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August 11, 2008

Adding other countries together to equal China's GDP and population

China's population estimate 1.33 billion in 2007 (0.6% increase) Add in Hong Kong and Macau 8 million. Total population in 2008 1.35 billion. This analysis was related to a question from Tom Craver, what would China's GDP look like if you split it into two countries ?

The overall GDP was 3.3 trillion (2007) and heading to over 4 trillion at the end of 2008 with GDP growth and exchange rate increases. The future GDP of China will be rising quickly. the IMF thinks about 7 trillion by 2013 and others believe closer to or exceeding the $14 trillion PPP figure in 2013 because of a more rapidly strengthening chinese currency. The rapid rise in nominal GDP (exchange rate basis) means that the additive country mix to get the equivalent of China is rapidly changing. China is adding a Belgium (10 million) in population each year.

By 2013, China is either something in the range of a Germany in GDP or adding a Germany and Japan in GDP. The population of China in 2013 will be about 1.4 trillion.

As fast as China's national GDP is growing, the 4 richest Chinese provinces plus Shanghai are growing at 14% per year. The wealthiest are growing even faster. Plus their population is growing with more migration from poorer provinces.

Currently, the bottom one billion would approximate the economy of India but would be richer by 200% [US$2 trillion, or kind of like India plus Mexico with a bit fewer people] and the then the top 350 million (including Hong Kong) would be like Brazil but richer and more populated by 60%.

By 2020, when China will likely have passed the economies of Europe and the United States. China will be equal to a supersized Europe population with comparable economy or Europe plus India to equal population and GDP.

The top 4 provinces in China in terms of GDP plus Shanghai and Hong Kong.

Guangdong 3.3 trillion yuan (2008)
[US$480 billion, $5k/per cap]
Shandong 2.7 trillion
[US$390 billion, $4k/per cap]
Jiangsu 2.6 T yuan
[US$380 billion]
Zhejiang 1.9 T yuan
[US$280 billion]
Shanghai US$165B(U$9000 per cap)
Hong Kong US$218B in 2008

330 million people
US$1.9 trillion GDP.


The Guangdong provincial GDP has jumped from 1350.2 billion RMB in 2002, to 3060.6 billion RMB in 2007, with an average annual growth of 14.5%. About US$500 billion. Its ratio in proportion to the national GDP increased from 1/9 to 1/8. Guangdong’s GDP, after overtaking those of Singapore and Hong Kong, has surpassed that of Taiwan. Guangdong’s GDP per capita has reached 4000 US dollars. Guangdong population at the end of 2007 is 94.49 million

FURTHER READING
Is China's economy being statistically underestimated

China's economic projection

List of China's administrative divisions bu GDP

Jiangsu
Jiangsu population (2006) 75,495,000 (5th)
GDP (2007) CNY 2.56 trillion (3rd) CNY 33,689 (5th) per cap GDP

Zhejiang
Zhejiang Population (2004) 47,200,000 (11th)
GDP (2007) CNY 1.86 trillion (4th) CNY 37,128 (4th) per capita

In 2007, the nominal GDP for Shandong was 2.59 trillion yuan (US$340 billion). It's GDP per capita was 27,723 yuan (US$3,646), ranking seventh.

Shanghai 18.5 million, GDP US$157.8 billion (7th), per cap US$8,949 (13th) [2007]

10 comments:

Geoffrey Britain said...

Every 20 years or so, the punditocracy consigns America to the economic dustbin.

Remember the chorus in the late 1980s telling us that Germany and Japan had mastered the art of wealth creation?

The chatter peaked just as the 1988-1992 US export boom began to take off - after a dollar crash, of course.

At the end of the day, the US remains the only major power still producing babies at a rate high enough to survive through the 21st century as a dynamic society.

China's workforce will peak in 2015. The country will then tip over into the steepest demographic decline ever recorded. It will be old before it becomes rich, doomed to second-tier status.

China's main strength is its labor force. What will she do when in perhaps 20-30 years the 'perfect storm' of robotics, artificial intelligence, nanotechnology, revolutionary manufacturing methodologies and alternative energy such as fusion powered reactors and American innovation make their workforce unneeded?

bw said...

Germany has a population of 83 million and Japan 128 million.

1 German was never going to be worth the economic output of 4 Americans.

1 Japanese was never going to be worth the output of 2.5 Americans.

For China to pass the USA all that has to happen is for 1 chinese to be equal to the economic output of 23% of an American.

