2040 China, a 123 trillion dollar economy?!?!?!

[intradaybill]

Quote from heech:

Whatever you call it, riddle me this: what is it about *you* that leads you to believe you (and your children) will be perpetually 5x wealthier than people working twice as hard as you are?

First of all, try to keep this on a non-personal level and do not make any references to me, my kids, my work or anything else because you have no idea what I do, how much I have worked in my life, etc.

Then, learn that hard work and wealth have no corelaltion. Otherwise, all the slaves would have been rich. Your thinking defies common knowledge, history and experience.

 

[intradaybill]

Quote from MohdSalleh:

Papermaking....transmitted from China to Europe via the Arabs after the Battle of Talas in modern day Kyrgyzstan when the arabian army seized some chinese paper makers.

Printing....The chinese invented printing 1000 years before Gutenberg in the West and he might have been influenced by Chinese type moving presses, but the diffusion is unclear.

You forgot Indian magic carpets...get real...

 

[MohdSalleh]

Quote from intradaybill:

here isn't a breakthrough, other than gun powder AFAIK, that can be attributed to Chinese or to any other nation in the East.

http://en.wikipedia.org/wiki/List_of_Chinese_inventions

 

[david666]

The same thing happened with Japan in the 1970s, hitting 8 percent growth in GDP...being predicted to take over the US because of their free market. We saw what happened there.

Their growth is not sustainable. 66% of their population is broke farmers who can barely afford to live.

I am tired of seeing all these posts saying how China will take over the US.

 

[JoePaterno]

Quote from MohdSalleh:

Okay so by his calculations, USA will still have highest GDP per capita but how can the world support another 1 billion + people with 2x the GDP per capita of the average European? Do we have even have enough resources for that?

I also lol'ed at "European culture continues to prize long vacations, early retirements, and shorter work weeks over acquiring more stuff, at least in comparison to many other developed countries,such as the United States." Maybe thats where the USA is headed


$123,000,000,000,000*
*China’s estimated economy by the year 2040. Be warned.


Robert Fogel is director of the Center for Population Economics at the University of Chicago Booth School of Business and winner of the 1993 Nobel Prize in Economics

In 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. China's per capita income will hit $85,000, more than double the forecast for the European Union, and also much higher than that of India and Japan. In other words, the average Chinese megacity dweller will be living twice as well as the average Frenchman when China goes from a poor country in 2000 to a super rich country in2040. Although it will not have overtaken the United States in per capita wealth, according to my forecasts, China's share of global GDP -- 40 percent -- will dwarf that of the United States (14 percent) and the European Union (5 percent)30 years from now. This is what economic hegemony will look like.

And Europe? Europe, by which I mean the 15 earliest EU members, faces twin challenges of demography and culture, its economic future burdened by a mix of reproductive habits and consumer restraint. The population of Western European countries has been aging rapidly, and that is likely to continue over the next several decades.

Europe's culture confounds economists.Citizens of Europe's wealthy countries are not working longer hours to make higher salaries and accumulate more goods. Rather, European culture continues to prize long vacations, early retirements, and shorter work weeks over acquiring more stuff, at least in comparison to many other developed countries,such as the United States.

To the West, the notion of a world in which the center of global economic gravity lies in Asia may seem unimaginable. But it wouldn't be the first time. As China scholars, who take a long view of history, often point out, China was the world's largest economy for much of the last two millennia.(Chris Patten, the last British governor of Hong Kong, reckons China has been the globe's top economy for 18 of the past 20 centuries.) While Europe was fumbling in the Dark Ages and fighting disastrous religious wars, China cultivated the highest standards of living in the world. Today, the notion of arising China is, in Chinese eyes, merely a return to the status quo.

Full Article:
http://www.foreignpolicy.com/articles/2010/01/04/123000000000000?page=0,0

Yes, China will export 3X what the world uses. China is highly dependent on what the world buys from it. But unless Venus, Mars, Jupiter and a few other planets start importing their goods, this is nothing but sheer speculation. Similar to the people here who have a system that will make them a trillionaire in 26 months...

China depends on a bunch of idiot countries to keep buying their stuff, while they try to buy little back from these countries.

 

[tradingjournals]

China would get old, before it gets rich, because of the one child policy of the past. The stock market in that country would fall rapidly when the time comes, particularly given the psychology of the Chinese investing crowds.

