Wandering China

An East/West pulse of China's fourth rise from down under.

China V Japan [Independent UK]


According to the CIA World Factbook (2010 figures), the size of the U.S. economy is still almost 3 times larger in terms of GDP (nominal). 14,620,000 versus 5,745,000 million. In terms of PPP (Purchasing Power Parity), the U.S. is about 1.5 times larger at 14,720,000 million verus 9,854,000 million.

This article reveals a skeptic’s view on China’s overtaking of Japan as the the world’s second largest economy (I believe the writer got it wrong by over-stating China took over as the world’s largest) and it is met by an interesting response from a reader below.

The idea that lack of democracy and a free press are prerequisites for economic success is one of those oft repeated mantras which has very little basis in reality where China is concerned and begs all sorts of questions about how much democracy or press freedom exists in the ‘democratic’, western orientated world anyway. What has always been important to the Chinese is the freedom to live and work in a secure and orderly environment and the greatest threat to that is corruption, a problem which the present government recognises and is combatting vigorously. (A dose of the Chinese prescription – a mandatory death penalty for high level corruption and a few high profile cases ‘pour encourager les autres’ – would do no harm in the West either.)

Press freedom? Those who need the information can usually get it, in China or anywhere else and, as the ongoing furore over the Wikileaks revelations shows, official commitment to freedom of information is more lip service than commitment in the West.

‘Wasteful, prestige investments at vast cost to the environment and quality of life?’ Well, It is, I suppose, a moot point as to whether the most prominent examples of this are to be found in China or in the West. Lack of resources to expand? That is precisely why China is so carefully cultivating its links with Africa and South America and that, presumably, is what all those American dollars will be used for.

peterthomasson

– – –

China V Japan
By Sean O’Grady
Econoblog
Source – The Independent, published 14 February 2011

The news that China has overtaken Japan as the world’s largest economy comes as no great surprise. Indeed for those of us who are proud of a time-lord like perspective, it is merely a sign that China is returning to the role in the world economy she played up until the 1500s. Then, as now, her huge size meant that she was a sizeable player in the world.

After Deng’s reforms in 1989, she has unleashed again what would appear to be a formidable mercantile and entrepreneurial talent too long submerged during the Mao era (though the Chinese nation remains deeply grateful to him for unifying their fissiparous state, a necessary pre-condition for today’s progress). Anyway, some over excited souls are predicting that China might overtake America by 2020 or 2030. I’m not so sure it will be that fast, or even happen at all.

First, China still suffers from her lack of democracy, a free press and the rule of law, which are the necessary long term concomitants of a healthy economy. Without those, too many of her resources have been misallocated into wasteful prestige “investment”, usually at vast cost to the environment and quality of life.

The banks are opaque and her property market is a bubble, and she is too reliant still on exports, despite a recent easing in her trade surplus with the rest of the world. China’s market economy is just too underdeveloped – in terms of its market signalling – to cope with what is being asked of it. And the resources are just not there for them to expand – hence the current choking off of growth through inflation of commodity prices. A landmark was certainly reached today, but for a Sino-Sceptic like me, it proves very little.

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Filed under: Beijing Consensus, Chinese Model, Domestic Growth, Economics, Environment, Greater China, Human Rights, Independent UK, Influence, International Relations, japan, National Medium- and Long- term Talent Development Plan, Nationalism, Politics, Public Diplomacy, Soft Power, Strategy, The Chinese Identity, The construction of Chinese and Non-Chinese identities, Trade

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