China as a Super Power

Red Moon

Junior Member
It could all be cyclical of course with the Engineers and Scientists being the Illustrious Empire Building fathers and the Bankers and Lawyers the lazy feckless children that squander away the fortune.
That's kind of depressing, actually, but not out of the question. In any case, I'm convinced these cultural attitudes towards various temperaments -- or occupations -- are indeed formed historically... but I don't know how.
 

Spartan95

Junior Member
Based on Purchasing Power Parity, PRC's economy may have been biiger (or on par) with the US economy in 2010. Maggern already posted the news article in the economics thread, so here's the link to the economic explanation that the news article was based on:

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Is China Already Number One? New GDP Estimates
by Arvind Subramanian | January 13th, 2011 | 05:11 pm

When the presidents of China and the United States meet next week in Washington, neither will likely be aware that, measured in terms of purchasing power, it is Hu Jintao not Barack Obama who represents the world’s largest economy. Some time in 2010, the Chinese economy overtook that of the United States. My calculations of GDP for 2010—which of course are subject to the uncertainty associated with all such exercises—are based on new estimates of GDP that will soon be published by the Penn World Tables (PWT) under the guidance of Professor Alan Heston at the University of Pennsylvania.

Cross-country comparisons of economic size and standards of living of the average citizen rely on two approaches. The first uses market exchange rates to convert the economic value of goods and services produced around the world into a common currency, usually the dollar. According to the IMF’s latest estimates for 2010, the value of total US GDP was $14.6 trillion while that of China was $5.7 trillion.

But it has long been recognized by many economists that using the market exchange rate to value goods and services is misleading about the real costs of living in two countries. Such goods and services as medical services, retail and constructions services, and haircuts—which are not traded across borders—are cheaper in poorer countries because labor is abundant. Using the market exchange rate to compare living standards across countries understates the benefits that citizens in poor countries enjoy from having access to these goods and services.

Purchasing power parity (PPP) estimates—which take account of these differing costs—are an alternative and, in some respects, more revealing way of computing and comparing standards of living and economic size across countries. These estimates have been published periodically in the Penn World Tables since 1970.1 My calculations (explained in greater detail below) based on the most recent version, which is due in early February, show that the size of the Chinese economy in 2010 was about $14.8 trillion dollars—surpassing that of the United States.

How do I obtain this number?

The IMF has produced its own PPP-based estimates for 2010 (published in the World Economic Outlook in October 2010). But these are problematic in two important respects for China: The GDP number for 2005, which is the starting point for all the PPP-based calculations, is understated, and the price increases between 2005 and 2010 are overstated, which further reduces the GDP number for 2010. Consider each.

When the World Bank published its PPP-adjusted estimates for GDP per capita based on disaggregated data collected by the International Comparison of Prices (ICP) project exercise in 2005, a number of commentators expressed doubts about them, especially because the estimates for China ($4,091 per capita) and India ($2,126) were revised downward by 40 percent relative to the pre-ICP estimates. The IMF uses this lower number for 2005.

Surjit Bhalla (2008) argued that the number for China was unrealistic. Suppose, he said, the revised number was extrapolated backward, using China’s growth rate between 1952 and 2004 of 5.52 percent. It would imply a level of GDP per capita in 1952 of $153 (in 1985 prices) that was well below the threshold value of $250 that Pritchett (1997) has argued is the minimum required for subsistence. In Bhalla’s evocative description, the revisions meant that there were few living Chinese in 1952.

The validity of doing this backward extrapolation is questionable because, as I pointed out in a paper with Simon Johnson and colleagues (2009), PPP growth rates and market exchange rate-based growth rates are not identical and cannot be used interchangeably.

Nevertheless, Bhalla’s point is correct, albeit for slightly different reasons as argued by Deaton and Heston (2010). They suggest that China’s PPP-GDP was underestimated (by the ICP project and by the World Bank) because of the urban bias of the price sampling in ICP 2005. Data on prices were collected for 11 cities and their surroundings but no rural prices—which are typically substantially below urban prices—were collected (or rather allowed to be collected by the Chinese authorities).

The latest version of the Penn World Tables (version 7 to be released in early February 2011) have corrected these biases, which result in an upward revision for China’s PPP-based GDP by about 27 percent and for India by about 13 percent for the year 2005. I use the new PWT corrections as the starting point for computing new estimates for PPP-based GDP and GDP per capita.

