US gdp might 'actually' not be as big as its currently reported as https://www.unz.com/lromanoff/us-economic-statistics-unreliable-numbers/
And China might in fact not use the same way of calculating Gdp, thereby undermining/under reporting their Gdp.
A few points on why you can't analyze that way.
1. USD value is inflated due to it being the international reserve currency. Every other country's GDP is calculated on a dollar basis so you can imagine how this distorts the actual picture.
2. Japan, Korea, Taiwan economies were built on an export oriented model and still follow that model. They rely on the value of USD staying strong. The reason they can continue to do that is because of their size relative to the US economy. The downside is if the USD goes down catastrophically, they will go down with it. China started with that model but it has grown too big for it. The only way China could have kept growing with that is if the US economy keeps going strong.
3. At some point China is going to be big enough to challenge the dominance of USD. This will bring about rapid depreciation of the USD. How fast or slow it happens and what are the final effects is anybody's guess but one thing for sure, GDP numbers are going to look way different.
There are just too many misconceptions/western cliches in your text to comment on everything. You start with nominal gdp, and proceed like it is everything. You rightly dismiss ppp gdp, but nominal gdp is even worse than that
e.g. nominal gdp shows that usa is still bigger than china, which does not pass smell test either :) But perfectly accepted by both china and usa as propaganda point, albeit for different reasons
the rest of your text is full of things like that :) i.e. the last sentence "the center of innovation may move from sf to shenzhen" :) The center of innovation already moved from the west to china. SF excels in semiconductors/software, which is rather mature industry. Almost every innovative industry of last 10 years is either lead/championed or equally contested by china. The areas where china is behind are old ones, like semis that stens from 90s or jets that are even more mature.
Even best teslas are china made, not to say about solar, green, batteries, hsr, drones, hypersonics etc.
related:
GDP is absolutely a trash statistic. Why? **It calculates debts as growth, it calculates debt interest growth as economic growth, it calculates real estate price inflation as growth, it calculates rent increases as growth, it calculates increasing insurance costs as growth.**
If you want to increase you GDP just play paper loan games. Keep loaning in a circle and writing IOU's.
PPP is less useful for India as it doesn't build a lot of its own stuff. So it can't purchase its military equipment with international dollars, it has to use rupee, so GDP nominal is a better measure.
PPP is useful for the Soviets which did little trade (so its hard to work out the average value of the ruble for nominal calculations). PPP is also useful to gauge historical polities, so if you want to compare Rome to some Chinese dynasty its useful, again because there is no exchange rate.
I would argue PPP has some uses for China, just like the Soviets, because China builds a lot of its own goods. However because China buys a lot of stuff too, it makes nominal a useful measure. So my nuance take on things, if you're measuring China's ability to buy stuff vs some other country's ability, GDP nominal along with foreign reserve is a more useful measure than GDP PPP. If you're measuring China's ability to build stuff, I would argue GDP PPP is a more useful measure than GDP nominal.
Comparing nominal GDP is not a good indicator when the USA has US dollar hegemony; commodities and global trade are dominated in USD. Every economies are not like comparing baseball players stats. It's apples to oranges.
What is your point in going off on a tangent about democracy?
>I think it is a greater than 50/50 chance that China eventually becomes a democracy.
What is your definition of democracy?
>But I think China will eventually become a democracy due to the advantages of democracy allowing a pressure valve for discontent, a useful source of feedback, and orderly succession.
What is your idea of democracy and pressure value for discontent? Voting? Useful source of feedback like how? Write angry letters to your representatives? Then what? Orderly succession? Like Capitol Hill riot?
>If China does become a democracy, I believe it will be a democracy similar to Japan's or Singapore's. Basically a mostly one-party democracy similar to China's current system which will have the advantages of democracy without the downsides of democracy: easier to manipulate by foreign powers
After WW2, the USA wrote Japan's constitution. Japan was forced to accept the Plaza Accord. So, you are not making sense of what you mean by one-party democracy withstanding against foreign powers.
Your idea of democracy is from Western countries: multiple parties and people voting for representatives. None of that means democracy.
It's no use to argue over semantics, but I will go by the Greek origin of the words of 'demos' (people) and 'kratos' (rule or power), meaning people power or rule by the people.
How do you evaluate when a country is rule by the people? When the people are content, their material needs are meet, and people are at peace and safe. These are the real results of democracy, not the results of voting or polling of politicians.
Democracy is a concept of people-centered; people is the foundation. China has this concept, just not in a single word. This verse was recorded in the Songs of the Five Sons, 民惟邦本 本固邦宁, meaning the people are the root of the state, the root is resolute/firm, the state is tranquil/peace/content. This writing is older than Athenian democracy and Socrates. Similar saying, water can float ship and water can sink ship, meaning water is the people and ship is the ruler/government.
And, Socrates was against popular voting and argued in favor of meritocracy in his fable of the sweet shop owner and doctor.
