Forty years ago, after a long period of economic stagnation, China was not in the world’s top eight economies. Today, thanks to a breathtaking social and economic transformation that began in the late 1970s, China is on track to overtake the United States as the world’s number one economy within a few decades, if not sooner. By some measures, it has already done so. We are living in what many are now calling ‘The Chinese Century’.
China’s economy is the second-largest in the world,behind only the United States. But after three decadesof spectacular growth, China is now moving into a slowergrowth phase – an inevitable result of its transition froma developing economy to a more mature, developedeconomy. In the 1980s, 1990s and early 2000s, China’sannual GDP growth frequently exceeded 10 per cent,with an estimated 2019 growth of 6.3 per cent, althoughthis is likely to be closer to 6 per cent with the impact of the US-China trade war.
In coming years, the International Monetary Fund (IMF)forecasts China to continue growing at a rate of 6.3 percent in 2019 and 2020 and 6 per cent in 2021. Theseforecast figures still put it well ahead of most othermajor economies’ growth rates and keep it on track toeventually overtake the US as the world’s largest economy.Manufacturing, services and agriculture are the largestsectors of the Chinese economy – employing the majorityof the population and making the largest contributionsto GDP. Since 1949, the Chinese Government hasbeen responsible for planning and managing the nationaleconomy. But it was only after 1978 – when DengXiaoping began market-based reforms –that growth beganto take off, averaging 10 per cent annually for some 30years. During that period, the size of the Chinese economygrew by roughly 48 times, from USD 168.367 billion(current prices) in 1981 to USD 11.01 trillion in 2015.
Since the introduction of Deng Xiaoping’s economicreforms, China has what economists call a socialistmarket economy – one in which a dominant state-owned enterprises sector exists in parallel with market capitalism and private ownership. It was the active encouragementof private enterprise from 1978 that enabled China to kick-start the long expansionary boom that continuestoday. Private businesses now produce more than half ofChina’s GDP and most of its exports. They also createmost new jobs.
The irresistible rise of China has implications and consequences for us all on so many levels and it largely comes down to one word: opportunity. For Australia, and Australian businesses in particular, has there ever been an opportunity like China?
Under the socialist-market model, the ChineseGovernment plays a direct role in managing the economythrough its five-year plans that set goals, strategies andtargets. The five-year plans in the 1980s and 1990sfocused on market-oriented reforms, while the pasttwo five-year plans have focused on promoting morebalanced growth, better wealth distribution and improvedenvironmental protection. The current five-year planfocuses on increasing China’s competitiveness throughmore efficient and increasingly advanced manufacturing onthe east coast, attracting labour-intensive manufacturingto central provinces and increasing domestic demand.
Economic growth, which has in recent decades been drivenby export-led manufacturing, is now becoming morereliant on domestic consumption. The resulting increasein consumption spending represents a major opportunityfor Australian businesses that are able to successfullytarget their products and services to an increasinglyaffluent Chinese public. There is also encouragement forforeign businesses to invest in key areas such as advancedmanufacturing, energy saving, environmental protectionand modern services. Tightened regulation on energyconservation and environmental protection also presentsan opportunity for Australian businesses.
The perception of China since the 1980s as a predominantly low-cost manufacturing hub, where it effectively served as an inexpensive producer for global brands, is changing as the economy grows. Increasing labour costs and an ageing workforce have caused manufacturers’ pro t margins to decline steadily. As a result, while cost rationalisation is still an attractive feature of the China market, global and local businesses are now starting to change strategies to tap China as an engine for growth. Currently, approximately one-third of global business leaders rank China among their top three regions for generating growth over the next year.
Businesses contemplating establishing operations inChina should be aware that, despite long-held perception,average wages in China have been climbing on the backof the country’s economic emergence, to the point whereit is less a low-cost hub as it is a dynamic and complex economy. However, the recent cooling of the Chineseeconomy has blunted the wages surge after a double-digitincrease in 2009, as noted by the International LabourOrganisation. Nevertheless, average real wages in stateownedand other urban-based enterprises grew by 9 percent in 2016, while those of workers in private enterprisesclimbed 8 per cent in 2016. Reflecting the Chinese‘boom’ was the more-than trebling of the average annualsalaries of city workers from RMB 14,000 in 2003 toRMB 74,000 in 2017. Accompanying this new wealth,however, were sharply increased living costs.