I had already analysed the chinese demographic issue

China's median age is still 33.

The US median age is 36.6

In 2015, China's median age will be 36.

China will raise the retirement age. It is a simple solution. It is not like the people over 60 will not be healthy and active.
http://www.chinadaily.com.cn/china/2006-11/28/content_744935.htm

China's technology and automation is improving. China is and will adopt nanotechnoology, superconductors, AI and robotics and nuclear power (including fusion).

China physics papers are nearing the US in terms of volume and citation quality is improving.
http://www.parapundit.com/archives/005410.html

The view that China only has cheap manual labor is not correct. If that was all China had going for it then there is no way that they would pass the United States.

The anti-aging successes of Sirtuins and lysosomes and other areas will mean that everyone will have longer and healthier lives and when people are live to 120+ and staying healthy to 110+ then retirement ages will have to be tossed as outdated concepts.

qraal said...

Hi Brian

China will choke if it doesn't implement non-fossil fuel power in a hurry. What do you think of their chances?

I suspect the willingness of China to rapidly innovate versus America's increasingly litigious and Luddite population may be a lesson to the global community. Are the idiots taking over?

bw said...

China's 2020 energy generation mix for electricity will be about what the US mix is now

In terms of 50% coal. China's new target is 70GW for nuclear. The USA has 100GW nuclear now. China will have more hydro power and larger than the US share of renewables now compared to China in 2020. The coal that China has in 2020 will be as clean and efficient as any western coal plants. (supercritical plants)

By 2030, china will be doing very well with factory mass produced nuclear power (high temperature reactors and advanced AP1000s) and more breeder reactors. Maxes out hydro and wind.

china 70GW 2020 nuclear target

China is expected to have 311 GW of hydropower in place by 2020, meeting the government target, and 380 GW in 2030. Hydropower is expected to rise to over 1000 TWh in 2030, but its share of total power output will fall from 16 per cent to 12 per cent. The target for wind power is expected to be exceeded, with wind power reaching 42 GW in 2020 and 79 GW in 2030.

China has made considerable progress in the implementation of state-of-the-art coal fired generation technologies, by building larger, more efficient power plants. China added 18 GW of supercritical plant in 2006, bringing total supercritical capacity to about 30 GW. There are about 100 GW of supercritical plant on order, implying that the share of supercritical technology in new capacity will increase significantly over the next few years.

After 2015, new coal power stations will probably be as efficient as those built in the OECD. The average gross efficiency increases from 32 per cent in 2005 to 39 per cent in 2030, bringing it much closer to the OECD average of 42 per cent by 2030. Furthermore there will likely be a greater implementation of cleaner technologies such as supercritical, ultra-supercritical and integrated gasification combined-cycle plants.

Geoffrey Britain said...

People, you're missing the point.

Yes, China will adopt new technologies and it does indeed have a labor advantage in numbers.

ALL of China's wealth is being created through manufacturing and the exporting of those manufactured goods.

It's labor force is working for peanuts and will continue to do so for at least the next generation. China's wealth class depends upon the continued use of that labor class AND the world continuing to NEED that labor force.

But no matter how low the wages paid, they cannot compete with robots programmed with AI to do the relatively simple jobs involved in manufacturing.

The point is that with robotics and AI we can manufacture products more cheaply than the Chinese can...robots do not demand wages, benefits, or time off...Shipping costs alone will present an insurmountable obstacle to China.

Why send raw materials over to China and then manufacture, assemble, test and package product and then ship it back to the US and Europe...once we can do it far more cheaply at home?

The repercussions of the information age will resonate far beyond China's historically temporary reign as the manufacturing capital of the world.

bw said...

China is buying the newest manufacturing equipment.

http://www.robotics-benelux.info/Branchesites/RAB/Downloads/Press%20release%20IFR%20statistical%20department.pdf

In China (now the third largest Asian robot market), robot investment is still booming, with
5,800 units installed in 2006, an increase of 29% on the previous year. Here, alongside the
automotive sector, demand is increasing in the electronics and rubber and synthetics
industries.

http://www.worldrobotics.org/downloads/Pressinfo_speeches_11_Jun_2008.pdf
Robot investment is still booming in China, the third largest Asian robot market, with 6,600
units supplied in 2007, an increase of 14% on the previous year. Here, demand is increasing
in all industries, including the automotive sector. Total supplies in the United States grew by 12% to 16,600 units and in Canada by 67% to 2,900 units. In Japan, the largest robot market in the world, sales increased slightly by 2%, at 38,100 units.