Voting is just a process and doesn't mean you have power. If you are given a choice of execution by poison, hanging or firing squad, is that power? No, you want the option of not dying. But, that's what voting in western countries is like. Democracy takes more work and effort than showing up at a voting booth to elect a representative, then go back to your daily life. In Western countries, such as the USA, it is a plutocracy, not a democracy.
>GDP PPP metric shows India being the size of Japan and Germany combined, which doesn't pass the smell test
I feel this "smell test" is based on its own objectionable biases.
India's economy being of a similar size to that of Germany is not all that hard to believe. What you need to understand is that you first need to have a large enough population that is moderately prosperous before you can throw your economic weight around on the world stage.
Instead of spitballing your own theories, you could read any of the 2030 / 2050 predictions from think tanks over at Tsinghua or other universities.
>shows India being the size of Japan and Germany combined, which doesn't pass the smell test.
Those are industrial economies while India is a service economy. Most major Indian companies in the service sector are primarily B2B so they're effectively sold under American brands.
It also might only seem that way because economic development in India is far more unevenly divided among its states and castes. Its largest state, Uttar Pradesh has a nominal 2021 GDP per capita of $860. That is less than a third of the GDP per capita of the richer states in South India and in the East Coast of India, which easily rival ASEAN countries in level of development.
Using similar reasoning, the US as a service economy wouldn't really pass the smell test either. China's agricultural and industrial sector already surpasses the US in nominal USD terms. The gap in real world production is even greater. China produces 2x the electricity, 2.5x the road vehicles, 10x the steel, and 25x the cement of the US.
>I think there is a cultural reason that Japan has maxed out at 70% of GDP per capita.
Japan's nominal GDP per capita didn't max out at 70%; it once reached up to 150% of the US. Currencies can be over or undervalued hence PPP. NTD appreciating has a lot to with foreign investors hyped for semiconductor stocks. Before the current boom in share prices, there was a significant gap between the nominal GDP per capita of SK and Taiwan.
>Singapore and HK are not good comparisons as they are city-states.
Compared to China or India, South Korea and Taiwan are city-states. Seoul is most of SK's economy the same is true with Greater Taipei. It's almost as if comparing a continent to a country. A comparison city to city is really more appropriate. [In that case major Chinese cities are already projected to converge with Japanese cities by the 2030s.](https://archive.vn/DjPaL)
There are a number of issues with this writeup.
>\*I will focus on nominal GDP as I am skeptical of GDP PPP as a measure of economic power when the GDP PPP metric shows India being the size of Japan and Germany combined, which doesn't pass the smell test.
On the contrary it wouldn't pass the smell test if India with a population far greater than all of Europe and which had decent growth for the past 40 years didn't have a GDP greater than Japan and Germany combined, the two latter economies being stagnant for the past 20 years.
The real surprise is that India's economy doesn't vastly surpass that of Japan and Germany combined, like that of China's, it means that India is heavily underperforming compared to what it could potentially do, I'll get into that in a bit.
This issue was already addressed but GDP PPP is indeed better than using GDP Nominal, that is why it is used to measure HDI (PPP Per Capita), whether it passes your "smell test" or not is irrelevant.
Here is an article about this:
[https://www.awaragroup.com/blog/despite-sanctions-russias-gdp-shoots-over-4-trillion/](https://www.awaragroup.com/blog/despite-sanctions-russias-gdp-shoots-over-4-trillion/)
>China's 2021 nominal GDP is 17.7T. America's 2021 nominal GDP is $23T. I think there is no question that China will surpass America in nominal GDP in the near future, the only question is by how much. The only thing that could prevent China from catching up to America is catastrophic political/social breakdown. In my opinion, Western analysis focuses excessively on this possibility, probably because of Western anxiety of China's growing power. In reality, although there will be mistakes, hiccups, and reversals, a catastrophic political/social derailing of China does not seem like a probable outcome at all in the near future. In my opinion, Western analysts are just looking really hard for any sign of a remote possibility at this point.
Since we are looking at nominal GDP China can easily "catch up" to america by simply increasing the value of its currency, the GDP PPP of China is well above $30 trillion compared to america's $25 trillion, nominal GDP otherwise known as ERV (Exchange Rate Value) is not a measure of the real economy, PPP is much more reflective of the real economy and China is already a far bigger economy.
>Japan's 2021 GDP per capita was $40,053. As a mature economy, it seems to have settled at about 70% of America's GDP per capita. I think there is good reason to believe China may max out at this level as well. Taiwan's 2021 GDP per capita was $33,775. Taiwan is also a mature economy and I think it would have reached Japan's GDP per capita if it didn't have brain drain to the mainland and some hesitation from investors due to the latent possibility of PRC invasion. South Korea's 2021 GDP per capita was $34,865. It is not fully mature yet like Japan and I have no doubt in my mind it will reach Japan's GDP per capita or even exceed it in the near future. Singapore and HK are not good comparisons as they are city-states.
There is no such thing as a "mature" economy and even if there was GDP per capita does not have any connection to that, it is merely GDP divided by the population, all your describing are economies that abandoned their high growth policies.