For Australian businesses, opportunities in China havesprouted across a huge – some might even say bewildering– range of industries, market sectors and geographiclocations. Rapidly rising income levels in China and massmigration from rural to urban areas have created an abundantly large class of urban consumers demandingimproved housing, a cleaner environment, overseas travel,better education, a higher protein diet and an enhancedchoice of financial services. From the sophisticatedconsumers of developed cities such as Beijing, Guangzhouand Shanghai, to the growing middle classes in lesserknowninland cities, the newly industrialised China is averitable smorgasbord of opportunity.
This is not to say that doing business in China is withoutunique challenges and complications. Apart from languageand cultural barriers, which can be considerable, foreignbusinesses must navigate issues ranging from complexbureaucracies, challenges in intellectual property (IP)law enforcement, to quality control and the sheer,overwhelming size and diversity of the country. There is alsothe overarching challenge of the different way that businessis conducted in China compared with other countries, thelarge and highly competitive market for both domestic andforeign businesses, and the complexity of understandingand selling to the Chinese customer.
The rewards can be immense for Australian businesseswilling to put in the necessary preparation and hard workto address these challenges and successfully establishin China. The Chinese Government has continuedto introduce policies aimed at raising standards andencouraging more trade and investment, both inboundand outbound.
Want to learn more? Explore our other China information categories or download the China Country Starter Pack.
In its World Economic Outlook released last week, the International Monetary Fund said China is “rebounding strongly” following the reopening of its economy. The country's GDP will grow 5.2% this year and 5.1% in 2024, it predicted.
China's GDP in the first quarter of 2023 expanded 4.5 percent over the same period in 2022, higher than previous forecasts. Reuters, for example, forecast a 4.0 percent growth in the first quarter based on its surveys of 70 economists.
Over the medium term, China's economy continues to confront a structural slowdown. Potential growth has been on a declining trend, reflecting adverse demographics, tepid productivity growth, and rising constraints to a debt-fueled, investment-driven growth model.
There is still much work to be done to propel China to the top of the world's economy, but it is certainly possible that the Chinese economy can surpass the power of the US by 2050. It may also be too early to make definitive projections of China's future.
China's years of high GDP growth meant that its economy ballooned more than tenfold between the turn of the century and 2021, from $1.2 trillion to nearly $18 trillion, according to World Bank data. By contrast, the GDP of the United States, the world's largest economy, is a little more than double its size in 2000.
Outlook Across Key Economic Metrics. The speed and the extent to which inflation returns to pre-2021 levels depend on a number of key factors. In all scenarios, we expect to see a material softening of inflation in 2023, returning to target inflation levels of 2% by 2024 in the case of a 'soft landing.
If China were on track to grow at 4–5% a year to 2050, as many seem to hold, it follows that China would be on course to become the world's most dominant economy by far. With 2–3% growth, China's future looks very different. China would still likely become the world's largest economy.
China's GDP should grow 5.7% per year through 2025 and then 4.7% annually until 2030, British consultancy Centre for Economics and Business Research (CEBR) forecasts. Its forecast says that China, now the world's second-largest economy, would overtake the No.1-ranked U.S. economy by 2030.
The U.S. currently has the largest economy in the world by far with $23 trillion in 2021 GDP, according to the World Bank's data, while China has the second-largest GDP at $18 trillion and India the sixth-largest at $3 trillion.
In this line, data acquired by Finbold indicates that as of April 12, China's national debt amounted to $14.34 trillion, ranking second globally. This value reflects a year-on-year (YoY) increase of $3.81 trillion, or 36.18%, compared to the $10.53 trillion recorded in 2022.
Still, China's economic headwinds could lead to major impacts. Any slowdown in the Chinese economy will create new price pressures in the U.S. if its export prices rise — and hurt the demand for U.S. products.
