China as the World’s Biggest Economy?

“To get rich is glorious”

Deng Xiaoping

Chairman of the Central Advisory Commission of the Communist Party Deng Xiaoping (1904-1997) Politician and reformist leader of the Communist Party of China who, after Mao’s death led his country towards a market economy.

First you need to understand that the Chinese have always been a big

China has been the world’s largest economic power over 1750 years, trade between China and Europe grew at the rate of 4 percent a year between 1719 CE and 1806 CE, doubling the volume of trade every 18 years and in year 1800 China responded 33% to the world’s production, time when China was the world’s developed countries was only for a few hundred years ago, but the closing a country and the refusal to cooperate with other States stopped the social and economic development.

What happened?

1800 century British started smuggling opium into China. The result was disastrous for the Chinese, between 1821 CE and 1840 CE the Qing government tried to stop the opium trade, the result was the Opium Wars.

After the Opium Wars  in 1851 CE, Hong Xiuquan revolted against the Qing Dynasty, proclaimed Qing’s rulers to be “filthy barbarians and beasts” who had ” led China into despair”. His rebels, called the Taipings, quickly took control of much of southern China with aid from the British and French, the Qing defeated the rebels, but not before the rebellion claimed over 20 million lives. Lasting until 1871 CE, the Taiping Rebellion was one of the bloodiest wars in history, and it devastated the Qing economy. (Wu, Sun; Griffith, Samuel B. (translator), 2006, The Art of War, Blue Heron Books)

Following the Taiping Rebellion, some Manchu nobles acknowledged that reforms were necessary. They instituted the Self-Strengthening Movement, in which limited modernization occurred, such as re-equipping the army, creating a standing navy, and industrialization. Although some of these reforms were successful, most of the Manchu nobility opposed them. The Chinese economy underwent a somewhat limited industrialization during this period. After defeat by the Japanese in 1894 CE, the movement became discredited. In 1911 CE, the Xinhai Revolution overthrew Manchu rule and established the Republic of China. The collapse of the Qing accelerated the decline of the Chinese economy, which was rapidly declining in comparison to the world gross domestic product. (Sun, Jian, Economic history of China, 2000).

The economy was heavily disrupted by the war against Japan and the Chinese Civil War from 1937 to 1949, after which the victorious Communists installed a planned economy.

Economic reforms began after Deng Xiaoping and his reformist allies ousted the Gang of Four Maoist faction. By the time Deng took power, there was widespread support among the elite for economic reforms.

Economic reforms in 1978, China has become the world’s fastest-growing major economy

But still 1997 China responded only 3,5% to the world’s production, long way from 33% like 1800 century.

What is the situation now?

“China’s fast-growing economy has been forecast to overtake the U.S. as the world’s biggest economy as early as 2016“,  the first statement made ​​in this direction Harvard University Kennedy School of Government dean Joseph Nye 2002 when he published a book “The Paradox of American Power”.

An economic slowdown in Europe contributed to China’s, and is expected to further drag Chinese growth in 2013.

2013  in March a report by the Organization for Economic Cooperation and Development (OECD)  tell China was on track for a fourth straight decade of fast growth and will overtake the U.S. as the world’s largest economy in 2016, after adjusting for price differences.

Trade numbers from China told at  Chinese exports rose 14.7 percent in April from a year earlier, above market expectations for a 10.3 percent increase, while imports rose 16.8 percent – beating forecasts for a 13.9 percent rise.

What numbers tell us?

  • the world’s most populous country , with a population of over 1,35 billion
  • 8227 trillion $ Gross domestic product (GDP)  [2nd]
  • 816 million labor
  • 76704 thousand labor, employed persons are individuals with a minimum required age who work during a certain time for a business
  • 912 Thousand unemployed  (or 4-5% )
  • 63,500 “super-rich”, individual must possess more than 16 million USD dollars
  • 1 020 000 millionar, individual must possess more than 1,6 million USD dollars
  • 200-250 million “middle class” people
  • 948 million live less than 5$ a day
  • 394 million live less than 2$ a day
  • 172 million live less than 1,25$ a day

(Poverty Headcount Ratio, Word bank and http://www.tradingeconomics.com/china and GroupM Knowledge – Hurun Wealth Report 2012)

Same time when Hurun Report, said, “As China is set to become the world’s biggest market for luxury, it is critical to understand the Chinese luxury consumer” China has so many people who live poverty line. the large trade surplus that China has built up in recent years is a further problem, because it stimulates an urban industrial sector that no longer creates many new jobs, while restricting the government’s ability to increase spending to improve services and address disparities. The government has recently shifted its policy to encourage migration, fund education and health for poor areas and poor households, and rebalance the economy away from investment and exports toward domestic consumption and public services, to help reduce social disparities.