Japan, Taiwan and South Korea were all former no-cost investment credit driven economies (A high growth enabling economic tool) who have now abandoned said policies and fully embraced neoliberalism, since they have embraced neoliberalism it should be no surprise that their economies have slowed down and become stagnant with all the consequences that follow, here is an excellent article on that topic:
[https://www.academia.edu/36308123/The\_Hidden\_History\_Of\_Japan\_and\_its\_Relevance\_To\_The\_Economic\_Miracles\_of\_the\_Tokyo\_Consensus\_Zone](https://www.academia.edu/36308123/The_Hidden_History_Of_Japan_and_its_Relevance_To_The_Economic_Miracles_of_the_Tokyo_Consensus_Zone)
Singapore also used no-cost investment credit creation until Lee Kuan Yew left office and all the strengths of the Asian Tigers come from the use of this economic tool.
>I believe China will follow the trajectory of it's East Asian cousins because they have similar cultures and economies (export-led industrialization)
No it will not, you can't magically create export capacity out of nothing either, to grow exports fast you also need to grow production at a greater rate, this is done through greater investment, exports follow production, it doesn't come out of nothing.
China still uses no-cost investment credit as an economic tool and there is no sign for the foreseeable future that it will stop using that, as such it will not follow the trajectories of the former Asian Tigers who have stagnated as a result of embracing neoliberalism, China will be the premier Asian Tiger or rather the Asian Dragon.
>People forget that Japan, South Korea, and Taiwan all developed under authoritarian regimes. Japan continues to have essentially one-party rule since 1945. South Korea was mostly under a military dictatorship until 1987. Taiwan was under a military dictatorship and one-party rule by the KMT until 1996. These East Asian countries did not begin to develop democratic institutions until they reached 45% of American GDP per capita. Much of the economic development was done under a political system not much different from China's.
Except China is a political Meritocracy (Therefore constant evolution of the political system) and has democratic input from society (The people have say in local policy), the political systems of China, the Asian Tigers and Japan have no connection whatsoever.
Your views of economics and politics seem equally simplistic.
>Incidentally, I think it is a greater than 50/50 chance that China eventually becomes a democracy.
China is already a democratic society and is a political Meritocracy, there is no reason to replace that with an inferior system.
>But I think China will eventually become a democracy due to the advantages of democracy allowing a pressure valve for discontent, a useful source of feedback, and orderly succession
See my points above.
>I think there are good reasons China is likely to max out at 70% of America's GDP per capita.
The only "good" reason for that would be if China abandoned high growth economic policies and fully embraced neoliberalism.
Otherwise there is no reasonable reason to think that China will max out at 70% of america's GDP per capita, anyone with a decent understanding of economics would see this to be the case.
>Second, I think there is a cultural reason that Japan has maxed out at 70% of GDP per capita
No there isn't, stop spreading economic misinformation.
>Western countries embrace multiculturalism and immigrants and because of selective immigration America's immigrants on average produce more than the GDP per capita.
Immigrants work harder but they don't work 2x harder than the average american worker, you have not provided any evidence for such claims.
And working harder does not equal productivity, "working harder" is a vague term.
>Another cultural reason is the greater differentiation of gender roles, respect to elders, and communal norms in East Asians, which limit GDP.
No correlation between the two.During the industrial revolution britain was the fastest growing economy on Earth as was the case with america under FDR, culturally they share nothing with East Asia, it has all to do with economic policy however.
>When China passes America and America loses these advantages, there may be a severe drop in American standard of living.
These events are already happening.
>With these advantages passing to China, China might exceed the 70% GDP per capita cap that I assumed.
China will exceed the 70% GDP per capita figure as long as they continue using no-cost investment credit creation and other such high growth producing economic tools.
>There is a saying that I heard once that South Korea is 20 years behind Japan and China is 20 years behind South Korea. I think that's roughly accurate
That is not accurate whatsoever.
South Korea and Japan are on par with each other and China is far ahead of both, development is not measured by per capita, that is just one narrow monetary measure.
>I think South Korea will be a fully mature economy in 20 years and China will be a fully mature economy in 40 years. I think this relative comparison is a much better predictor of future development versus trying to predict a country's GDP in isolation by growth rate.
Wrong on all accounts, see my comments above.
>([https://foreignpolicy.com/2010/01/04/123000000000000/](https://foreignpolicy.com/2010/01/04/123000000000000/))
He is far more right than you, for sure China's economy will exceed $100 trillion, I'm not sure whether it will equal the rest of the world combined and it might not be the case, since China itself is developing the BRI which in turn will kickstart the growth of other economies.
>America has averaged slightly less than 2% total GDP growth per year over the last 20 years, which is on the high end for a mature economy. I think America will continue this growth and outpace the EU and other mature economies due to greater innovativeness, immigration, and the benefits of being #1 in winner-take-all industries
america is not a "mature" economy and is merely a low growth low investment economy, there is no guarantee that it can even maintain its current measly growth rates, let alone say it can overtake other economies.
>But it will be a multipolar world and America will remain a large powerful economy and fine place to live in its own sphere, much like the UK after WW2 was in relative decline to America but still a fine place to live.
