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Underestimating China

The interesting question is not if China’s economy is as large as the USA economy. The interesting question is when it will be twice as large.

New calculations on production in China and the USA yield that the size of the Chinese economy is about equal to that of the USA economy. This led to denial from a number of (especially: USA?) economists. One of them is Jeffrey Frankel, who states that it’s not about domestic production and consumption (huh…?!) but only about world markets:

When we talk about size or power we are talking about such questions as the following:

  • From the viewpoint of multinational corporations, how big is the Chinese market?
  • From the standpoint of global financial markets, will the RMB challenge the dollar as an international currency? …
  • From the viewpoint of the IMF and other multilateral agencies, how much money can China contribute and how much voting power should it get in return …?
  • From the viewpoint of countries with rival claims in the South China Sea, how many ships can its military buy?

 

Top 10 Countries with Best Performing Brands-resized-600

It’s indeed interesting to look at the Chinese market – the car market, for instance (graph). Let me do the arithmetic: [22 million > (15,6 million + 5 ,3 million)}. The Chinese car market is larger than the Japanese and USA market combined. t might of course be that 2013 was special, while 2014 data reveal a wholly different situation. And indeed, they do. Car sales in China jumped with 18% in February 2014. Oops, that increase should be roughly equal to total car sales in Brazil… Very bad for the environment, I agree. And that’s indeed one of the most important reasons why we should not, literally, underestimate China.

  1. David Gold
    May 9, 2014 at 3:42 pm

    When one puts these numbers on a per capita basis, China’s position changes quite a bit. Isn’t that comparison also relevant?

    • robert r locke
      May 9, 2014 at 5:34 pm

      No, because while the Chinese elite has managed to raise the material wealth of an expanding middle class in a demographically overpopulated country, a tremendous accomplishment, the US elite has managed to enrich the top 1%.

  2. May 10, 2014 at 9:21 am

    Reblogged this on ..::popular spanish practices::.. and commented:
    I wonder when all the economic development in China will start to benefit the people. How can a system like that be called comunism, when it’s exactly the opposite?The country is ruled by foreign enterprises with a so called Comunist Party totally controlled by infiltrated agents of foreign countries

  3. Bruce E. Woych
    May 20, 2014 at 8:14 pm

    These two editorial leaders of the UK’s ECONOMIST are now on tour and (not surprisingly) were on Charlie Rose last night.
    Charlie Rose [#20106] (original broadcast date: 5/19/14)
    * John Micklethwait and Adrian Wooldridge of the Economist magazine on their book,
    “The Fourth Revolution – The Global Race to Reinvent the State”

    They methodically set up a platform that established a global perspective when, in the last 5 minutes of their discussions, they turned from opinion to a policy platform for Obama to take ‘charge of the light brigade’ …, or in the future we will all be speaking Chinese in a non-democratic state capitalism that will dominate the world.

    These are the same guys that (with back channeling narrative = ?) are driving / selling the hegemonic global consensus that is explicitly promoting for an implicit sanction for Obama to crank up the U.S> role as dominant authority in the balance of global forces (especially against and over China). It is essentially a very slippery slope version of the New American Century and its biased perspective on America’s “moral” imperative to be the amoral leader of the world powers and its status quo.

    These are the guys that wrote those two major articles last week that received such central attention (in the republican challenging way that sets up his compromises)””against” …against… Obama’s “weak” and too “timid stance” in the Pacific (aka: China). All this from the editors of the United Kingdom’s ECONOMIST.

    The literal threat is A standard [statement] of …”or else”…as the classic fear mongering from the reactionary right, predicting unspecified but ‘total doom’ as a lesson presumably proven by history. More selective historicism than objective history it attempts to establish an ultimatum when aggressive action is not taken to assure the one track option they offer as solution. This stance is never evaluated with game theory scenarios or even as a potential provocation towards hostilities. It is an end process seeking a following. Yet these very aggressive counter-insurgency type grand tactical positions clearly do establish opportunistic power to their advantage (and tilt the imbalances dangerously into strict opposition in the process). The idea that the Chinese will simply back down is presumed constant …note well: Despite History! It doesn’t seem to matter, since the method is in the madness of supremacy and pre-emptive security (a total contradiction in terms).

    I believe and see this as a very well organized but reckless upper level elite version of a tea party ad hoc parliament / astro turf representative consensus from the commercial interests of imperialism as the neoliberal tactical corporate perspective carelessly pursues power by promoting, nay,
    …hawking… an aggressive confrontational politics as some form of wisdom from the world leaders. It is a form of action that presumes that we had better do it to them before they do it to us. The fascinating fact is that is coming from the editors of the ECONOMIST *UK !!

