Gradual ascent of Chinese economy
Posted on 24. Jun, 2011 by S M Hali in Business and Economy
China has a firm control over its economy. Prudent planning, astute strategizing and futuristic forecasting has brought Chinese economy from the downtrodden and battered in the 1950s, to the current state where it is second only to the US but according to the IMF, likely to overtake it by 2016.
By Sultan M. Hali
Contrary to western propaganda, China has a firm control over its economy. Prudent planning, astute strategizing and futuristic forecasting has brought Chinese economy from the downtrodden and battered in the 1950s, to the current state where it is second only to the US but according to the IMF, likely to overtake it by 2016. Economic historian Angus Maddison estimates that the Soviet Union at its peak produced only a third as many goods and services as the US; Japan's economy at its peak was still less than half the size of the US economy. China's ascension has been startlingly different, in speed and size. If it grows at anything like the 10 per cent rate it has averaged since 1980, its economy will be far bigger than that of the US within a generation. China's growth has been unprecedented. In 1980, when its economic reforms were just starting, the IMF estimates the US produced more than 10 times as many goods and services. Even 10 years ago, when China overtook Japan to become the world's second-biggest economy, the US still produced three times as much.
But since then China's share of global output has doubled, while that of the US has shrunk rapidly. From 25 per cent of global output in 1986, the US share has shrunk to less than 20 per cent and a projected 17.8 per cent by 2016. China produced just 2.2 per cent of the world's output in 1980, but this rose to 7 per cent by 2000, 14 per cent now, and is projected to top 18 per cent by 2016. By 2016, the IMF estimates, China will be producing more in a fortnight than it did in a year when the reforms began. Over that period, its output would have risen to 30 times its starting level; US output would have risen to 2.7 times its 1980 level.
However this rapid rise does not come without pitfalls, but it is heartening to note that Chinese economists and planners have taken cognizance of the dangers lurking ahead. There are concerns about inflation, excess investment, soaring wages, and bad bank loans. Prominent academics warn that China could fall victim to the dreaded “middle-income trap”, which has derailed many a developing nation. Strategy and commitment have been applied to forestall any disasters. Since 1953, China has framed its macro objectives in the context of five-year plans, with clearly defined targets and policy initiatives designed to hit those targets. The recently enacted 12th Five-Year Plan could well be a strategic turning point – ushering in a shift from the highly successful producer model of the past 30 years to a flourishing consumer society. Seared by memories of turmoil, reinforced by the Cultural Revolution of the 1970’s, China’s leadership places the highest priority on stability. Such a commitment served China extremely well in avoiding collateral damage from the crisis of 2008-2009. It stands to play an equally important role in driving the fight against inflation, asset bubbles, and deteriorating loan quality. A domestic saving rate in excess of 50% has served China well. It funded the investment imperatives of economic development and boosted the cushion of foreign-exchange reserves that has shielded China from external shocks. China now stands ready to absorb some of that surplus saving to promote a shift toward internal demand.
Over the past 30 years, the urban share of the Chinese population has risen from 20% to 46%. According to OECD estimates, another 316mn people should move from the countryside to China’s cities over the next 20 years. Such an unprecedented wave of urbanization provides solid support for infrastructure investment and commercial and residential construction activity. China has taken enormous strides in building human capital. The adult literacy rate is now almost 95%, and secondary school enrollment rates are up to 80%. Shanghai’s 15-year-old students were recently ranked first globally in math and reading as per the standardized PISA metric. Chinese universities now graduate more than 1.5mn engineers and scientists annually. The country is well on its way to a knowledge-based economy. More importantly, Chinese planners are willing to prove the doubting Thomases wrong and are prepared to risk the slowing down of its economy deliberately, to shake off the aftereffects of inflation.
Investors are apprehensive of the supposed rising inflationary trends in China; their apprehension is that Chinese central bank will end global growth. The most recent inflation digits of China: 5.3% may be considered spiraling since the annals of Chinese history are replete with social, economic and political upheaval. However, despite its extraordinary growth record since Deng Xiao Ping opened China in 1978, China’s per-capita GDP is just $4,399 ($7,481 purchasing power adjusted), less than one-tenth of the $48,157 U.S. level. China requires 30 to 50 years of uninterrupted high growth to bring the living standards of Chinese up to current developed country levels. That's why its central bank, the People's Bank of China, has raised reserve requirements for Chinese banks five times so far this year to more than 20% today and adopted a number of other policies to curb price increases, such as selling food from government stockpiles.