It not just cheap labor but the faster speed and flexibility of building in China.
http://www.theatlantic.com/doc/200707/shenzhen

So as robotics improve China is adopting that technology. Plus if robotics are going to win that Japan has the lead not the USA.

Geoffrey Britain said...

"So as robotics improve China is adopting that technology. Plus if robotics are going to win that Japan has the lead not the USA."

Yes, I read that China is adopting robotic technology as well. Please explain how China reducing its work force is going to help them?

But even that does not address my main point: Why send raw materials over to China and then manufacture, assemble, test and package product and then ship it back to the US and Europe...once we can do it far more cheaply at home?

THAT rationale would apply to Japan, Europe and anyone else as well. In a world of robotics and AI and with the exception of needed raw materials (for the most part, not a problem for the US) manufacturing will take place close to end markets. Why would you want to do it otherwise if labor costs are no longer a factor?

Again, the repercussions of the information age will resonate far beyond China's historically temporary reign as the manufacturing capital of the world.

bw said...

Geoffrey you are describing superior localized manufacturing for all products. This will not happen for a long time and even with nanofactories there can still be reasons and advantages for centralized production. Just as there are now printing jobs that get sent to China.

There are local laser printers but there are still larger production runs of printing where centralized printing is superior even when shipping costs are added in.

China has a growing domestic market. In another ten years or so China will have minimal dependence upon export markets.

Geoffrey Britain said...

"Geoffrey you are describing superior localized manufacturing for all products. This will not happen for a long time and even with nanofactories there can still be reasons and advantages for centralized production." bw

Yes I am bw but localized in the sense of regional markets like say, North America.

I believe it will start to happen within 20 yrs. and be an irreversible and undeniable reality in 50 yrs. Not that long a time in the larger scheme of things.

Once these technological developments reach critical mass the advantages of centralized production will be much less. Customization of basic templates will be the rage.

"China has a growing domestic market. In another ten years or so China will have minimal dependence upon export markets."

It is growing but the numbers are only impressive compared to much smaller populations. Not as a percentage of population. Only 5% of china's population makes $18k or more per year...not much of a middle class in terms of percentage and that is what you need for dynamic, long-term growth.

For a society to evolve to where it has "minimal dependence upon export markets." it MUST have a large AND significant middle class as a percentage of it's population...

And I reiterate:China's workforce will peak in 2015. The country will then tip over into the steepest demographic decline ever recorded.

Your faith that raising the retirement age will ameliorate this factor is, I believe, unfounded (smoking, lack of health care, etc.)and at best, unproven.

Finally, the long-term effects of the Chinese government's discouragement of the pursuit of individual ambition will in time have a greatly deleterious effect upon her economy.

Technology is NOT the 'fuel' that fires innovation and economic growth, rather it is individual aspiration.

bw said...

The emergence of China's middle class from a 2006 McKinsey projection.

lower middle class (25K RMB-40K RMB per year in household income) about US$4k-6K

2009 73 million households (32%) out of 220 million
2011 96 million households (40%) out of 240 million
2015 140 million households (50%) out of 280 million


The upper middle class (40K RMB-100K RMB per year in household income) About US$6K-15K

2009 24 million households (11%) out of 220 million
2011 29 million households (12%) out of 240 million
2013 39 million households(15%) out of 260 million
2015 59 million households (21.2%) out of 280 million

For the 100+k rmb ($15k)
In 2015, they will be 6% or about 28 million households. In 2025, they are projected to be about 11% or about 40 million households.

euromonitor indicates 80 million in 2007 with 60K rmb to 500k rmb.

It is forecast to expand to 700 million by 2020, driven by continued strong economic growth.

If the yuan moves to 3 to 1 USD by 2015. Then the Mckinsey upper middle class defn is US$13K-33K.


Gary shilling, Insight wrote in forbes

http://www.forbes.com/2008/02/20/china-housing-deflation-pf-guru-in_ags_0220soapbox_inl.html

estimated that China's middle and upper classes amount to about 110 million. This indicates that only 8% of the total 1.4 billion population are middle class in terms of having measurable discretionary purchasing power.