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A study released Tuesday by a U.S. research group concluded that China's economy will overtake that of the U.S. by 2035. The report, by economist Albert Keidel of the Carnegie Endowment for International Peace, also announced that China's economy will be twice the size of the U.S. economy by 2050. Under current market estimates, China's GDP now stands at about $3 trillion, compared to the U.S.'s $14 trillion, reports Rob Lever of AFP. Keidel, a former World Bank economist and U.S. Treasury official, predicts that
China's financial clout will spill into every conceivable dimension of international relations... [the United States] will have an important secondary influence, like Europe, but it will need to compromise, and its sphere for unilateral action will be increasingly curtailed.Keidel also added that the Communist Party posed possibly "the greatest barrier to sustained rapid economic expansion" for China.
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Are these the same folks who predicted in 1984 that Japan's economy would be twice the size of the United States by 2000?
Sorry, but these economists are just throwing darts. Assuming that China will continue its 10% growth for another three decades is extremely shaky - especially when the fissures (inflation, the environment, civil unrest, corruption, rampant nationalism, an aging population with no safety net, etc) are becoming more and more apparent.
It seems to me that a large percentage of China's growth is tied up in fixed infrastructure - much of which stands empty upon completion - and hot money swelling the value of stocks and real-estate beyond reason. Seems like a correction is inevitable.
Will China be one of the world's great economic powers? Of course. But the gargantuan problems facing this country should temper any starry-eyed fantasies about China dominating the world in the next half-century.
I disagree with your impressions on stocks and real estate.
my bloomberg says A share's P/E is 22, the S&P 500's is 20. when you consider future growth that's a goddamn bargain. So i'd argue that the sotcks aren't inflated. I would argue that the market as a whole is fairly messed since it's like 95% retail, but these stocks are not inflated.
morgan stanley's latest report says the hot money thing is more a political scare. My guess is less than 20 hedge funds under the radar. And good luck converting QFII funds into cold hard cash, getting coke across the boarder would be easier. I treat the term 'hot money + china' with the discontent I treat the word "terrorists", simply political tools.
Shenzhen's real estate is going through a serious correction right now. you're probably right about Shanghai and Beijing but I'd say the 2nd are 3rd tier cities real estates are not overvalued at all.
It seems your perceptions are based on hear say, if this discourse was in person I would punch you in the nose on sheer principle for propagating rumors.
-sorry, slow day at work.
Haha, bring it on.
The Shanghai market was horribly over-inflated - P/E was 50-1 last year - and the market has lost half it's value in the past six months. I'm curious the ramifications for the whole economy. Lots of middle-class people who didn't know what they were getting into lost their shirts when that bubble popped. I wonder how that affects the overall economic and stability picture.
You grant that real estate is over-valued.
On the issue of hot money in China, and its potentially devastating effects on the economy, read this article by the Economist.
http://www.economist.com/finance/displaystory.cfm?story_id=11639442
Or do you consider the Economist 'hearsay'?
Twit.
This article just another "japan will overtake" bla bla. How many times did the USA been hampered by these so-called experts. China is still very very fragile in all areas of growth. Of course it will be a major economic player but over take what, we still have emerging players India, Middle east nations, perhaps even regions in africa??? we don't know. USA is fairly a young country with a young labor force, granted its still has problems but nothing they havent handle before. China like Japan will be a force to reckon with US supreme power but thats all speculation and hype.
That's good news. You guys have a good 27 years to learn mandarin.
@Alec, touche, well played ol chap, the economist is far from hearsay it's the new bible.
that was the article that spread alot of fear mongering.I personally didn't find that article very convincing, yes there's alot of money flowing into this country-any bean counter can tell you that, but i don't see it flowing out anytime soon. The article didn't give me enough reason to worry, I don't think it made any definitive claims.
I believe this house of cards will stand for quite a while longer. I'm betting the RMB will keep plugging away to at least 5.5 by 2011. But that is just my opinion. 6.836-6.846 today btw, fuck yeah baby.
As for the middle class that lost their shirts by blindly buying stocks, they were such a small percentage of the population, i don't think it'll cause any instability in the grand scheme. Anyone that starting buying anytime after spring '07 was too late to the party. just like that saying, a fool and his money will eventually be separated.
@Howie 当然，我迄今投资两年学这个"god forsaken language"因为中文的研究报告比英文报告具体和及时地。如果你不会看得懂每天的中文晨报，你太慢。我推荐这份软件https://addons.mozilla.org/firefox/3349/ 还有， www.mandarintools.com/dimsum.html 都是很有用。
All the best gentlemen.
godspeed
All Chinese over 50 remember the time in 1961-1963 when millions of Chinese died of starvation. But now? Have a look at a village banquet which has nothing to do with fre-for-all-dinner of People's Commune era, even at a world food crisis time:
http://blog.foolsmountain.com/2008/07/09/the-fanciest-village-banquet/#comments
I can give you 5 reasons why China will overtake US in becoming the world's biggest economy. China is absolutely not Japan.
1. China's economy policy is the most pro-business and its market is the most open to global investment. It already attracted the most global investment for the past few years. Japan's market is closed, and it's extremely hard to get into the protective market.
2. China has a large consumer market. There are 25,000 new cars being added to the road every day. Japan's population is only 25% of the US, while China is 4 times of the US.
3. China's economy development is aided by a huge oversea Chinese network all across Asia. Singapore is 90% Chinese, Taiwan is 99% Chinese, Hong Kong is 99% Chinese, Malaysia is 30% Chinese, Thailand is 20-30% Chinese, Indonesia and the Philippines are 5-7% Chinese but they control 70-80% of the national wealth. China-ASEAN free trade zone is becoming a reality in a few more years. China-ASEAN Expo, now in its 5th year, attracts 300,000 business visitors in the first year alone.
4. The technology and financial investment from Silicon Valley to China is $1 Billion in 2007, while only a few millions go to Japan.
5. China's government is one-party, they can make things happen immediately. They can build large infrastructure...from new ports to new highways with decisive power.