A second correction relates to developments between 2005 and 2010. For this period, if the IMF data are taken at face value, they suggest an increase in the real cost of living in China relative to that in the United States (which is equivalent to a real appreciation of the Chinese currency) of about 35 percent.2 This seems implausible because three alternative ways of assessing currency changes point to a much smaller appreciation.

First, most real exchange rate indices computed for China (for example those of JPMorgan and the Bank for International Settlements) point to an appreciation during this period of between 12 and 20 percent. Analysis of productivity differentials between China and its trading partners, and between tradable and nontradable sectors within China, by the IMF in its 2010 Article IV consultation (p. 19) would also imply an appreciation of the yuan of no more than 10 to 15 percent.3 Third, one could ask what currency appreciation would be implied for China if it behaved like the average country: For this country, estimates suggest that currency appreciation responds to the difference between its own growth rate of per capita GDP and that of the United States (in the jargon, this is called the dynamic Balassa-Samuelson effect). This procedure also yields estimates of about 10-15 percent for Chinese currency appreciation.4

If a currency appreciates, the movement is akin to an increase in the average cost of living. So taking 15 percent as the best estimate of the currency appreciation, rather than the 35 percent estimated by the IMF, requires adjusting China’s 2010 GDP upward by 20 percent (because the increase in the cost of living has been overstated by 20 percent). To be conservative, I have not adjusted GDP up by the entire 20 percent.

These two adjustments increase China’s GDP from the current estimate of $10.1 trillion to $14.8 trillion (an increase of 47 percent, of which 27 percent is due to the revision in the 2005 estimate, and the rest due to smaller-than-assumed increases in the cost of living between 2005 and 2010). This $14.8 trillion figure exceeds US GDP of $14.6 trillion. It must be emphasized, of course, that the difference is small enough to be within the margin of error.5

Applying the same adjustments to GDP per capita increases the estimate for China from $7,518 (the current estimate in the IMF’s World Economic Outlook) to $11,047. The GDP per capita (the average standard of living) is now about 4.3 times greater in the US than in China compared with a multiple of 6.3 without my corrections (and compared with a multiple of 11 if GDP is computed using market exchange rates).

One interesting question is why China did not allow more representative prices to be collected as part of the ICP project in 2005. Professor T. N. Srinivasan of Yale University has long argued that China likes to exaggerate its growth rate (to showcase its strength and dynamism) and simultaneously understate its level of GDP (being seen to be poorer may have advantages internationally, such as not being expected to contribute financially to global institutions or global public goods). Overstating prices has the effect of understating GDP, and thus helps achieve this objective.

Perhaps a more important explanation of China’s behavior has to do with exchange rate politics. Had all prices been collected, China’s average price level (cost of living) would have been substantially lower. And this would have resulted in estimates of undervaluation of the Chinese currency of close to 40 percent against the dollar (see Subramanian 2010 for the connection between China’s price level and the implications for estimating whether currencies are under or overvalued). China’s trading partners would have had additional technical ammunition to deploy against its highly sensitive but demonstrably beggar-thy-neighbor exchange rate policy.
 

ccL1

New Member
China-Tajikistan Settle Border Dispute

I didn't want to start a new thread:

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Tajikistan Friday hailed as a triumph a deal ending a long-running border dispute with China, even though it will see the impoverished ex-Soviet state handing over almost one percent of its territory.

The Tajik parliament this week approved a border demarcation agreement that will see Tajikistan cede 1,122 square kilometres (433 square miles) of uninhabited mountainous land to China.

The land in the Pamir Mountains represents 0.78 percent of Tajikistan's total area of 143,000 square kilometres (55,212 square miles).

Tajik Foreign Minister Khamrokhon Zarifi hailed the deal as a "success for Tajik diplomacy", saying China had previously been seeking 28,000 square kilometres of Tajik territory.

Meanwhile Sukhrob Sharipov, head of the the Centre for Strategic Investigation think tank which is attached to the presidential administration, said Tajikistan had solved a major long-term problem.

"If we had not taken the decision to hand over the land to China then we would not have been able to withstand Chinese pressure, given the seriousness of the issue," he told AFP. "Tajikistan minimised its losses in the dispute."

He said that if China had ever shown signs of using military intervention to resolve the issue, then no-one would have come to Dushanbe's aid.

...

Seems like China and Tajikistan settled their almost 150 year border dispute. China claimed 28,000 squared kilometres, but got 1000 squared kilometres. The Tajik government claim it as a victory, and I'm sure China claims it as a victory too. A mutually beneficial situation.

I guess that's one less border dispute (probably the easiest one) settled.
 