As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
According to Policy Brief No. 153 from the United Nations Department of Economic and Social Affairs (UN DESA), entitled “India overtakes China as the world's most populous country”, between 2023 and 2050, the number of persons aged 65 or over is expected to nearly double in China and to increase by more than double in ...
At the end of last year the bank revisited its calculations. It now thinks China's economy will not overtake America's until 2035 and at its high point will be only 14% bigger (see chart).
According to a recent report by Harvard University, “From economic complexity growth estimates, India is growing at the annual list at the rate of 7.9 percent as the fastest growing country for the coming decade.
The United States is the richest country in the world with the highest GDP, as of 2021. China is the second richest country in the world with a $17.734 trillion GDP.
Investors in Japan and China hold significant shares of U.S. public debt. Together, as of September 2022, they accounted for nearly $2 trillion, or about 8 percent of DHBP. While China's holdings of U.S. debt have declined over the past decade, Japan has slightly increased their purchases of U.S. Treasury securities.
The threat of a U.S. recession remains alive in 2023. The consensus estimate on the probability of a meaningful downturn in the American economy in the next 12 months is at 65%, according to Goldman Sachs Research. But our own economic analysis rates that probability much lower, at 35%.
It will take much longer to claw back the rest of the lost ground. By mid-2022, U.S. GDP should be back up to where it was before the COVID-19 crisis began, according to RBC GAM. Previously, it had anticipated this would occur by December 2021.
U.S. GDP gained 1.1% in the first quarter of 2023, and the Atlanta GDPNow model is currently projecting another 1.7% gain in U.S. GDP in the second quarter. By this common definition, we are not heading for a recession.
"China will be unable to surpass the U.S. economically, even after 2036," JCER said, due to slower productivity gains coupled with labor shortages. The Communist Party of China has set two long-term targets for 2035 and the middle of this century in amendments to the constitution made in October.
What is MCF? MCF is the CCP's strategy to develop the People's Liberation Army (PLA) into a "world class military" by 2049. Under MCF, the CCP is systematically reorganizing the Chinese science and technology enterprise to ensure that new innovations simultaneously advance economic and military development.
"China would overtake the United States to become the world's largest economy in nominal US dollar terms by about 2030," the report's authors conclude. "But it would never establish a meaningful lead ... and would remain far less prosperous and productive per person than America, even by mid-century."
Answer and Explanation: It is unlikely that China's economy will collapse if U.S. stops buying Chinese goods. Trade is an important part of any economy, and a very important part of China's economy. According to the World Bank, exports account for 20% of China's gross domestic product.
China has shifted purchases away from the United States to reduce its reliance on US suppliers, but US farmers remain highly dependent on the Chinese market. In 2022, around 19 percent of US agriculture exports went to China, up from 14 percent in 2017 and 13 percent in 2009.
Switzerland. Switzerland, officially called the Swiss Confederation, is a small country in Central Europe made up of 16,000 square miles of glacier-carved Alps, lakes and valleys. It's one of the world's wealthiest countries, and has been well-known for centuries for its neutrality.
The median salary in China is 26,800 Yuan (USD 3,855) per month. That means half of the population draws an average income less than the median salary. In contrast, the other half earns more than the median salary.
At the end of 2021, of the 98 countries for whom data was available, Pakistan ($27.4bn of external debt to China), Angola (22.0bn), Ethiopia (7.4bn), Kenya (7.4bn) and Sri Lanka (7.2bn) held the biggest debts to China.
China and Japan are the largest foreign investors in American government debt. Together they own $2 trillion — more than a quarter — of the $7.6 trillion in US Treasury securities held by foreign countries.
Many Americans continue to view China as a threat to the United States, both militarily and economically: 65% say China is at least a somewhat serious economic threat to the U.S. and 57% say it is at least a somewhat serious military threat.
Banks would close. Demand would outstrip supply of food, gas, and other necessities. If the collapse affected local governments and utilities, then water and electricity might no longer be available. A U.S. economic collapse would create global panic.
China's economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy.