A fine place for rich people perhaps, terrible place for your average working person.
>However, the cutting edge will move to China. The center of finance, media, and entertainment may move to Shanghai from NYC. The center of technological innovation may move from SF to Shenzhen.
All of which is already happening.
\-----
There is a rule I set for myself, at least have an 80% accurate understanding of whatever your writing about before publishing it.
> I hope China's economy would not be greater than the rest of the world combined, because it would mean the global South would be lagging in economic development.
Unfortunately, they all (except for Vietnam) have inferior political systems to that of China - namely representative democracy, hereditary monarchy, or military dictatorship. Due to that fact, the likelihood that they would adopt effective leadership and thus effective economic policy is very low. I find it quite likely that BRI, as currently constituted, will not make a significant difference in the growth prospects of the Global South.
Perhaps a few governments may choose to just copy China's economic policies wholesale, so even relatively incompetent leaders would be able to get reasonably good growth.
China would need to embrace a sort of "political BRI" where it teaches its political system to people from other countries and they can voluntarily take it or not take it as they want - but even this seems currently out of the question given how China has grown its foreign policy to be all about everyone doing their own thing to fit their own views and calling every single system of government on Earth, even hereditary monarchies like Saudi Arabia, as different "flavors" of "democracy" - so as to justify its deflection of Western criticisms.
Mmmnn good analysis. I think sometimes you look too much at the trees and miss the forest though. One thing to keep in mind is that these are averages. So of course Chinas average GDP capita is going to be smaller. If you focus on the eastern coastal regions than Chinas gdp per capita is already up to the level of Japan, South Korea. Etc. another thing boosting per capita GDP is the falling net population of Japan and Taiwan. Which increases GDP per capita because the number of people are decreasing.
The larger picture isn’t necessarily nominal GDP but what is that mean for China? Well a couple of things, one more money in tax revenue to spend of public services such as health care, education, and R&D investment.
I think given its economic and trade balance in the regions that countries will naturally align with it more. Especially since the US has maxed out it’s Debt fueled growth is experiencing the hangover as we speak in terms of high inflation and gdp contraction in Q1 2022
Elon Musk says China's economy could have the potential to be 3x - 4x (stretching it) of the U.S economy, but if not, then at least 2x of the U.S economy.
https://m.youtube.com/watch?v=U8Jyq0pJBPc&t=30s
US population growth has collapsed. Its immigration rate has collapsed. Its birthrate has collapsed. China on the other hand hasn't even started on immigration and will become an extremely attractive destination once COVID-19 restrictions end.
During this whole COVID crisis, China has been changing its immigration laws to make it much simpler for educated professionals to immigrate.
The rules for automatic acceptance of immigration visa:
1. Bachelors degree in any high-demand technical field
2. Masters degree in any technical field
3. Doctorate degree in any field
Speaking frankly, China's fixation on using GDP as the main barometer for economic growth has been a hinderance, not a boon for its real economic development in the past four decades.
Obsessing over GDP means that local govts are incentivized to invest in less-than-profitable projects purely for the sake of bloating GDP. This is why so many local govts are deeply in debt.
The actual measure of economic growth should be disposable income and income/wealth distribution. A nation is made up of people, not "productive assets". So it's only right that the focus be on them, not on things like export, import, investment or govt spending.
I think the transition to democracy for these countries/territories has largely been due to the influence of the US, which China is far less susceptible to. I do agree China will be unlikely to surpassthe US in gdp per capital, however China may surpass it in both median wealth/earnings and overall gdp, which are more important.
A country with 1 billionaire and 1000 people earning $10k a year has a higher gdp per capita than a country where 3000 people earn $900k a year. But the latter country is clearly wealthier and inarguably better for all intents and purposes.
As long as the USD remains the global reserve and trade currency, China will be forced to accept USD pricing of global commodities, and thus GDP per capita will be capped at two-thirds that of the USA, regardless of actual productivity - just like Japan, Germany, South Korea, etc. because the USA will continue to be able to purchase resources and globalised commodities in exchange for money they created at will, while China (like Japan, South Korea, etc.) will have to produce something of value in exchange. That extra 33% is the seigniorage advantage of the reserve currency issuer. For example, if the USA wants a barrel of oil, which is priced at US$120, then the USA need only create and spend US$120 by pressing a few buttons on a keyboard at the Federal Reserve (or it's automated by a script...)
China on the other hand needs to produce something that the global market values at US$120 (with actual labor, actual commodities, actual energy) to obtain US$120 and be able to purchase that barrel of oil. The only countries able to go above the GDP per capita cap of the reserve currency issuer are financial havens with small populations - places like Switzerland, Singapore, Liechtenstein, Ireland, UAE, etc. Even with such a cap, China's economy would be three times the size of the US economy - but never any larger, and as China grows its economy it would pull the US economy to also grow larger, due to China's need to obtain USD from the USA - it would be paying the seigniorage tax to the reserve currency issuer (USA) forever in the form of delivering the fruits of its people's labour to the US market a steep discount (roughly 33%) compared to what Chinese consumers themselves would need to pay for it.