 

[heech]

Quote from intradaybill:

First of all, try to keep this on a non-personal level and do not make any references to me, my kids, my work or anything else because you have no idea what I do, how much I have worked in my life, etc.

First of all, perhaps you're not familiar with "you" as a literary device... but not only do I not have any idea what you or your kids do, I don't really care. None of us on this thread are discussing your personal qualities.

Replace "you" with "average American", and revisit the discussion.

Then, learn that hard work and wealth have no corelaltion. Otherwise, all the slaves would have been rich. Your thinking defies common knowledge, history and experience.

Well, you're the second to make the above comment. Really makes me optimistic about the future of America! I suspect the earlier generations that really made America great are more or less turning over in their graves that this is now something of an established mindset. I certainly don't feel this way, and I certainly will do my best to make sure my children don't adopt such a mindset.

"Slaves" are not at all a good counter example. After all, hard-working slaves had as much wealth as lazy slaves: zero. Slave-owners, on the other hand, were able to acquire wealth by holding political and military power and dictating how it were to be distributed. That's what you're really implying. Well, hopefully we're speaking of the modern globalized world where capital (human and financial) flow more or less freely. Let's talk about that context, shall we? (And within the slave-owner class, I would speculate that greater wealth was still correlated with harder work.)

Let me help you out with this discussion. Before we talk about (average) Americans versus (average) Chinese in 2040, let's talk about 2010. Why is the average American today 10x more economically productive (indisputable) than the average Chinese?

In my eyes, one answer: capital. America has accumulated a great deal more financial and intellectual capital.

Intellectual capital: the American working population in 2010 is FAR better educated than the Chinese working population. Probably something like 1-3% of the Chinese working population has a college degree, and probably only 20-30% have even a 12th grade education... I suspect the comparable American ratios are 10x and 3x greater, respectively. The American working population is also far more skilled than the Chinese working population. There are three generations of workers in the workforce, with a great amount of expertise in the system. In China, the *most* experienced entrepreneurs/lawyers/accountants will only have about 20 years of working experience... and the vast majority will have far less.

Financial capital: Americans make more because they're already wealthy. Three generations as an industrial superpower means American households and corporations control a vast amount of financial capital. Majority of American domestic spending gets recycled in the American economy, American industrial infrastructure remains far superior, etc, etc, etc. Make 3% a year (average GDP growth) off of $1mm, and that $30k in new growth is still a lot more than the Chinese economy growing 8% a year off of $50,000 (=$4000).

This is why Americans are wealthy today, and why basket-weavers in Indonesia or engineers in China are poor (in relative terms). Now, I ask you again... what specific factors preclude China from being far wealthier in 30 years? Why will the average American child born today make much more than the average Chinese child born today?

On my part, I believe the human capital gap will have closed, and I believe the financial capital gap will also have closed.

 

[heech]

Quote from tradingjournals:

China would get old, before it gets rich, because of the one child policy of the past.

This is nonsense in my mind. Clearly the population will get older, and in other nations that would clearly imply the population will get *poorer*.... because workers drop as a % of overall population. In many countries, having one worker economically support two parents and four grandparents is a recipe for poverty.

The situation in China is very different. The "older" generations are literally barely literate rice farmers, while the "newer" generations replacing them are often educated engineers. In my opinion, 1 educated engineer is far more economically productive than 4 illiterate rice farmers. Growth will still be affected, but it will not be as dramatic as some seem to hope.

 

[tradingjournals]

1. Heech: "Why is the average American today 10x more economically productive (indisputable) than the average Chinese?"

Because the American is involved in high margin businesses, while the Chinese is involved in low margin businesses. Example: the American designs a better chip (high margin), while the Chinese manufactures the chip (Low margin). A 25% margin is better that 25 times 1% margin. If you doubt this, check the stock valuations.

2. Chinese engineer is currently involved in low margin risky businesses because they are movable. Singapore is probably the only country in the world that understood this phenomenon and is heavily giving cash to American universities to position itself in high margin businesses, but Singapore might fail because innovation cannot be imported because it resides in the mind of individuals. It however has pre-requisites such as a free, and clean society ruled by law. They have the "clean" part. They need rule of law and freedoms, and an education system that values innovation.

 

[MohdSalleh]

Quote from tradingjournals:



2. Chinese engineer is currently involved in low margin risky businesses because they are movable. Singapore is probably the only country in the world that understood this phenomenon and is heavily giving cash to American universities to position itself in high margin businesses.

like what?

I know they have invested heavily into Biotech