Another factor to comprehend is that China’s inflation is not high across the board–it has been driven by two factors: rising food prices and rising energy and industrial commodity prices. So-called "core" inflation, excluding food and energy, is still quite low, productivity is growing 10-12% per year, and there is widespread excess capacity in Chinese industry that is keeping finished goods prices in check. According to Dr. Rutledge, the Chairman of Rutledge Capital, a CNBC economics contributor, and a former Reagan economic advisor, since China's currency is, effectively, pegged to the dollar, notwithstanding western bickering of keeping the exchange rate low, soaring global food, oil and commodity prices, expressed in dollars, are the culprit. Both can be traced to U.S. policy mistakes. The Fed tsunami that increased bank reserves by 17x since 2008 is driving global energy and industrial commodity inflation. And Fed policy, along with its misguided ethanol policy that has diverted 40% of U.S. corn production into ethanol, have more than doubled corn prices in the past year. Ultimately, it will be US that will suffer and not China, whose economy is steadily progressing.
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S M Hali
neel123
24. Jun, 2011
China has achieved spectacular economic success, thanks to huge investments of western capital and technologies during the cold war era, and now well on its way to become the single largest economy in the world.
But the fact remains :
1. Militarily China will not be in a position to challenge the US and Europe in the foreseeable future, nor will it be anywhere near to the west in terms of current and future technologies.
2. China is going to be a lonely superpower, with only pariah nations like N Korea, Pakistan, Myanmar and Sudan as allies.
Be proud
25. Jun, 2011
Don't be a sour grape.
Fact remains.. Chinese are the most progressive people on Earth.
Chinese do not need to be powerful militarily as you described as so important.
China helps developing country through trade not exchanging religion for goods… as did the West to the rest of the stupid world.
Fact remains.. the West is doomed to fail economically one by one simply because today is a global economy and the most efficient survives.
Not a single Western country can be considered healthy. All are dying a slow death as the rest of the world becomes more productive and unexploited by the West for centuries.
No you are wrong. China will have friends from all over the world as it is happening now. She trades not go to war.
Days of Western dominance is coming to an end. Hey both Euros and dollars are worthless.
ravenfort
25. Jun, 2011
Technology can be purchased, duplicated and augmented by collective intelligence. The Chinese cannot be underestimated. The sun rises in the East, or did the West forget.
dumb and stupid
25. Jun, 2011
Those, whose perception is mainly focussed at the material level to the exclusion of other aspects, need to quickly realise that reality is beyond the material. Knowledge not only needs to be compelmented with power, it needs to be complemented with its own power.Within Reality/Permanency, empowerment is through Unity whereas within Relativity/Transience/Humanity, empowerment is strictly through Division. When truth is always about “over” vs “under”, not only will there be no real solution, there will be no truth either, the truth being no longer so when there are only viewpoints/the-temporal. As such, “Democracy”, like “Communism”, is merely a religion, the circuituous tango between saviours and worshippers, religion being the knowledge which lacks real empowerment.
When you have the power but not its own knowledge [other than some knowledge], you will not be able to handle the power. Similarly, when you have the knowledge but not its power [not knowing what the knowledge is truly for], you will not be able to handle the knowledge. Being gross is just that, the lacking of the depth. Width is for complementing with its depth, a bat having the width of sound frequency but lacking its depth means that its has no perception of music much like a dog having the width of the olfactory but lacking the depth of perceiving filth and beauty. Sense is not for sense’s sake, it is for the sake of its sensibility.
Western culture is akin to the foliage system of a tree whereas Eastern culture represents the root system of that tree. One is the width and the other its/the depth, the solution to a problem being at its roots and not its consequences, prevention being better than cure. Do not, even for a split second, assume that you know/are everything just because you are able to physically destroy, destruction being of 3 dimensions, namely the subjective/emotional, oka “The Left” and the objective/material-cum-the projective/intellectual[“mental”], oka “The Right”. When your cup is full, ensure first that it is filled with sense and not nonsense like Fame, Fortune & Immortality, oka Vested Interests.
