Understanding China, our new world leader

Up to now we have had a developed western country as a leader, what changes can we expect when we for the first time in history become number two?

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Actually things are returning to a normal stage, china has been number one throughout history. It is only in very recent history there have been western leaders.

However I am not so sure they are taking over. There are lots of problems in China, well hidden sure. But they are still there. Which could prevent it from becoming number one. Still considering it has ~ 4 times the U.S. population, it wouldn't be surprising if it managed to pass in overall GDP.

The age pyramid is a good example of a chinese problem, one child is supposed to support 2 parents, and perhaps also grand parents, inflation is driving prices up, and most of them cannot afford to get by without support from their one child. This is all working fine as the income keeps rising, and jobs are there. But it is also a bit of a cardbox house, if suddenly jobs get fewer or salaries start to drop it risks tumbling down really fast. Same things goes for housing, there are already gigantic ghost cities where houses could not be sold, if the urbanization is halted, and house prices start to drop it could lead to panic.

Another thing is the central gouverment has borrowed huge amount of money to local ones, and not a little of it gets lost in corruption. At some point it might be payback time.

China has massive reserves to coup with a lot of these things sure, and also they've done something really smart, they've invested a lot in education, with a highly educated workforce they have good chances of keeping up the growth, as lots of peoples/companies are starting to move higher paying jobs and research to china.

On the other hand they also have other problems, people are starting to protest go on strikes, demand higher quality of living, and demand answers when gouverment projects go wrong. Some local places even started their own little democratic societies.

The best and brightest students, and a lot of the must succesfull chinese ( and movie stars etc ) don't want to keep their chinses citizenship, most of the ones who go to study abroad or gets jobs in other countries don't comeback. I mean if you are really rich, probably freedom is the thing you're going to want the most? instead of being locked to doing as the gouverment wishes?

On the other hand chinese gouverment keeps improving health care, schools, public service, transports, living standards and on top of that building a lot of beautiful and high-tech culture and entertainment, and so on, as long as people see these improvements they'd be relatively happy.

I think it is hard to predict which way it would go, perhaps if you take everything into account it might actually be a 50/50 % chance. Future will tell!

zahratustra said:

But than there is no such thing as "Swedish exceptionalism" :lol:

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20 things to know before moving to sweden

GothicGothicness said:

I think it is hard to predict which way it would go, perhaps if you take everything into account it might actually be a 50/50 % chance. Future will tell!

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I, personally, don't care one way or another but let me ask again: why should it matter?

I, personally, don't care one way or another but let me ask again: why should it matter?

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It would matter in some ways for everyone, money brings power, and being the wealthiest you'll probably also be the most powerful or among the most powerful. To have a "dictatorship" being the worlds most powerful nation will have affect on everyones freedom among other things. I am sure there'd also be positive things though, U.S. sure haven't been without it's problems as world dominator.

I'm not that worried about China. It has a ton of structural and systematic issues (as does India). Their overbuilding makes the overbuilding in the US seem like a walk in the park for one thing.

Also, while you need to be all in the same total GDP ballpark, once you are there, the health of an economy is much better evaluated on GDP per capita, and both China and India are very, very far behind on that.

Well, if you measure china by GDP per capita it'll be a bit strange. Because you have a countryside population which is really poor, and a city population which is richer. Still the inflow of money to the gouverment is enormous, the US has low taxes and a dominating private ownership and have to borrow money to even get even, and sweden have high taxes but most of the money is invested back to the people. In china a lot of the money goes directly to the central gouverment being used for buying up foreign companies, land, houses, and so on. Leading to giving china a lot of power, especially in many african countries with a simular kind of corrupted gouverment.

The point being that china having same GDP as the U.S. will lead to the chinese gouverment being unimaginable rich, and getting an extreme amount of power. Not to mention how much money the U.S. owe to the chinese gouverment.

What is more scary is they can do more or less whatever they want, build military power, invest in huge dangerous projects? manipulate the world economy to their advantage? none is going to stop them. However right now their extremly export based economy is standing in the way.

Wealth concentrated in the government or wealth concentrated in corporations and their CEOs. Not sure which is scarier.

GothicGothicness said:

What is more scary is they can do more or less whatever they want, build military power, invest in huge dangerous projects? manipulate the world economy to their advantage? none is going to stop them. However right now their extremly export based economy is standing in the way.

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And how is that different from what USA was/is doing? Or Britain before them?

There was and news posting on yahoo today that India has over 500,000,000.00 in banks hidden all over from ilegal actives...

Another thought china has over 1,000,000 single men with no hope of finding a woman because of their one baby law. That one hell of an army that the government could form.