China has so many domestics issues at government must be more interest domestic economy.

China is trying to rebalance its economy from one that is driven by investment and exports to a more consumption driven one which could further slow growth.

China have lot of domestic problems and solutions to some are money.

  • Political Reform and the Future of the Chinese Communist Party
  • Corruption and Localized Unrest
  • Human Rights and Religious Freedom
  • Demographic Challenges
  • Social Policy:  Education, Health, and the Social Safety Net
  • Environmental Issues
  • China’s Legal Reform

What future show?

Analysts said that just because China’s economy had grown rapidly in the past, that did not mean it would continue to do the same in the future.

“China has come quite some way, but is still miles away from where it would like to be and where it could be in terms of productivity and levels of GDP per capita, which is about 13 to 14 percent of what it is in the U.S.—so it still has a massive amount of catching up to do,” said Louis Kuijis, chief China economist at Royal Bank of Scotland.

The government’s 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. (CIA)

China’s economy unexpectedly slowed in the first three months of this year, growing 7.7 percent from a year earlier compared with a 7.9 percent rise in the previous three months on slower industrial output and investment.  New figures show that the future is open and what happen in China economy, is also affected by the global economy.

“if things would see the three days in advance would be rich for thousands of years”

Chinese proverb

China unemployed persons

http://www.tradingeconomics.com/china

Reserves of foreign exchange and gold:
$3.312 trillion (31 December 2012 est.)country comparison to the world: 1$3.181 trillion (31 December 2011 est.)
Stock of direct foreign investment – at home:
$1.344 trillion (31 December 2012 est.)country comparison to the world: 2$1.232 trillion (31 December 2011 est.)
Current account balance:
$213.8 billion (2012 est.)country comparison to the world: 1$201.7 billion (2011 est.)
Exports:
$2.05 trillion (2012 est.)country comparison to the world: 2$1.899 trillion (2011 est.)
Stock of broad money:
$15.49 trillion (31 December 2012 est.)country comparison to the world: 1$13.52 trillion (31 December 2011 est.)

r The World Factbook: China CIA.

Sources

  • Wu, Sun; Griffith, Samuel B. (translator) (2006), The Art of War, Blue Heron Books
  • Sun, Jian, 2000, Economic history of China
  • OECD report, 2013
  • Poverty Headcount Ratio, Word bank
  • http://www.tradingeconomics.com/china
  • CIA , The world factbook, 2013
  • The Paradox of American Power, Joseph Nye, 2002
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4 Responses to China as the World’s Biggest Economy?

  1. I was visiting Beijing ten years ago and what struck me then was that in in a restaurant with ten customers there where at least twenty waitresses. And everybody I met where the kindest people I’ve met.

    There are many things that I do not care about in this communistic government controlled country. But one thing is for sure, if the government decides that there is going to be large changes, I’m in no doubt that it can move more people to the same direction than any other nation in the world. And it has almost unlimited recourses to do so.

    The only thing holding them back is the lack of free speech and information and all the propaganda the government is pushing. We live in an information age and if the government is trying to control the information flow they will never reach their full potential.

  2. kniemela says:

    This is very comprehensive and topical issue. China’s economy has been in the news a lot lately. You have Jari searched very well material for your blog and interestingly told how the Chinese economy has developed from the beginning to this day. I think it was a nice addition that you were looking for figures on what kind of people live in small amounts. Those do not maybe match with the image that people have of China.

    Thank you Jari!
    -Katriina

  3. annika0513 says:

    I have to agree with Katriina. Your choice for the article is really current. There has been many newspaper articles about China´s economy lately. After seeing the figures that you posted I`m getting more worried. Let`s see what is going to happen!

  4. harza123 says:

    Size of China’s economy is about $ 9,18 trillion, or another figure i found of China GDP was $ 12.4 trillion, but not “yet” 8227 trillion $. Size of US GDP is about $ 16,8 trillion (2013).

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