When a human lacks realisation [because mere knowledge is insufficient] of the unseen superset which moderates and guides the human subset of the 3 realms noted above, he starts replacing Reality with Relativity – to divide as opposed to uniting. When a humna has no realisation of his true duty, which is to be a true human, there being those who only look human but are not [but neither are they “lizards”, “aliens” and such nonense], he tries to become some god – to own, Ownership/Attachment Issues being the MO of Humanity. Reality is not about being religious, Reality is Religion [per se], to be religious being to own when the power is unattainable. Perhaps within three generations, people will be able to witness the destruction of all the religiosities within Humanity, that of the blind leading the blinded. Judge yourself and should you be successful, you will then no longer need to judge/own others, thereby replacing your Belief, Might and Prowess with Reality – complementing your Width with Depth. To have the courage and sincerity to open your real eyes as opposed to blindly finger-pointing as if you know it all which is realising very little in reality.
The road to reality is paved with many viewpoints but only one answer, every journey beginning with one single step. Without empowerment, knowledge is mostly meaningless. Without its realisation, knowledge is merely an accumulation whereas the empowerment of that knowledge is the flow which will offer the accumulation reality. The flow of Truth is Love and the flow of Love is Joy, “Flow” being “Tao”, to be joyful without ownership issues being the goal of Humanity. The minute a person divides, he is good for nothing [real], the principle of grossness being to make others gross and nothing else.
As Grandma had advised, “Charity Begins At Home”. No, not the zillionaires’ version but the real version which is that, “There is nothing constructive nor destructive that we could do to others without having done the same to ourself first” – each and everytime and without one single exception. Especially for the grossest of gross, those who are always re-presenting others as opposed to representing them. If true, are human beings stupid or are we merely dumb. Wrong again, it is both because Stupidity is merely Dumbness expressed and Dumbness is just Stupidity suppressed. It is benevolent ot realise [because mere knowledge lacks depth] that a Know-Eet-All is merely the Really-Know-Nuffin’. Afterall, whom do you know has a hand in his own evolution to being a human? Really? Next, you’ll be saying, “I’ll press the Big button so shut up”. Just like The Famous, The Fortunate and The Immortal are always threatening to do, being The Clever, The Mighty and The Cunning. And here the fairytale ends but the problem remains. Stupid-cum-Dumb humans who, at the next opportunity/latently, are the Dumb-cum-Stupid.
Those, whose perception is mainly focussed at the material level to the exclusion of other aspects, need to quickly realise that reality is beyond the material. Knowledge not only needs to be compelmented with power, it needs to be complemented with its own power.Within Reality/Permanency, empowerment is through Unity whereas within Relativity/Transience/Humanity, empowerment is strictly through Division. When truth is always about “over” vs “under”, not only will there be no real solution, there will be no truth either, the truth being no longer so when there are only viewpoints/the-temporal. As such, “Democracy”, like “Communism”, is merely a religion, the circuituous tango between saviours and worshippers, religion being the knowledge which lacks real empowerment.
When you have the power but not its own knowledge [other than some knowledge], you will not be able to handle the power. Similarly, when you have the knowledge but not its power [not knowing what the knowledge is truly for], you will not be able to handle the knowledge. Being gross is just that, the lacking of the depth. Width is for complementing with its depth, a bat having the width of sound frequency but lacking its depth means that its has no perception of music much like a dog having the width of the olfactory but lacking the depth of perceiving filth and beauty. Sense is not for sense’s sake, it is for the sake of its sensibility.
Western culture is akin to the foliage system of a tree whereas Eastern culture represents the root system of that tree. One is the width and the other its/the depth, the solution to a problem being at its roots and not its consequences, prevention being better than cure. Do not, even for a split second, assume that you know/are everything just because you are able to physically destroy, destruction being of 3 dimensions, namely the subjective/emotional, oka “The Left” and the objective/material-cum-the projective/intellectual[“mental”], oka “The Right”. When your cup is full, ensure first that it is filled with sense and not nonsense like Fame, Fortune & Immortality, oka Vested Interests.
