-must-read-fresh-perspective-chinas-bubble"

http://seekingalpha.com/article/259775-china-is-not-a-bubble-it-s-the-hindenburg"

http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12?slop=1#"

http://www.businessinsider.com/there-are-now-enough-vacant-properties-in-china-to-house-over-half-of-america-2010-9"

http://www.businessinsider.com/the-...bble-is-the-most-obvious-bubble-ever-2010-1#"

http://www.cnbc.com/id/43639266/Why_China_s_Local_Government_Debt_Is_So_Scary"

http://www.bbc.co.uk/news/business-14836386"

http://www.reuters.com/article/2011/07/05/us-china-debt-moodys-idUSTRE7640EN20110705"

http://economictimes.indiatimes.com/news/international-business/chinas-hidden-debt-undermines-its-sermons/articleshow/9911609.cms"

China has some major demographic problems regarding an aging population and because of killing so many of their female babies, a big problem of a severe shortage of available women for the men, major problems with pollution (they have no pollution controls on their industry), major problems with lack of quality control (they build garbage infrastructure apparently, LITERALLY---see the http://www.weirdasianews.com/2010/02/05/shanghai-wonderbridge-trash-collapses/" ), lack of food safety and worker safety standards and regulations, etc...

Also a video:

http://www.youtube.com/watch?v=rPILhiTJv7E&feature=player_embedded

I just find it hard to believe with all this going on that they are going to keep chugging along, increasing in GDP output, and blow by the United States. The Chinese government cannot circumvent the laws of economics, even though they have tricked quite a few into thinking they can it seems.

 

[lisab]

Can anyone name a product that was conceived of - developed from the ground up (100% of the original R&D), including prototypes, testing, and with a comprehensive marketing strategy that now leads the world in it's category?

Please don't argue fortune cookies or other nonsense - think modern consumer product.

Oh you just took all my fun away, WhoWee !

 

[Proton Soup]

Oh you just took all my fun away, WhoWee !

i think most cheap fireworks are still made in china. silk.

 

[WhoWee]

Oh you just took all my fun away, WhoWee !

Sorry lisab.

I asked the question because the Chinese don't compete well in the global economy with their own proprietary products - they compete on (manufacturing) price rather than (product) benefits.

I realized this over 15 years ago when Chinese factories used to send catalogs with thousand of pages of their domestic goods over with salesmen trying to break into the US retail market. The products might have been functional in the mid 1990's (when I looked through the books) but would have been competitive in the late 1960's or early 1970's US economy.

The prices were unbelievable (in container quantities) - but the only realistic distribution method would have been flea markets and garage sales - certainly not retail stores.

 

[mege]

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.

I know this over simplifies things - but I feel that China is a good capitalist on the international scene, but a poor capitalist internally.

 

[WhoWee]

I know this over simplifies things - but I feel that China is a good capitalist on the international scene, but a poor capitalist internally.

To further over-simplify - China has become the favorite sweatshop of the world. However, consumers don't necessarily want the "made in China" brand - only the lower prices.

 

[shashankac655]

US brain drain?
China and Russia

 

[MarcoD]

I just find it hard to believe with all this going on that they are going to keep chugging along, increasing in GDP output, and blow by the United States. The Chinese government cannot circumvent the laws of economics, even though they have tricked quite a few into thinking they can it seems.

I read some of the links, but I don't find any evidence that they are not just right on track. With 1.2-1.3 billion people and a sluggish state-led economy, you just don't care about some incidental ghost cities. Wait a few years, and they'll just be filled and thriving. Internal debt also has no meaning in a socialist state, and their state owned banks hold more than three trillion dollars to solve that problem.

As far as the other comments on where China is in the world at the moment. Well, as far as I know, they're everywhere - first mostly in Asia and then all third world nations. It comes with a mercantile strategy, the western world is just the last picking on the dinner plate.

If the East India Company is a predictor of the problems of a mercantile strategy, their biggest problems will be poor worker's conditions and rampant corruption.

 

[CAC1001]

I read some of the links, but I don't find any evidence that they are not just right on track. With 1.2-1.3 billion people and a sluggish state-led economy, you just don't care about some incidental ghost cities. Wait a few years, and they'll just be filled and thriving.

One of the major problems with those ghost cities is that most average Chinese cannot afford them (for example the homes in them). One of the article for example points out how at the height of the Japanese real-estate bubble, inter-generational mortgages were being offered. These are also being offered in China today.