Spartan95

Junior Member
Re: China-Tajikistan Settle Border Dispute

Well, the Huffington Post has called China a superpower:

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Obama Hosts Hu For Daylong Meetings Before Glitzy State Dinner Tonight
MATTHEW PENNINGTON and JIM KUHNHENN
01/19/11 03:59 PM

WASHINGTON — Chinese President Hu Jintao declared Wednesday that "a lot still needs to be done" to improve his country's record on human rights, a rare concession that came after President Barack Obama asserted that such rights are "core views" among Americans.

The exchange over human rights was balanced by U.S. delight over newly announced Chinese business deals expected to generate about $45 billion in new export sales for the U.S.

Those agreements were cemented during Wednesday's summit meeting between the leaders of the world's two largest economies. Obama said the deals would help create 235,000 U.S. jobs.

"I absolutely believe China's peaceful rise is good for the world, and it's good for America," Obama said, addressing a major concern in Beijing that the United States wants to see China's growth constrained.

"We just want to make sure that (its) rise occurs in a way that reinforces international norms, international rules, and enhances security and peace as opposed to it being a source of conflict either in the region or around the world," Obama said.

The two leaders, standing side by side at a joint news conference in the White House, vowed closer cooperation on critical issues ranging from increasing trade to fighting terrorism. But they also stood fast on differences, especially over human rights.

Obama noted that China's human rights policies were a source of tension between the two governments. The U.S. has called for expanded religious freedoms and for China to release jailed dissidents, including Nobel Peace Prize winner Liu Xiaobo, who was prevented from attending the Dec. 10 prize ceremony in the Norwegian capital.

"We have some core views as Americans about the universality of certain rights: freedom of speech, freedom of religion, freedom of assembly," Obama said.

He said he drove that home forcefully in his discussions with the Chinese leader, but "that doesn't prevent us from cooperating in these other critical areas."

Hu at first didn't respond to an American reporter's question on human rights differences between the two countries. Pressed about it in a later question, he said technical difficulties in translation had prevented him from hearing the question.

He argued that human rights should be viewed in the context of different national circumstances.

"China is a developing country with a huge population and also a developing country in a crucial stage of reform," Hu said. China "faces many challenges in social and economic development. A lot still needs to be done in China on human rights."

Hu said that while China "is willing to engage in dialogue" with the U.S. and other nations on human rights issues, countries must exercise "the principle of noninterference in each other's internal affairs."

On another contentious issue, Obama said that the United States continues to believe that China's currency is undervalued, making Chinese imports cheaper in the United States and other countries and U.S. goods more expensive in China.

"I told President Hu that we welcomed China's increasing the flexibility of its currency," Obama said. But, he added, the yuan, also called the renminbi, "remains undervalued, that there needs to be further adjustment in the exchange rate, and that this can be a powerful tool for China boosting domestic demand and lessening the inflationary pressures in their economy."

In a sign of the growing economic bonds between the two superpowers, Obama also said China was taking significant steps to curtail the theft of intellectual property and expand U.S. investment.

Obama said China had become "one of the top markets for American exports" and that these exports have helped to support a half million U.S. jobs.

U.S. companies have also bristled at China's "indigenous innovation" policy, which limits Beijing's purchase of foreign products to those designed in China. The White House said Wednesday that China took steps to ease that policy.

As both countries continue to recover from the global economic crisis – a recovery that began in China well before it did in the U.S. and other developed nations – the United States increasingly sees China as a market for its goods.

"We want to sell you all kinds of stuff," Obama told Hu. "We want to sell you planes, we want to sell you cars, we want to sell you software."

Obama welcomed Hu to the White House with full honors and a red-carpet greeting, marking the start of daylong meetings to address trade, security and human rights issues that have been the cause of strains between the two powers.

The day's work was to end with a lavish state dinner Wednesday night at the White House.

For all the pomp and ceremony, tensions between the nations were boldly evident. Senate Majority Leader Harry Reid of Nevada, a member of Obama's party, called Hu "a dictator."

In the House of Representatives, several members of the Republican-led Foreign Affairs Committee assailed the Chinese government's record on human rights, military expansion, financial strategy and weapons sales. Several witnesses testifying at a committee hearing Wednesday, among them retired military officers and diplomats, echoed the lawmakers' harsh take on China.

"When the Cold War ended over two decades ago, many in the West assumed that the threat from communism had been buried with the rubble of the Berlin Wall. However, while America slept, an authoritarian China was on the rise," Rep. Ilena Ros-Lehtinen, R-Fla., chairwoman of the committee, said.

