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#1: China Replaces US This Year

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#1 Turk.

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Posted 03 May 2014 - 13:49

May 02, 2014 12:16

Sometimes size DOES matter. China may pass the US and become the world’s most important economy this year, according to the World Bank. It would take the position the US has held since 1872.

Previous studies have suggested China could become the world's biggest economy by 2019.

Ever since the 2008 financial crisis, the Chinese economy has contributed a quarter of total global growth. Between 2011-2014, China’s economy will account for 24 percent, according to IMF estimates.

In comparison the US economy will only show an increase of 7.6 percent over the same period.

The predictions are hard to calculate as the latest estimates are based on purchasing power parity. The index attempts to assess the size of an economy based on the assumption that prices of non-tradable goods and services are a lot lower in poorer countries, says the Financial Times (FT).

The evaluation process of the service may differ, as a haircut in China may cost much less than in the US, however its quality may differ as well.

The same problem touches upon the quality of tangible goods. A DVD player bought in China may be way cheaper than a US one, however there is no warranty that it will last longer than several months. Besides US goods are sold with far more consumer protection laws, which through more scrutiny and inspection, delivers a better product.
Source




#2 DocM

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Posted 04 May 2014 - 06:45

Jan. 20, 2017

#3 MDboyz

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Posted 04 May 2014 - 07:19

Ofc, it's not surprised as all.  More and more Chinese join work force to feed their family, while more and more American join welfare and foodstamp.



#4 T3X4S

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Posted 04 May 2014 - 07:50

The company I work for is about to release their product on the market - and the U.S. isnt even on the list of countries.

Their #s suggest if they get 1/10 of 1% of China's market - they will hit capacity on their brand new manufacturing plant.... a $70,000,000 facility



#5 68k

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Posted 04 May 2014 - 08:43

It's actually the US's fault. Some time ago someone thought up that goods would be cheaper to manufacture in China. Then, BOOM.

 

Now, there's too much competition across all markets. China has 'learned' and have made copies of everything (including integrated circuits). Then again, look at the mobile phone: I no longer need to by a compass, mp3 player, GPS, camera or 100s of other accessories, because of technological advancements (but these are only small value items, compared to cars for example, in which local manufacturing can be sustained by proper control of competition (IMHO)).



#6 Steven P.

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Posted 04 May 2014 - 08:55

It's not surprising when most western economies have outsourced in favour of cheap labor, vs cost of living in the west. I mean even customer call support is outsourced to faraway lands these days because it's cheaper!



#7 Osiris

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Posted 04 May 2014 - 09:35

The surprising thing about this change is that people seem surprised. Putting aside all the changes in the world over the last 20 odd years, there's a couple thousand years of human history that demonstrates power and the centre of the world never stays in the one place forever.

 

You can't really blame the outsourcing or the functions of the economy on this change, in a global world where goods and people can be moved around so quickly you would be throwing out the market mechanisms some love so much and generating inefficiencies to try and keep manufacturing and support centres in these countries.  On top of that in the US case it never would have worked because the corporations that could maximise profits by making these changes just would have lobbied until the legislation allowed them to move offshore. 

 

I believe where the theory has come off the rails is that the first world was meant to move their economies and citizens to being knowledge economies of skills based workers, that hasn't happened as fully as would be required - for a variety of reasons.  We've also failed to capitalise on opportunities like we did in the past - the renewable energy market should have been lead by the West who have generally been considered to have the technological advantage, it could have been the next silicon valley, instead we failed to recognise it as a potential growth market and now China is the number 1 in investment infrastructure and continues getting more tech firms over there due to these investments that just aren't near the same scale in the western markets.



#8 compl3x

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Posted 04 May 2014 - 11:09

It's not surprising when most western economies have outsourced in favour of cheap labor, vs cost of living in the west. I mean even customer call support is outsourced to faraway lands these days because it's cheaper!

 

Bingo. It's pretty easy to build a strong economy if you have an inexhaustible supply of slave or near-slave labor.



#9 Kriz

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Posted 04 May 2014 - 12:26

Just waiting for the announcment.. US DECLARES WAR ON CHINA



#10 AsherGZ

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Posted 04 May 2014 - 12:41

Just waiting for the announcment.. US DECLARES WAR ON CHINA

They can't afford one. :D



#11 cork1958

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Posted 04 May 2014 - 12:42

It's not surprising when most western economies have outsourced in favour of cheap labor, vs cost of living in the west. I mean even customer call support is outsourced to faraway lands these days because it's cheaper!

 

Exactly what business is all about, being cheap!! ;)



#12 guru

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Posted 04 May 2014 - 13:04

Bingo. It's pretty easy to build a strong economy if you have an inexhaustible supply of slave or near-slave labor.

well post Industrial revolution,  Its always been that way, British and Europeans built their economies and colonization and slave labor. Its either been slave labor or being lucked out with resources (Australia, Oil rich Arab countries). only exception to this is possibly United States.



#13 spenser.d

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Posted 04 May 2014 - 13:17

Hooray for China?



#14 Astra.Xtreme

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Posted 04 May 2014 - 13:48

Until the US stock market loses significance, the size of the economy means basically nothing.   Regardless, we're seeing pretty clear side-effects of capitalism.



#15 xrobwx

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Posted 04 May 2014 - 14:03

Just waiting for the announcment.. US DECLARES WAR ON CHINA

You don't have to worry about that with the current administration as they are more worried about class warfare, climate, and welfare.I don't think there is one economist among them.


Until the US stock market loses significance, the size of the economy means basically nothing.   Regardless, we're seeing pretty clear side-effects of capitalism.

The current administration fights capitalism at every turn.