    They advocate political and economic power pressures as the primary buffer against the unspecified speculations of a future Asian “domination” that they project as inevitable if the West does not take domain controls immediately to offset their predictions. In the meantime they neglect any referecnes to the accusations from China that the “domination” is and has been Western in origin. But the introduction to their new book clearly and specifically states that the new educational modality in China is for nothing short of World Domination.

    China has carefully adapted and adopted what it perceives as working capital processes, and has successfully and selectively kept liberalization at arms length and under strict restraints. The state capital directives, as its apparatus manages it, is a Chinese version of liberalization over its own domestic developments; tactfully keeping the Western corporate interests under constraints, using them to their advantage when agreeable, but even kicking them out when they don’t work under Chinese rules. This is very tough on international power that is used to leveraging things into power positions that have only one choice…their own. Much like the Ukraine, it has been a difficult field to navigate and exploit.

    Meanwhile, While it may be up to its waste boots in US Treasuries, China has not substantially undertaken to establish a Western style foreign policy that aggressively utilizes an “imperialistic” liberalization of other peoples assets (at least not yet). The global domination project must be top secret and on hold.
    The projected “threat” perceived is simply a trajectory of Chinese growth based upon a decline in the competitive advantage of Western economic domains. The interview with Charlie Rose made a great deal of focus out of the Chinese ability to shop around the world and construct a composite government out of what they like and feel is viable, but rejecting the actual models that the standard Nations are insisting are the true democratic forms. They make a specific point that the Chinese are not impressed with the government of the United States and Great Britain (hence democracy by some bizarre association that no longer exists). This, of course, is the great divide that establishes divergence into the threatened future. The presumption logically extended is that the Chinese ultimately threaten “democracy itself” since they are building a model government (the big race to reinvent the State…as their title states)…a model government that is not a copy or compliant to the Washington consensus, the British off shore financial Empire…or the Neo-nazi New American Century’s view of the world…and its future political profile.

    The idea of making a reluctant President Obama simply comply to a world leader mandate equivocates essentially as a quasi-pseudo “democratic (s)election by leading authoritative global representatives). This not only endorses but literally justifies and all but legitimates the United States having an “obligation” to dominate and lead the “free western aligned world” against the evil future domination of their projected Asian boogeymen. It is not a matter of will…but a matter of historic necessity and practically establishes another of Obama dilemma opposition schemes that corners him reluctantly to accept the wisdom of the people rather than his own timid, meek and mild mannered liberal preferences to diplomatically negotiate a fair playing ground. It is essentially the talking points for real politik and a secret license for Obama to act… as he has all over the rest of the world without drawing attention to his gun ship diplomacy. In the process, Obama escapes ultimate authorship of actions, and delegates history as another global rally of international consensus. But all this from the UK: ECONOMIST ?

    ———————————————————————————————-
    The Fourth Revolution: The Global Race to Reinvent the State by John Micklethwait and Adrian Wooldridge (May 15, 2014)

    The book they have jointly presented; is a very methodical sophistry of historicism meant to stage the seamless process of justifying and legitimating its historical material realism. One special note for Robert R. Locke, the internal logic to their thinking is that the ideal democracies have become lax and are becoming divergent and diluted, while the Chinese
    conundrum is reaching for a “convergence” process that is not going according to the Western plans…the future convergence is the threat, but ironically it is eclectic ingenuity, reverse engineering, and divergence that is giving it driving force (even as it decentralizes the presumption of high ideal democracy in the United States and Great Britain.

    ===================================================================
    Background to consider: 2nd two are Both from the editors of the Economist (UK).

    1) (sets up Obama’s display of a hesitant and weak stance from his recent visit to the Pacific political arena).
    No firm commitment from US to defend PH
    Obama: Goal not to counter China
    http://globalnation.inquirer.net/103033/no-firm-commitment-from-us-to-defend-ph
    By Christian V. Esguerra, TJ A. Burgonio
    Philippine Daily Inquirer
    12:23 am | Tuesday, April 29th, 2014

    2)
    http://www.economist.com/news/leaders/21601508-nagging-doubt-eating-away-world-orderand-superpower-largely-ignoring-it-what
    The weakened West
    What would America fight for?
    A nagging doubt is eating away at the world order—and the superpower is largely ignoring it
    May 3rd 2014 | From the print edition

    3)
    http://www.economist.com/news/united-states/21601538-america-no-longer-alarming-its-foes-or-reassuring-its-friends-decline
    Geopolitics:
    The decline of deterrence
    America is no longer as alarming to its foes or reassuring to its friend

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