Can China keep on growing at 15-16% per year? My investment advisor claims that China and India will surpass the USA in GNP, by 2015 or so. I was just wondering though-does China have any big weaness that could halt the growth? Say oil-can China keep increasing its oil consumption? Or will China and India find limits to growth? Could China be laid low by an environmental disaster? (like a massive outbreak of water-borne disease?
Your investment advisor is grossly over exaggerating. And if you’re looking at equities, very few listed companies are of what most people would call investment quality.
Growth is much more like 8-10% range, but Chinese statistics are notoriously unverifiable.
Long term risks: greying population, environmental degredation, lack of water, petroleum dependance.
Other risks: global economic slowdown will reduce demand for chinese goods. quality and safety issues may also slowdown exports.
Pretty much the main issues I see.
China has made herself into a gigantic ecological experiment, the kind of experiment that would not be ethical. It appears (Heaven knows only a fool would claim certainty…) that it is coupled with an experiment in laissez fucking insane capitalism. It would be of abstract interest if there weren’t so many people in a position to suffer.
But its monstrous. The ruling class has doffed thier Mao jackets and hats for suits and ties, studying spreadsheets rather than Little Red Books, with no more regard for the fate of their people than the most heartless Stalinist.
There may not ever be any dramatic moment, no plague, no disaster, just the inevitable degrading of the environment that sustains human existence. People will be born healthy enough, I suppose, but will live just long enough to be exploited for their labor, and then die without being tiresomely old.
You misspelled Crony Capitalism.
As for the OP, China might well surpass the US in GDP within a decade or two. But remember, China has 4x the population, so it’s per capita GDP still has a long way to go. But 15% growth rate is not sustainable over long periods of time. China is growing rich because it makes stuff inexpensively and sells it to richer countries. As China becomes richer and richer, it will no longer be able to make inexpensive stuff. Remember Japan in the 1950s and Korea in the 1980s?
It is definitely monstrous in some respects, but China has become a much better place for its people since 30 years ago. I’m much more worried about the almost utter disregard for the environment that pervades most of the country. There are occasional oases of conservation and protection, but often the folks doing things in the name of the environment are being just as exploitative and damaging.
To be fair, I think the highest national leaders are aware of the problem and some may sincerely want things to change, but locals are very good at fooling or bribing inspectors and doctoring statistics. The corruption (even from my limited vantage point) is indeed staggering.
And the possibility civil conflicts erupting in the provinces?
Are the provinces still being ignored when they aren’t being exploited by Beijing? That could prove a problem if they see the capitalists in Shanghai getting rich on their labor, and there are still lots of people with extensive education in what to do about it, from operas to AK47s.
It’s common for countries to have high growth rtes during the transition to a modern, capitalist economy. But as time goes on, the ‘low hanging fruit’ gets picked, and incremental gains become increasingly difficult. In addition, the economy must change dramatically and rapidly as the comparative advantages of the country shift. Look at South Korea: Fifty years ago it had the advantages of a third world nation. Primarily, cheap labor. ‘Sweat Shops’ abounded. But as more and more foreign capital flowed into the country, wages rose and eroded South Korea’s comparative advantage in cheap labor. So South Korea transitioned into an industrial economy, and now it’s transitioning to a knowledge based economy.
The biggest risk facing China is that its ‘capitalism’ sill has a strong element of state control, and the population lives under an authoritarian government. This creates a lck of economic flexibility which will inhibit Chin’s ability to adapt.
I heard one of the biggest demographic problems facing China is that it’s population control policies have left it with a shortage of women. While this may not seem like a big problem, try to imagine a country of over a billion dudes with all the frustration of a bar at closing time when the only thing left are drunk guys and a few skanks.
To be fair, the US was probably no better at protecting the environment when it was at a comparable stage of development. That doesn’t excuse their actions, but when people are poor, and much of China is still poor, they simply aren’t going to care as much.
It’s pretty bad. Only about 25% of China is benefiting from the economic boon-- those in the urban areas. Most of China still lives a poor, rural lifestyle. And you can’t just pick up and move to the cities-- you have to have permission from the government to do so. Further, the government is cutting back on services it used to provide, like schooling, and the rural folk find their yuan stretched thinner and thinner. The government would say it is trying to manage growth, and there might be some truth to that, but if the gap between rural and urban areas continues at anything near the current pace, there will be trouble in River City.
Still, the Chinese have proven themselves to be masters of walking this tightrope, and suppressing dissent. Who knows how long they will be able to pull this off…
This is a serious problem. It’s one of the factors leading to the cultivation of Islamist extremism in Saudi Arabia. If the sexual imbalance in China gets too far out of whack, expect it to lead to political instability and a more militant population.
It did? Can you elaborate? I’ve never heard that before.