When a human lacks realisation [because mere knowledge is insufficient] of the unseen superset which moderates and guides the human subset of the 3 realms noted above, he starts replacing Reality with Relativity – to divide as opposed to uniting. When a humna has no realisation of his true duty, which is to be a true human, there being those who only look human but are not [but neither are they “lizards”, “aliens” and such nonense], he tries to become some god – to own, Ownership/Attachment Issues being the MO of Humanity. Reality is not about being religious, Reality is Religion [per se], to be religious being to own when the power is unattainable. Perhaps within three generations, people will be able to witness the destruction of all the religiosities within Humanity, that of the blind leading the blinded. Judge yourself and should you be successful, you will then no longer need to judge/own others, thereby replacing your Belief, Might and Prowess with Reality – complementing your Width with Depth. To have the courage and sincerity to open your real eyes as opposed to blindly finger-pointing as if you know it all which is realising very little in reality.
The road to reality is paved with many viewpoints but only one answer, every journey beginning with one single step. Without empowerment, knowledge is mostly meaningless. Without its realisation, knowledge is merely an accumulation whereas the empowerment of that knowledge is the flow which will offer the accumulation reality. The flow of Truth is Love and the flow of Love is Joy, “Flow” being “Tao”, to be joyful without ownership issues being the goal of Humanity. The minute a person divides, he is good for nothing [real], the principle of grossness being to make others gross and nothing else.
As Grandma had advised, “Charity Begins At Home”. No, not the zillionaires’ version but the real version which is that, “There is nothing constructive nor destructive that we could do to others without having done the same to ourself first” – each and everytime and without one single exception. Especially for the grossest of gross, those who are always re-presenting others as opposed to representing them. If true, are human beings stupid or are we merely dumb. Wrong again, it is both because Stupidity is merely Dumbness expressed and Dumbness is just Stupidity suppressed. It is benevolent ot realise [because mere knowledge lacks depth] that a Know-Eet-All is merely the Really-Know-Nuffin’. Afterall, whom do you know has a hand in his own evolution to being a human? Really? Next, you’ll be saying, “I’ll press the Big button so shut up”. Just like The Famous, The Fortunate and The Immortal are always threatening to do, being The Clever, The Mighty and The Cunning. And here the fairytale ends but the problem remains. Stupid-cum-Dumb humans who, at the next opportunity/latently, are the Dumb-cum-Stupid.
Gradual ascent of Chinese economy | SurviveinChina China Blog News
25. Jun, 2011
[...] state where it is second only to the US but according to the IMF, likely to overtake it by 2016. Full Story >> Share/Bookmark 2016, ascent, chinese economy, [...]
Second hand smoke
25. Jun, 2011
But most of the chinese people are just cheap labor.China also must fight a continual war against thought crimes.That must be very expensive.Theres the one child policy and the low cost organs trade.China sucks
John
18. Jan, 2012
You need to go to school, learn something in Macroeconomy and then say something. Your comment is just a conclusion from too much watching films.
Bonnie
26. Jun, 2011
There ISN''T any Rising Chink economy.
I say :chink" because it's the Reds, the Communist Government…or has everybody forgotten?
They claim : "stupid Westerner, we no longer have "Communism, it's now, blah, blah."
SO!? The govenment is STILL abusive, still repressive, still murderous. there still is censorship. There production plants are a mxture of sweatshops and slavery, in which young girls spend long hours, earning pennies a day.
And there is NO QUALITY CONTROL. Not for their domestic goods, nor for their exports.
And, the government certainly does NOT listen to, or care what the farmers, or the poor people want.
The chink government deserves that name, that insult.
What has happened, is that the Clinton Admin, and the ones after, gave Original U.S. Patents, and original high tech AWAY to Red China.
Took away the trade from The island Republic of China, to give it to the Communists, in the Mianland.
All the The economic " success" is just outward, a front, in the big cities, the coastal cities, the "success" is because, the U.S. took away jobs and production from OUR American People to give to the Reds.
The "success" is only the Bankers /Stock Market in Red China, in cities like Hong Kong, or Shanghai, but the Interior, IS A MESS- where the majority of the poor Chinese People live. The Reds have that glittery new train, that SOOO impresses those with amnesia, but there IS the problem of the Yangze River Dam, with all the cracks springing up.
Red China doesn't have any rising economy. It's failing!