The state visit marked Hu's first trip to the U.S. since 2006, when his arrival ceremony was marred by protocol blunders and an outburst from a protester from the Falun Gong spiritual sect. No such missteps occurred Wednesday.

___

Associated Press writers Tom Raum, Donna Cassata, Julie Pace and Erica Werner contributed to this report.
 

delft

Brigadier
In deed, "core views", but not when it concerns citizens in countries of dependent dictators like, until a few days ago, Ben Ali in Tunisia, and still Mubarak in Egypt? What about Karzai in Afghanistan, voted into office in Bonn and remaining in office with the help of fraudulent elections? What about the rights of the Arab citizens of Israel, of the Palestinians in the Occupied Territories and in the those in the camps around Israel?
 

Red Moon

Junior Member
In deed, "core views", but not when it concerns citizens in countries of dependent dictators like, until a few days ago, Ben Ali in Tunisia, and still Mubarak in Egypt? What about Karzai in Afghanistan, voted into office in Bonn and remaining in office with the help of fraudulent elections? What about the rights of the Arab citizens of Israel, of the Palestinians in the Occupied Territories and in the those in the camps around Israel?
I agree, but what i found funny is that while China speaks of it's "core" interests (Taiwan and Tibet), basically saying it will not negotiate on these, the Americans want to convert even their supposed "views" into something comparable. I hope this is only for the press.
 

Spartan95

Junior Member
Well, here's the news coverage on PRC being the 2nd largest economy on earth for 2010:

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Japan overtaken by China as No. 2 economy
Posted: 14 February 2011 1636 hrs

TOKYO : Japan lost its 42-year ranking as the world's second-biggest economy to China in 2010, with data out Monday showing a contraction in the last quarter due to weak consumer spending and a strong yen.

While Japan was expected to fall behind a surging China in the year, the data underlined the weak state of a Japanese economy burdened by deflation, soft domestic demand and pressured by the industrialised world's biggest debt.

"It is difficult for the deflation-plagued Japanese economy to achieve self-sustained growth," said Naoki Murakami, chief economist at Monex Securities.

While China's leap forward reflects a shift in economic power as the country transforms itself from poverty-hit communist state to global heavyweight, it highlights the need for shrinking Japan to energise its economy, analysts said.

Japan's post-war "economic miracle" put it at number two behind the United States for more than four decades, but stagnation after the Japanese property bubble burst in the 1990s helped put China on course to supplant its neighbour.

However, Japan remains around 10 times richer on a per-capita basis, noted top government spokesman Yukio Edano. GDP per head in Japan is around US$42,000, say economists.

Predictions vary as to when China may overtake the United States as number one economy, but it should happen by 2025, according to estimates by the World Bank, Goldman Sachs and others.

Japan's real gross domestic product slipped by an annualised 1.1 percent in the October-December quarter as the expiry of auto subsidies hit car sales, a new tobacco tax sapped cigarette demand and a strong yen hurt exports.

In contrast, China grew nearly 10 percent in the same period.

While Japan's first contraction in five quarters was not as severe as forecasts of a 2.4 percent slide, the data is subject to constant revision.

The economy grew 3.9 percent in 2010, its first annual growth in three years. But this was not enough to keep it ahead of surging China.

Nominal GDP of US$5.474 trillion in 2010 put Japan behind China's US$5.879 trillion, the data showed. China first eclipsed Japan in the second quarter.

Despite Japan crawling out of a severe year-long recession in 2009, its recovery remains fragile with deflation, high public debt, an ageing population and a strong yen all concerns for policymakers.

Pressure is on Prime Minister Naoto Kan, who has seen his approval ratings tumble as his government looks to boost the economy without deepening the debt amid a legislative impasse over a US$1.1 trillion budget for next fiscal year.

Last month Standard & Poor's cut Japan's credit rating one notch to "AA-" from "AA", saying the government lacked a "coherent strategy" to ease a debt running near 200 percent of GDP, the highest of any developed nation.

Nearly a third of government spending is being swallowed up by a social security system catering to a rapidly greying society, Standard & Poor's warned, with that ratio set to rise without reforms as Japan continues to age.

Kan's centre-left government has prioritised social security reform and a tax system overhaul, but the opposition has so far refused to begin talks on the issue.

Private consumption, accounting for about 60 percent of Japan's GDP, slid by 0.7 percent quarter-on-quarter in October-December as subsidies for green car purchases expired and as cigarette sales were dented by Japan's biggest ever tobacco tax hike.