Internal debt also has no meaning in a socialist state,

Debt counts, even in a country like China. Their banks have taken on a LOT of debt in order to finance the various real-estate construction and infrastructure projects.

and their state owned banks hold more than three trillion dollars to solve that problem.

Yes, but what are their liabilities? They may well have in excess of that amount in liabilities, or close to it (no one knows for sure right now).

If the East India Company is a predictor of the problems of a mercantile strategy, their biggest problems will be poor worker's conditions and rampant corruption.

They definitely have those.

 

[MarcoD]

One of the major problems with those ghost cities is that most average Chinese cannot afford them (for example the homes in them). One of the article for example points out how at the height of the Japanese real-estate bubble, inter-generational mortgages were being offered. These are also being offered in China today.

The problem is that we are not seeing what real-estate developments actually worked. These ghost cities are probably the excesses of state-led development in places where they backed the wrong horse (too expensive housing) with a combination of internal corruption (everyone is grabbing from the state for personal reasons, so the house prices, even for the simple condos, are just too high anyway.) [Maybe it is even just stealing money from foreign investors.]

It will probably mean that 'the party,' will get angry at some officials, write of these condos, and push forward to payable homes in the next five year party plan.

Thing is, every system has its excesses. The Chinese might also report about the excess of produced waste in the US as a result from a deregulated capitalist market. It's incidental evidence.

Debt counts, even in a country like China. Their banks have taken on a LOT of debt in order to finance the various real-estate construction and infrastructure projects.

Yes, but what are their liabilities? They may well have in excess of that amount in liabilities, or close to it (no one knows for sure right now).

I agree with that, but there's also the point that in a state-led economy you can just transfer money (balance the books) internally somewhat at will. It isn't that simple, but to use what happened in pure free-market societies as a predictor for a socialist economy is probably wrong, it just doesn't transfer.

So, in a socialist society, national liabilities are less relevant than the international ones, and the international liabilities are just not there.

 

[lahaut]

The biggest problem with China today is hubris. In 25 years of observation, I have seen China change, but also the Chinese with them. Not only the BMW 750iL drivers in China, but practically the whole nation is acting as if they have already passed the west. I really have no reply for taxi drivers making 300 $ per month telling me proudly that Chinese now are "stronger" than the country I come from.
Another problem is the perception that visitors have of China. Many cities, especially in the East regions, are booming and start to look posh, but they represent only a fraction of China and even in a place like Shanghai it is not difficult to find poverty and filth. GDP goes up, but the quality of that GDP is doubtful. Majority of the housing would not pass any serious test in the west and one will be lucky if his apartment lasts for 20 years, while paying for it with an average income would take 50 years. At the moment this is concealed, many owners got compensated extraordinarily for the crappy apartments they were living in and had either a replacement or could pay off a big part at least of the mortgage of the even more overpriced new developments built on the site. But you can only play this trick one time and anyone without the luck of owning an old apartment simply cannot afford a new one unless off course they are one of the lucky few in business or with rich/corrupt relatives. Even if the leadership can contain the situation at this time, there will be a time, when the buildings start crumbling (or just topple over, like happened in Shanghai) that the fun is over.
In the meantime a lot of accumulated hate against the west is starting to show up. It used to be concealed envy, but the general feeling is that China has somehow already overtaken the west and for some lesser minds, it is time for revenge. The call for a great army is real and the frustration about China being left out for the moment of military actions around the world is for some nearly unbearable. This translates in erratic arguing with only one topic: the west is bad and needs to be punished somehow, preferably by Chinese showing their superiority. Any feeling for logic is lost in the hatred and though China itself is a victim of Islamist threats and actions in the west of China, many go as far as to flaunt support for Al Qaida and sorts. Very worrying is that these extreme views are condoned on websites like Chinadaily. For example: http://comment.chinadaily.com.cn/articlecmt.shtml?id=13663893

 

[MarcoD]

In a black and white world, a capitalist mercantile state is a force to be reckoned with. In a black and white world, a nationalist socialist totalitarian one-party state set on a mercantile strategy just isn't even funny anymore.

I have no idea what western companies are doing there, except for that the world consists of shades of grey, and they better be darned sure China is light-grey.