If. I’d have to see the actual numbers to decide how much of a problem it is. I know, qualitatively, that this is a problem, but I don’t know how to quantify it. Maybe homosexuality will burst on the scene in China and solve the problem. Considering that something like 3% of the male population is probably exclusively homosexual, maybe the problem isn’t as big as it might seem.
I agree with Sam. China is still passing through the easy growth period of capitalism - it’s filling up a void. But at some point its economy will reach maturity and then its growth rate will drop to a more typical level. The same things happen with businesses - you can go through a period when the market for personal computers or VCR’s or the expansion of Blockbusters or Starbucks is growing by ten or twenty percent a year but you can’t sustain that rate. At some point you’ll have sold a product to every likely customer or build a franchise in every likely town. China will reach the point where its available business opportunities have all been taken.
China’s unusual demographics are also be a wall that their society will eventually hit. I predict that like any imbalance the male-female ratio will cause some mass movement. Either a lot of Chinese men will emigrate to places with better business opportunities and single women (which will cause China a drain of its citizens who have the most iniative) or single women in other countries will be encouraged to immigrate to China (which will cause Chinese society to have to absorb millions of new people who were not raised in Chinese culture). Either way China will experience some changes.
I recall that the Chinese peasant was the first benefit -massively- by Deng’s liberalization.
I honestly don’t know the details about China’s growth. Then again, I don’t know where you picked that 25% number from.
Yeah, but there are still millions of sufficiently educated citizens that can be put to work in factories: with GDP per head of $1470, I’m guessing that the environmental and regulatory limits might hit before the usual ones do.
US GDP: $11,711.8 billion, #1 in world
China: 1931.7 billion, #6 in world.
US Growth 1994-2004: 3.3%
At those rates, China surpasses the US in… ~2037. Not 2015. And I would expect the growth gap to narrow long before then.
I don’t personally see this as a big risk. What is overlooked in the China modernization story is that there are between 100-200 million migrant workers. These are peasants from the countryside that work in the export factories, construction, as domestic help, etc. They have a pretty hard life but for the first time in Chinese history, they also have wealth accumulation. This is real money that is going into the impoverished countryside.
If you go to the chinese countryside now, pretty much there are no people between 20-45 there. Except when they come home to help with the harvest. What you have are the kids and the elderly. Everyone else is out making money.
Again, it’s not a lot of cash, but to the impoverished countryside, it’s the first time in Chinese history there is actually an infusion of cash at the grass roots level. It’s changing the ball game. People are starting micro businesses, and even feedger businesses into the export machine, one can buy legal support and some justice, etc,
Media reports of countryside disturbances I think are overblown, and reading waaaay to much into isolated incidents. I spent 3 years in the impoverished Chinese countryside in the 1980’s, and life there is about 100 times better than it was before. It lags the city by a huge margin, but when coming off of such a low base, any improvement is measured in light years rather than increments.
China has one big advantage the US never had, it IS a totalitarian government. It doesn’t have to deal with laws, unions or pesky human rights. While making a small change in the US could take months or years to affect, huge changes in China can happen practically over night. Currently, they are relocating millions of people out of the Olympic city, they just did it. Imagine how much and how long that would have taken in the US, if it could even be done at all.
Also, the Chinese don’t have to just keep making toys and machine parts. If they use the government (and the very willing foreign investors) to rehaul their manufacturing industry, they could become the new (old) Japan. Remember the 80’s-90’s when “those Japs were going to take over the country?” This time the country is several times larger, several times more populace and doesn’t have all the damn regulations.
IF IF IF IF, they had good/great/genius financial planners at the head of the government, there’s really no limit on what a billion people moving towards the same goal at the same time can’t accomplish.
Will it happen? Probably not, but it’s not as cut and dry as everyone is saying.
True, to an extent. They decollectivized the farms, and that was good, but they aren’t part of what we usually think of as “the China boom”.
That’s the number I commonly read in analyses about China’s economic situation. Although China is an industrial powerhouse (25% of 1.2B is 300M, about the population of the US), it is still largely a rural country.
I just don’t know how to respond to the assertion that China’s economic system is some sort of extreme laissez faire capitalism.
I…well, let’s back up.
You do know what a laissez faire capitalist ideology is, right? Something like this wikipedia entry, right?
You do know that the largest business owner in China is the People’s Liberation Army, right?
I could go on, but maybe you’d like to think about what you’ve said and revise and extend your remarks first.
So, will china prevent other 3rd-World countries 9like in africa0 from moving in to an industrial economy? i can’t imagine an African country being able to do this-their small manufacturers aregetting KILLED by Chinese products. The Chinese are driving even village craftsmen (like potters, blacksmiths,etc.0 out of business-they can sell a chaep plastic bowl for much less than a local potter can make it for.
The Africans seem to get hit hard by everything that comes along.