May 02, 2008

China 3rd largest economy

China (including Hong Kong and Macau) has a larger GDP than Germany based on current exchange rates. The Euro has traded down to 10.77 to the Chinese Yuan

The Euro/Yuan exchange rate will likely continue to fluctuate.

The European countries (France, Spain, Italy) have been saying that the Euro has been too strong. The US federal reserve has indicated that it will probably not cut US interest rates further. All factors that would indicate the Euro should continue to ease to the 10.5 level against the Chinese yuan over the next month. Then China would be third largest even without including Hong Kong and Macau.

China's economy could be 2.5 times that of the US by 2030, based on Japan's experience and the yuan's appreciation against the greenback, a senior Chinese economist says in Harvard Business Review's Chinese edition.

The forecast by Justin Lin Yifu, head of Peking University's China Center for Economic Research and chief economist-designate of the World Bank - in the May issue of the magazine published on Thursday - is one of the most ambitious for China's economic growth.

By 2030, it is possible that the per capita GDP of China reaches half of that of the Americans. Given that the Chinese population might be five times that of the US at that time, the Chinese GDP would be 2.5 times of the US.

The World Bank, where Lin will assume his post at the end of this month, said last month that China had surpassed Japan to become the second largest economy in terms of purchasing power parity.

China's GDP in 2007 was 24.66 trillion yuan ($3.38 trillion) and per capita GDP was $2,556, official figures suggest.

My projection is that China will get close to double the size of the US economy in 2030 on an exchange rate basis.


Jonathan said...

I read a cool National Geographic magazine entirely on China just recently. They talk about China's amazing growth as well as some of their major hurdles/problems right now. Seems that water is going to be a huge issue for China in the next few decades. The Huang He was talked about a lot with its bad pollution as well as poor management (some years it doesn't even reach the sea). I was looking at the maps and it seemed as though China gets a lot less rain than the US does. Maybe new technology will help with water, like ways to safely extract it from the sea or to condense it from the air?

korvin said...

Have you also factored in the coming population crash in China due to the affects of the One Child Policy (i.e disproportionate number of male children when compared to female childre), and the failure of China to spread its infrastructure investments outside of the coastal plains area.

Mike said...
This comment has been removed by the author.
bw said...

I am aware of a projected population crash projection for China.

The one child policy did not get absolute enforcement and has been relaxed even more recently. People with more money are ignoring the financial penalties. It was never strictly enforced in the rural areas and most people lived in the rural areas and still do in spite of decades of migration.

China still has a 1.73 fertility rate

That fertility rate is higher than Canada's, Russia, Spain, Italy, Germany about the same as Netherlands and Australia

That is supposing that the reported fertility rate is accurate. With the partially enforced one child policy there probably are more rural births that are unreported and uncounted.

The Economist magazine indicates that the province GDP estimates have averaged about 1% higher than the China national GDP. The provincial numbers proved to be right when the GDP was adjusted in the 2004 Census It also discusses the varying degrees of reliability of Chinese statistics.

I believe urbanization will be a big factor in China maintaining higher GDP growth rates 2020-2025.

The Irrefutable Fool said...

I think one of the bigger questions is how long can China stay as one country yet still be innovative? 'Relative' political freedom seems to be a necessity for innovation.

bw said...

That previous comment should have said not aware.