Reader Mark sent me this article that says that an IMF report predicts that in 2016, China will overtake the US as the world’s largest economy. There is some dispute about this because economic measures are hard to quantify, especially when purchasing power is factored in, as is done here. But the disagreements center on the date of overtaking. There seems to be a consensus that China will overtake the US at some point in the fairly near future.
As one analyst explains, “What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That’s very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages.”
The article speculates on the psychological effects on the US public of losing its place as the worlds biggest economy, a position it has held for over a century. My feeling is that the people in the US already have the sense that they are rapidly losing ground economically and so this will not come as a shock. What will come as a shock is when the US is no longer the world’s greatest military power. That will take longer to arrive since military power lags behind economic power.
I remember seeing that article. I thought it was blatant sensationalism. The writer demonizes China without any justification and he hardly comes across as being very knowledgeable about the country. Maybe he’s correct to do so. I don’t know much about the country but his reasoning is baseless. It was pretty clear that the article had more to do with the American recession than anything else.
I’m no economist but I can’t help but feel like the “threat” of China is kind of silly. The country is huge. It could have every single person in poverty and still have a larger economy because it’s just that much larger of a country.
I also can’t help but feel like China is going to go through a lot of growing pains in the next decade anyway. From pollution, low birth rates, an aging population, a large boy/girl disparity, and a huge wealth disparity. I only know the tip of the iceberg but I’m sure they’re going to have a ton of internal issues.
Is America going to remain a dominant world power? No. Should it? No. There are plenty of other industrialized countries around the world. It’s time we realized that we’re not the only country in the world.
It should be obvious to many that a country with a much larger population, an authoritarian government intent on expanding trade (in this case particularly exports,) in a ‘free market’ will eventually become a larger economy that one without some or all these characteristics.
I don’t agree with the analyst who says that the US traded jobs for profits. Jobs, profits etc, are by products. The real variables are; Free Trade, Population, Cost of Labour, Authoritarian Government etc.
What is the article trying to say? I don’t somehow get it. But I guess the following paragraph says it all.
“They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony.”
In other words, mourn the demise of the harmless giant and beware of the dragon!
well, no one how is the economic changes each year. even some economic analysts come with this kind of prediction, it doesn’t mean their prediction will go for real. however, if this prediction becomes true i won’t get shocked. i have heard many times that China also has great power in increasing their economic growth.
China is going to go through a lot of growing pains in the next decade anyway.
I’m definitely of the camp that China is a not a monolithic and unstoppable juggernaut. It has its own problems, and increasingly it will have to deal with its own challenges in realms such as income disparity and environmental pollution. That being said, it’s obviously been doing a few things right so far.
I feel that China has a ton of growing pains ahead.
While their economic power will probably pass the US’s soon, I think that China will increasingly
rely on more “mature” economies to model their own.
That said, we (the US) need to “tighten up” our own economy. We have been the benchmark for economic success but are in danger of losing that title.
Some much needed economic reform is at hand if we are to remain competitive in this new and evolving global economy.