Exports slipped in the quarter as the yen surged to 15-year highs against the US dollar, making Japanese goods more expensive overseas and eroding repatriated profits.

But many analysts expect the economy to rebound in the January-March quarter as the rising tide of global recovery lifts Japan, amid a recent pick-up in corporate spending and exports.

"The contraction will not last long," said Murakami. "Companies' manufacturing activities are recovering rapidly in January-March this year from their bottom in October 2010."

The government played down Japan's slide to third biggest economy and said it would benefit from having a booming neighbour.

"We welcome, as a neighbouring nation, that China's economy is advancing rapidly," said Kaoru Yosano, minister for fiscal policy.

- AFP/ir

Still waiting on the census data from PRC that was supposed to have been released in Dec 2010. Wonder what's causing the hold up on the authorities in PRC releasing an official statement on the size of their population....
 

Spartan95

Junior Member
The 2010 population census puts PRC's population at 1.37 billion. This is a growth of 0.57 percent (73.9 million) over the 2000 census population.

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China's mainland population grows to 1.3397 billion in 2010: census data
English.news.cn
2011-04-28 10:07:35

BEIJING, April 28 (Xinhua) -- China's population has increased to 1.37 billion, including 1.3397 billion on the mainland, the National Bureau of Statistics (NBS) said Thursday.

The new population figure for the Chinese mainland was 73.9 million more than that of 2000, when China conducted its fifth national census, according to data from the sixth census released by the NBS.

The census data shows an annual average population growth of 0.57 percent over the past decade (2000-2010) on the Chinese mainland, slower than the growth rate of 1.07 percent from 1990 to 2000, said Ma Jiantang, director of the NBS.

"The rate indicated the momentum of fast growth in our population has been controlled effectively thanks to the family planning policy," Ma said, adding: "This has eased the pressure on resources and the environment and laid a relatively good foundation for steady and rapid economic and social development in China."

When asked about China's family planning policy that started in 1980, Ma said China had made great achievements in family planning work by effectively controlling excessive population growth.

"But we also need to pay close attention to the new changes of our population structure, adhering to the family planning policy while cautiously and gradually improving the policy to promote more balanced population growth in the country," Ma said.

He described the upward aging population trend, an expanding floating population and the high boy-to-girl sex ratio among newborns as three major challenges China faced last decade.

According to the census, males accounted for 51.27 percent of the total population on the mainland, while females made up 48.73 percent. But the male-to-female ratio among the newborns was 118.06 for every 100 girl infants, higher than 116.86 in 2000.

"The gender ratio of 118.06 was still beyond the normal range and we must attach great attention to this problem and take more effective measures to promote sex equality in terms of employment and salary, while caring more for girls," he said.

China's mainland population living in urban areas totaled 665.57 million, or 49.68 percent of the total, up by 13.46 percentage points on the 2000 figure, while the population categorized as rural population stood at 674.15 million, said the bureau.

"Judging from the migration data, our economy has boosted its vitality over the past decade, as more people were migrating from the inland and western regions to the economically developed eastern coastal areas," Ma said.

According to the NBS, the proportion of permanent residents living in the eastern mainland regions rose by 2.41 percentage points over the last decade to 37.98 percent, while less people were living in the central, western and northeastern parts.

The falling birth rate and increasing floating population of migrant workers led to a declining number of 3.1 persons for each core household on average on the mainland, compared with 3.44 persons in 2000, according to the census data.

Also, the proportion of Han Chinese residing on the mainland had dropped to 91.51 percent, or 0.08 percentage points lower than that in 2000.

The census data shows the growth rate of the aging population on China's mainland had increased with people aged 60 or above accounting for 13.26 percent, while juniors aged below 14 made up 16.6 of the total.

The census data also shows that the illiteracy ratio on the mainland declined to 4.08 percent in 2010 from 6.72 percent in 2000.

To break down the census data by regions, Guangdong, Shandong, Henan, Sichuan and Jiangsu provinces were the top five largest populated regions on China's mainland.

As the world's most populous country, China launched its month-long sixth national population census on its mainland from Nov. 1 last year, mobilizing more than six million census takers to go door to door and visit over 400 million households across the country.

Statistics on the population in China's Hong Kong, Macao and Taiwan were provided by authorities in those regions in 2000.

The increasing disparity in the male-female ratios has been described by demographers as a ticking time bomb as this will mean that in time to come, males will outnumber females by the millions.
 
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