 

[ThomasT]

Because the area where I grew up as well as the area where I spent most of my time before retirement have experienced significant losses in manufacturing and heavy industries that have put tens of thousands of people out of work over the years, I had the idea that America's 'deindustrialization' might be a significant factor in allowing China to overtake the US economically some day. Indeed, in at least one of the links below an economist predicts that China's GDP will be triple the US's by 2040. I don't have any sort of firm opinion on the OP's question, and was wondering if the more knowledgeable contributors here might comment on the credibility of the sources and assertions in the links below.

http://www.marketwatch.com/story/goldman-conspiracy-helps-china-beat-us-2010-09-14?pagenumber=2

http://theeconomiccollapseblog.com/...alization-of-america-that-will-blow-your-mind

https://www.amazon.com/dp/0465015905/?tag=pfamazon01-20

http://www.counterpunch.org/2011/08/05/the-deindustrialization-of-america/

http://en.wikipedia.org/wiki/Deindustrialization

http://agonist.org/thatsuckingsound

 

[CAC1001]

Because the area where I grew up as well as the area where I spent most of my time before retirement have experienced significant losses in manufacturing and heavy industries that have put tens of thousands of people out of work over the years, I had the idea that America's 'deindustrialization' might be a significant factor in allowing China to overtake the US economically some day. Indeed, in at least one of the links below an economist predicts that China's GDP will be triple the US's by 2040. I don't have any sort of firm opinion on the OP's question, and was wondering if the more knowledgeable contributors here might comment on the credibility of the sources and assertions in the links below.

http://www.marketwatch.com/story/goldman-conspiracy-helps-china-beat-us-2010-09-14?pagenumber=2

http://theeconomiccollapseblog.com/...alization-of-america-that-will-blow-your-mind

https://www.amazon.com/dp/0465015905/?tag=pfamazon01-20

http://www.counterpunch.org/2011/08/05/the-deindustrialization-of-america/

http://en.wikipedia.org/wiki/Deindustrialization

http://agonist.org/thatsuckingsound

Well the notion of America "de-industrializing" is largely a myth. The U.S. is one of the largest manufacturers on the planet and up until recently was the largest, being outdone by China slightly (China is responsible now for about 19.8% of global manufacturing as opposed to the U.S.'s 19.4% - http://www.industryweek.com/articles/china_tops_u-s-_in_manufacturing_24134.aspx"). But the U.S. achieves that 19.4% with far fewer workers then the Chinese due to our much greater labor productivity.

Also, manufacturing is not some panecea to economic hegemony. It is important, but a service and knowledge economy is very important to, and this is something that China is severely lacking right now. Manufacturing in the United States hasn't so much declined (U.S. manufacturing output continues to increase year-after-year), it's that as a percentage of the economy, it has shrank over the years as the economy has grown by leaps and bounds in other areas. Manufacturing employment has remained relatively the same over the decades even though manufacturing continues to grow, which I suppose means that, roughly, the rate of manufacturing's growth is the same as the rate of increases in its productivity (so everytime a worker is replaced by a machine, the manufacturing sector grows enough to include an additional worker).

Low-margin, simpler things, such as toys, shoes, consumer electronics, etc...are manufactured in countries like China (and even then, the actual design of these products is in the United States), but high-margin, sophisticated things, such as medical devices, computer chips, instruments, sophisticated componentry, etc...are a great deal manufactured in the United States. The Chinese cheat also in that they artificially de-value their currency (which IMO the U.S. should counter with a tariff on all Chinese goods that are hurting domestic U.S. industries simply because they are cheaper due to the currency advantage) and also they subsidize certain industries as well. For example, the U.S. machine tools industry has been hurt by Chinese competition, and IMO a tariff should be levied on Chinese machine tool imports until they decide to stop de-valuing their currency the way they do.

Some myths about American manufacturing also are that it is primarily driven by the defense budget, which isn't true, that it is just a few big-ticket items that the U.S. manufactures (this also isn't true), and that American manufacturing is dominated by large corporations such as GE, Boeing, and so forth (also not true). American manufacturing consists of a whole bunch of small and medium-sized businesses along with large corporations.

On the issue of China's GDP tripling the U.S.'s by 2040, I'd put about as much stock into such a prediction as the tooth fairy. No one can predict economic growth or the condition of an economy that far out into the future. Imagine in 1981 trying to predict the U.S. economy circa 2011 for example. Such a prediction also makes the (rather large assumption I think) that China will continue growing at a very high rate of growth for the forseeable future, which is not likely. All economies that are booming are subject to busts after a certain point.