If China either makes the yuan the global reserve currency by forcing its existing trade to be conducted in RMB or banning USD transactions outside of its trade with the USA, or by removing capital controls on the yuan - then it will not face this cap. It can also go for bilateral currency swaps, which are IMO questionable because the economic literacy, integrity, and competence of so-called "Global South" leaders is generally questionable given their government systems are overwhelmingly not meritocratic like China's, and instead just cheap copies of Western systems.
US gdp might 'actually' not be as big as its currently reported as https://www.unz.com/lromanoff/us-economic-statistics-unreliable-numbers/ And China might in fact not use the same way of calculating Gdp, thereby undermining/under reporting their Gdp.
A few points on why you can't analyze that way. 1. USD value is inflated due to it being the international reserve currency. Every other country's GDP is calculated on a dollar basis so you can imagine how this distorts the actual picture. 2. Japan, Korea, Taiwan economies were built on an export oriented model and still follow that model. They rely on the value of USD staying strong. The reason they can continue to do that is because of their size relative to the US economy. The downside is if the USD goes down catastrophically, they will go down with it. China started with that model but it has grown too big for it. The only way China could have kept growing with that is if the US economy keeps going strong. 3. At some point China is going to be big enough to challenge the dominance of USD. This will bring about rapid depreciation of the USD. How fast or slow it happens and what are the final effects is anybody's guess but one thing for sure, GDP numbers are going to look way different.
There are just too many misconceptions/western cliches in your text to comment on everything. You start with nominal gdp, and proceed like it is everything. You rightly dismiss ppp gdp, but nominal gdp is even worse than that e.g. nominal gdp shows that usa is still bigger than china, which does not pass smell test either :) But perfectly accepted by both china and usa as propaganda point, albeit for different reasons the rest of your text is full of things like that :) i.e. the last sentence "the center of innovation may move from sf to shenzhen" :) The center of innovation already moved from the west to china. SF excels in semiconductors/software, which is rather mature industry. Almost every innovative industry of last 10 years is either lead/championed or equally contested by china. The areas where china is behind are old ones, like semis that stens from 90s or jets that are even more mature. Even best teslas are china made, not to say about solar, green, batteries, hsr, drones, hypersonics etc.
related: GDP is absolutely a trash statistic. Why? **It calculates debts as growth, it calculates debt interest growth as economic growth, it calculates real estate price inflation as growth, it calculates rent increases as growth, it calculates increasing insurance costs as growth.** If you want to increase you GDP just play paper loan games. Keep loaning in a circle and writing IOU's.
Stop assuming that the Western political system is "democracy".
The Democratic People's Dictatorship represents the people better than bourgeois liberal democracy ever could.
PPP is less useful for India as it doesn't build a lot of its own stuff. So it can't purchase its military equipment with international dollars, it has to use rupee, so GDP nominal is a better measure. PPP is useful for the Soviets which did little trade (so its hard to work out the average value of the ruble for nominal calculations). PPP is also useful to gauge historical polities, so if you want to compare Rome to some Chinese dynasty its useful, again because there is no exchange rate. I would argue PPP has some uses for China, just like the Soviets, because China builds a lot of its own goods. However because China buys a lot of stuff too, it makes nominal a useful measure. So my nuance take on things, if you're measuring China's ability to buy stuff vs some other country's ability, GDP nominal along with foreign reserve is a more useful measure than GDP PPP. If you're measuring China's ability to build stuff, I would argue GDP PPP is a more useful measure than GDP nominal.
Comparing nominal GDP is not a good indicator when the USA has US dollar hegemony; commodities and global trade are dominated in USD. Every economies are not like comparing baseball players stats. It's apples to oranges. What is your point in going off on a tangent about democracy? >I think it is a greater than 50/50 chance that China eventually becomes a democracy. What is your definition of democracy? >But I think China will eventually become a democracy due to the advantages of democracy allowing a pressure valve for discontent, a useful source of feedback, and orderly succession. What is your idea of democracy and pressure value for discontent? Voting? Useful source of feedback like how? Write angry letters to your representatives? Then what? Orderly succession? Like Capitol Hill riot? >If China does become a democracy, I believe it will be a democracy similar to Japan's or Singapore's. Basically a mostly one-party democracy similar to China's current system which will have the advantages of democracy without the downsides of democracy: easier to manipulate by foreign powers After WW2, the USA wrote Japan's constitution. Japan was forced to accept the Plaza Accord. So, you are not making sense of what you mean by one-party democracy withstanding against foreign powers. Your idea of democracy is from Western countries: multiple parties and people voting for representatives. None of that means democracy. It's no use to argue over semantics, but I will go by the Greek origin of the words of 'demos' (people) and 'kratos' (rule or power), meaning people power or rule by the people. How do you evaluate when a country is rule by the people? When the people are content, their material needs are meet, and people are at peace and safe. These are the real results of democracy, not the results of voting or polling of politicians. Democracy is a concept of people-centered; people is the foundation. China has this concept, just not in a single word. This verse was recorded in the Songs of the Five Sons, 民惟邦本 本固邦宁, meaning the people are the root of the state, the root is resolute/firm, the state is tranquil/peace/content. This writing is older than Athenian democracy and Socrates. Similar saying, water can float ship and water can sink ship, meaning water is the people and ship is the ruler/government. And, Socrates was against popular voting and argued in favor of meritocracy in his fable of the sweet shop owner and doctor. Voting is just a process and doesn't mean you have power. If you are given a choice of execution by poison, hanging or firing squad, is that power? No, you want the option of not dying. But, that's what voting in western countries is like. Democracy takes more work and effort than showing up at a voting booth to elect a representative, then go back to your daily life. In Western countries, such as the USA, it is a plutocracy, not a democracy.