How much does Russia owe? About $40 billion US in foreign bonds, about half of that to foreigners. Before the start of the war, Russia had around $640 billion US in foreign currency and gold reserves, much of which was held overseas and is now frozen.
China's demand for Treasurys helps keep U.S. interest rates low. It allows the U.S. Treasury to borrow more at low rates. Congress can then increase the federal spending that spurs U.S. economic growth. Owning U.S. Treasury notes helps China's economy grow.
It's simple. For years, what the U.S. government spent on those things was far greater than the amount of money it had brought in to pay for them. That stacked up to that $31.4 trillion in debt we have now.
The United States remains the most powerful country in the world, followed by China and Russia. However, the balance of power may shift in the coming years as countries like India and Brazil continue to grow economically and assert themselves on the global stage.
India has overtaken China as the world's most populous country, according to UN population estimates, the most significant shift in global demographics since records began.
In other words, on a proportional basis, China is now roughly 75 percent as advanced in innovation and advanced-industry production as the United States. If this relative growth continues apace, China will surpass the United States by 2035.
China is on pace to surpass the United States in 5th generation fighter production, a dynamic shift with significant implications for the balance of air power in the Pacific.
India is expected to overtake Germany in terms of GDP in 2025 and Japan in 2027 to become the third largest economy after the U.S. and China. Modi has pledged to make India a developed country by 2047, when it celebrates the 100th anniversary of its independence.
In 2022, China's economy grew at its slowest rate since the 1970s. Long-term projections of potential economic growth rest on three factors: demographics, capital investment, and productivity.
China's economy expanded 4.5 percent in the first quarter of 2023, marking the highest growth since the first quarter of last year. This was above the 4 percent forecast made by Wind and Reuters, which indicates that China's economic recovery is right on track.
China's economy has grown to one of the largest and most powerful in the world over the past few decades. Driven by industrial production and manufacturing exports, China's GDP is actually now the largest in terms of purchasing power parity (PPP) equivalence.
The U.S. currently has the largest economy in the world by far with $23 trillion in 2021 GDP, according to the World Bank's data, while China has the second-largest GDP at $18 trillion and India the sixth-largest at $3 trillion.
As per projections by IMF for 2021, United States is leading by $6,033 bn or 1.36 times on an exchange rate basis.The economy of China is Int.$3,982 billion or 1.18x of the US on purchasing power parity basis.
The age of “peak China”, as they call it, is upon us—and it is far less Olympian a summit than most had predicted. In 2011 Goldman Sachs projected that China's GDP would surpass America's in 2026 and become over 50% larger by mid-century.
In this line, data acquired by Finbold indicates that as of April 12, China's national debt amounted to $14.34 trillion, ranking second globally. This value reflects a year-on-year (YoY) increase of $3.81 trillion, or 36.18%, compared to the $10.53 trillion recorded in 2022.
Economic momentum is slowing, amid higher interest rates and a banking crisis, new gross domestic product report shows. The U.S. economy wobbled in the first months of 2023, growing at an annual rate of 1.1 percent, as higher interest rates and a banking crisis dragged down activity across sectors.
We expect the US economy to go into a recession as we enter 2023. Following a large drop in US gross GDP in 2020 due to the impact of the COVID-19 pandemic, the US economy experienced rapid growth for much of 2021.
India. India's GDP grew by 8.7% in 2021, reaching $3.1 trillion, making it the fastest-growing major economy in the world. Furthermore, India's per capita income has doubled in the last decade, and poverty rates have declined significantly.
With an GNI per capita of $10,610 in 2020, China is an upper middle-income country. The poverty line for an upper middle-income country is $5.5 per day at PPP. As of 2020, China has succeeded in eradicating absolute poverty, but not the poverty defined for upper middle-income countries which China belongs to.
Officials in Beijing often like to point to the tighter monetary policies they pursued during the coronavirus pandemic as a key reason for their low rates of inflation.
Introduction: My name is Lidia Grady, I am a thankful, fine, glamorous, lucky, lively, pleasant, shiny person who loves writing and wants to share my knowledge and understanding with you.
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