CelticFrost said:

There was and news posting on yahoo today that India has over 500,000,000.00 in banks hidden all over from ilegal actives…

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Can't make sense of that Celtic...

read into it what you want

Now I understand and yes, India does how a problem with corruption, tax evasion and black economy.

"Always in motion the future is" - Yoda.

In short, it's hard to predict how things will turn. Yes, it looks like China and India will surpass the US, but that doesn't mean it's destined to happen. The US economy actually looks like it might be getting back on track, while the Chinese/Indian economy could hit a brick wall in the near future for all we know.

It's not too hard to find people gleefully predicting America's fall. That said, we've got a major structural problem that's going to cause us serious problems. Our comsumer-based economy only works as long as there's plenty of consumers with wads of disposable income in their pockets. With the demise of the middle class (for now, I'll stow my theories on the cause as they're unimportant to this point), we can no longer serve as our own customer base. We delayed judgment day for a couple decades thru the (ab)use of consumer credit, but that gravy train is pretty well dry now. While it's not a death spiral by any means, it's certainly a problem with circular feedback.

Not really sure how we regenerate that middle class given the constraints of a global economy. The baby boomers moving into retirement is going to dramatically shake up the labor force, but I just haven't yet convinced myself exactly what the effects will be. It's possible that will create enough labor demand to drive up paychecks for skilled workers (driving up all paychecks would just result in inflation) that would form the new middle class. It's also roughly equally possible that that's wishful thinking.

With the demise of the middle class (for now, I'll stow my theories on the cause as they're unimportant to this point), we can no longer serve as our own customer base.

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We haven't even tried to service our own consumer needs for a long time, DTE. US imports have exceeded our exports for… 30? 40? years. Hell, we even import more food than we export; with a landmass comparable to all of Europe, explain that one to me!

You're kinda touching on those theories I mentioned but didn't spell out. Even when the goods are made in China, you still get the impact of consumer spending in retail and service, which can spawn middle class jobs (although not as readily as manufacturing, IMO). We're just missing the opportunity to have that "vertically integrated" economic model of "ye goode olde days" when we piss away the manufacturing portion of the pie. It's unfortunate that PJ isn't around anymore. He has a very convincing theory about basing an economy on value added, which can actually lead you to abandon manufacturing completely. Some of it even makes sense. I think that overall it's still unicorn economics, but he's got a fair bit of impressive academics to back it up and all I've got is practical observation and greasy elbows.

I'd like to see your food numbers, though. It's widely acknowledged that we're the largest food exporter in the world. Perhaps your large imports would be luxury and/or specialty foods? High dollar, but low volume? I'm sure we're bringing in a lot of seafood, but I can't imagine that would outstrip our grain exports.

GothicGothicness said:

Well, if you measure china by GDP per capita it'll be a bit strange. Because you have a countryside population which is really poor, and a city population which is richer. Still the inflow of money to the gouverment is enormous, the US has low taxes and a dominating private ownership and have to borrow money to even get even, and sweden have high taxes but most of the money is invested back to the people. In china a lot of the money goes directly to the central gouverment being used for buying up foreign companies, land, houses, and so on. Leading to giving china a lot of power, especially in many african countries with a simular kind of corrupted gouverment.

The point being that china having same GDP as the U.S. will lead to the chinese gouverment being unimaginable rich, and getting an extreme amount of power. Not to mention how much money the U.S. owe to the chinese gouverment.

What is more scary is they can do more or less whatever they want, build military power, invest in huge dangerous projects? manipulate the world economy to their advantage? none is going to stop them. However right now their extremly export based economy is standing in the way.

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China also has a serious population aging issue, far worse than the US or Europe due to the one child policy. Add that with an unnatural imbalance of gender (due to the same mostly) and you have a country that is in serious danger of collapsing (or starting a major war) in the not too far future.

CelticFrost said:

Another thought china has over 1,000,000 single men with no hope of finding a woman because of their one baby law. That one hell of an army that the government could form.

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Yup. 1MM sexually frustrated men can do a lot of damage.

Drithius said:

We haven't even tried to service our own consumer needs for a long time, DTE. US imports have exceeded our exports for… 30? 40? years. Hell, we even import more food than we export; with a landmass comparable to all of Europe, explain that one to me!

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Did a little of my own digging. I think you're mistaken.

http://www.census.gov/foreign-trade/Press-Release/current_press_release/exh4s.pdf

Food and live animals, 2011:
export:$98B
import:$82B

Food and live animals, 2010:
export:$79B
import:$70B