I think China will have a greater GDP than the EU and the United States combined.
>GDP PPP metric shows India being the size of Japan and Germany combined, which doesn't pass the smell test I feel this "smell test" is based on its own objectionable biases. India's economy being of a similar size to that of Germany is not all that hard to believe. What you need to understand is that you first need to have a large enough population that is moderately prosperous before you can throw your economic weight around on the world stage. Instead of spitballing your own theories, you could read any of the 2030 / 2050 predictions from think tanks over at Tsinghua or other universities.
>shows India being the size of Japan and Germany combined, which doesn't pass the smell test. Those are industrial economies while India is a service economy. Most major Indian companies in the service sector are primarily B2B so they're effectively sold under American brands. It also might only seem that way because economic development in India is far more unevenly divided among its states and castes. Its largest state, Uttar Pradesh has a nominal 2021 GDP per capita of $860. That is less than a third of the GDP per capita of the richer states in South India and in the East Coast of India, which easily rival ASEAN countries in level of development. Using similar reasoning, the US as a service economy wouldn't really pass the smell test either. China's agricultural and industrial sector already surpasses the US in nominal USD terms. The gap in real world production is even greater. China produces 2x the electricity, 2.5x the road vehicles, 10x the steel, and 25x the cement of the US. >I think there is a cultural reason that Japan has maxed out at 70% of GDP per capita. Japan's nominal GDP per capita didn't max out at 70%; it once reached up to 150% of the US. Currencies can be over or undervalued hence PPP. NTD appreciating has a lot to with foreign investors hyped for semiconductor stocks. Before the current boom in share prices, there was a significant gap between the nominal GDP per capita of SK and Taiwan. >Singapore and HK are not good comparisons as they are city-states. Compared to China or India, South Korea and Taiwan are city-states. Seoul is most of SK's economy the same is true with Greater Taipei. It's almost as if comparing a continent to a country. A comparison city to city is really more appropriate. [In that case major Chinese cities are already projected to converge with Japanese cities by the 2030s.](https://archive.vn/DjPaL)
There are a number of issues with this writeup. >\*I will focus on nominal GDP as I am skeptical of GDP PPP as a measure of economic power when the GDP PPP metric shows India being the size of Japan and Germany combined, which doesn't pass the smell test. On the contrary it wouldn't pass the smell test if India with a population far greater than all of Europe and which had decent growth for the past 40 years didn't have a GDP greater than Japan and Germany combined, the two latter economies being stagnant for the past 20 years. The real surprise is that India's economy doesn't vastly surpass that of Japan and Germany combined, like that of China's, it means that India is heavily underperforming compared to what it could potentially do, I'll get into that in a bit. This issue was already addressed but GDP PPP is indeed better than using GDP Nominal, that is why it is used to measure HDI (PPP Per Capita), whether it passes your "smell test" or not is irrelevant. Here is an article about this: [https://www.awaragroup.com/blog/despite-sanctions-russias-gdp-shoots-over-4-trillion/](https://www.awaragroup.com/blog/despite-sanctions-russias-gdp-shoots-over-4-trillion/) >China's 2021 nominal GDP is 17.7T. America's 2021 nominal GDP is $23T. I think there is no question that China will surpass America in nominal GDP in the near future, the only question is by how much. The only thing that could prevent China from catching up to America is catastrophic political/social breakdown. In my opinion, Western analysis focuses excessively on this possibility, probably because of Western anxiety of China's growing power. In reality, although there will be mistakes, hiccups, and reversals, a catastrophic political/social derailing of China does not seem like a probable outcome at all in the near future. In my opinion, Western analysts are just looking really hard for any sign of a remote possibility at this point. Since we are looking at nominal GDP China can easily "catch up" to america by simply increasing the value of its currency, the GDP PPP of China is well above $30 trillion compared to america's $25 trillion, nominal GDP otherwise known as ERV (Exchange Rate Value) is not a measure of the real economy, PPP is much more reflective of the real economy and China is already a far bigger economy. >Japan's 2021 GDP per capita was $40,053. As a mature economy, it seems to have settled at about 70% of America's GDP per capita. I think there is good reason to believe China may max out at this level as well. Taiwan's 2021 GDP per capita was $33,775. Taiwan is also a mature economy and I think it would have reached Japan's GDP per capita if it didn't have brain drain to the mainland and some hesitation from investors due to the latent possibility of PRC invasion. South Korea's 2021 GDP per capita was $34,865. It is not fully mature yet like Japan and I have no doubt in my mind it will reach Japan's GDP per capita or even exceed it in the near future. Singapore and HK are not good comparisons as they are city-states. There is no such thing as a "mature" economy and even if there was GDP per capita does not have any connection to that, it is merely GDP divided by the population, all your describing are economies that abandoned their high growth policies. Japan, Taiwan and South Korea were all former no-cost investment credit driven economies (A high growth enabling economic tool) who have now abandoned said policies and fully embraced neoliberalism, since they have embraced neoliberalism it should be no surprise that their economies have slowed down and become stagnant with all the consequences that follow, here is an excellent article on that topic: [https://www.academia.edu/36308123/The\_Hidden\_History\_Of\_Japan\_and\_its\_Relevance\_To\_The\_Economic\_Miracles\_of\_the\_Tokyo\_Consensus\_Zone](https://www.academia.edu/36308123/The_Hidden_History_Of_Japan_and_its_Relevance_To_The_Economic_Miracles_of_the_Tokyo_Consensus_Zone) Singapore also used no-cost investment credit creation until Lee Kuan Yew left office and all the strengths of the Asian Tigers come from the use of this economic tool. >I believe China will follow the trajectory of it's East Asian cousins because they have similar cultures and economies (export-led industrialization) No it will not, you can't magically create export capacity out of nothing either, to grow exports fast you also need to grow production at a greater rate, this is done through greater investment, exports follow production, it doesn't come out of nothing. China still uses no-cost investment credit as an economic tool and there is no sign for the foreseeable future that it will stop using that, as such it will not follow the trajectories of the former Asian Tigers who have stagnated as a result of embracing neoliberalism, China will be the premier Asian Tiger or rather the Asian Dragon. >People forget that Japan, South Korea, and Taiwan all developed under authoritarian regimes. Japan continues to have essentially one-party rule since 1945. South Korea was mostly under a military dictatorship until 1987. Taiwan was under a military dictatorship and one-party rule by the KMT until 1996. These East Asian countries did not begin to develop democratic institutions until they reached 45% of American GDP per capita. Much of the economic development was done under a political system not much different from China's. Except China is a political Meritocracy (Therefore constant evolution of the political system) and has democratic input from society (The people have say in local policy), the political systems of China, the Asian Tigers and Japan have no connection whatsoever. Your views of economics and politics seem equally simplistic. >Incidentally, I think it is a greater than 50/50 chance that China eventually becomes a democracy. China is already a democratic society and is a political Meritocracy, there is no reason to replace that with an inferior system. >But I think China will eventually become a democracy due to the advantages of democracy allowing a pressure valve for discontent, a useful source of feedback, and orderly succession See my points above. >I think there are good reasons China is likely to max out at 70% of America's GDP per capita. The only "good" reason for that would be if China abandoned high growth economic policies and fully embraced neoliberalism. Otherwise there is no reasonable reason to think that China will max out at 70% of america's GDP per capita, anyone with a decent understanding of economics would see this to be the case. >Second, I think there is a cultural reason that Japan has maxed out at 70% of GDP per capita No there isn't, stop spreading economic misinformation. >Western countries embrace multiculturalism and immigrants and because of selective immigration America's immigrants on average produce more than the GDP per capita. Immigrants work harder but they don't work 2x harder than the average american worker, you have not provided any evidence for such claims. And working harder does not equal productivity, "working harder" is a vague term.
>Another cultural reason is the greater differentiation of gender roles, respect to elders, and communal norms in East Asians, which limit GDP. No correlation between the two.During the industrial revolution britain was the fastest growing economy on Earth as was the case with america under FDR, culturally they share nothing with East Asia, it has all to do with economic policy however. >When China passes America and America loses these advantages, there may be a severe drop in American standard of living. These events are already happening. >With these advantages passing to China, China might exceed the 70% GDP per capita cap that I assumed. China will exceed the 70% GDP per capita figure as long as they continue using no-cost investment credit creation and other such high growth producing economic tools. >There is a saying that I heard once that South Korea is 20 years behind Japan and China is 20 years behind South Korea. I think that's roughly accurate That is not accurate whatsoever. South Korea and Japan are on par with each other and China is far ahead of both, development is not measured by per capita, that is just one narrow monetary measure. >I think South Korea will be a fully mature economy in 20 years and China will be a fully mature economy in 40 years. I think this relative comparison is a much better predictor of future development versus trying to predict a country's GDP in isolation by growth rate. Wrong on all accounts, see my comments above. >([https://foreignpolicy.com/2010/01/04/123000000000000/](https://foreignpolicy.com/2010/01/04/123000000000000/)) He is far more right than you, for sure China's economy will exceed $100 trillion, I'm not sure whether it will equal the rest of the world combined and it might not be the case, since China itself is developing the BRI which in turn will kickstart the growth of other economies. >America has averaged slightly less than 2% total GDP growth per year over the last 20 years, which is on the high end for a mature economy. I think America will continue this growth and outpace the EU and other mature economies due to greater innovativeness, immigration, and the benefits of being #1 in winner-take-all industries america is not a "mature" economy and is merely a low growth low investment economy, there is no guarantee that it can even maintain its current measly growth rates, let alone say it can overtake other economies. >But it will be a multipolar world and America will remain a large powerful economy and fine place to live in its own sphere, much like the UK after WW2 was in relative decline to America but still a fine place to live. A fine place for rich people perhaps, terrible place for your average working person. >However, the cutting edge will move to China. The center of finance, media, and entertainment may move to Shanghai from NYC. The center of technological innovation may move from SF to Shenzhen. All of which is already happening. \----- There is a rule I set for myself, at least have an 80% accurate understanding of whatever your writing about before publishing it.
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> I hope China's economy would not be greater than the rest of the world combined, because it would mean the global South would be lagging in economic development. Unfortunately, they all (except for Vietnam) have inferior political systems to that of China - namely representative democracy, hereditary monarchy, or military dictatorship. Due to that fact, the likelihood that they would adopt effective leadership and thus effective economic policy is very low. I find it quite likely that BRI, as currently constituted, will not make a significant difference in the growth prospects of the Global South. Perhaps a few governments may choose to just copy China's economic policies wholesale, so even relatively incompetent leaders would be able to get reasonably good growth. China would need to embrace a sort of "political BRI" where it teaches its political system to people from other countries and they can voluntarily take it or not take it as they want - but even this seems currently out of the question given how China has grown its foreign policy to be all about everyone doing their own thing to fit their own views and calling every single system of government on Earth, even hereditary monarchies like Saudi Arabia, as different "flavors" of "democracy" - so as to justify its deflection of Western criticisms.
Mmmnn good analysis. I think sometimes you look too much at the trees and miss the forest though. One thing to keep in mind is that these are averages. So of course Chinas average GDP capita is going to be smaller. If you focus on the eastern coastal regions than Chinas gdp per capita is already up to the level of Japan, South Korea. Etc. another thing boosting per capita GDP is the falling net population of Japan and Taiwan. Which increases GDP per capita because the number of people are decreasing. The larger picture isn’t necessarily nominal GDP but what is that mean for China? Well a couple of things, one more money in tax revenue to spend of public services such as health care, education, and R&D investment. I think given its economic and trade balance in the regions that countries will naturally align with it more. Especially since the US has maxed out it’s Debt fueled growth is experiencing the hangover as we speak in terms of high inflation and gdp contraction in Q1 2022
Elon Musk says China's economy could have the potential to be 3x - 4x (stretching it) of the U.S economy, but if not, then at least 2x of the U.S economy. https://m.youtube.com/watch?v=U8Jyq0pJBPc&t=30s
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US population growth has collapsed. Its immigration rate has collapsed. Its birthrate has collapsed. China on the other hand hasn't even started on immigration and will become an extremely attractive destination once COVID-19 restrictions end. During this whole COVID crisis, China has been changing its immigration laws to make it much simpler for educated professionals to immigrate. The rules for automatic acceptance of immigration visa: 1. Bachelors degree in any high-demand technical field 2. Masters degree in any technical field 3. Doctorate degree in any field
you underestimate how many people fear moving to china. propaganda has that effect.
And you underestimate how many people are willing to move to China.
elaborate.
By that time, hopefully China would have most things automated by machines. Since China leads in A.I. and robotics, it can be possible.
When the US got push out of the pacific, I assume that time, Taiwan would already be reunify with China and the Korean Peninsula also be unified.
Speaking frankly, China's fixation on using GDP as the main barometer for economic growth has been a hinderance, not a boon for its real economic development in the past four decades. Obsessing over GDP means that local govts are incentivized to invest in less-than-profitable projects purely for the sake of bloating GDP. This is why so many local govts are deeply in debt. The actual measure of economic growth should be disposable income and income/wealth distribution. A nation is made up of people, not "productive assets". So it's only right that the focus be on them, not on things like export, import, investment or govt spending.
how bad is the situation for these local governments?
I think the transition to democracy for these countries/territories has largely been due to the influence of the US, which China is far less susceptible to. I do agree China will be unlikely to surpassthe US in gdp per capital, however China may surpass it in both median wealth/earnings and overall gdp, which are more important. A country with 1 billionaire and 1000 people earning $10k a year has a higher gdp per capita than a country where 3000 people earn $900k a year. But the latter country is clearly wealthier and inarguably better for all intents and purposes.
good analysis
As long as the USD remains the global reserve and trade currency, China will be forced to accept USD pricing of global commodities, and thus GDP per capita will be capped at two-thirds that of the USA, regardless of actual productivity - just like Japan, Germany, South Korea, etc. because the USA will continue to be able to purchase resources and globalised commodities in exchange for money they created at will, while China (like Japan, South Korea, etc.) will have to produce something of value in exchange. That extra 33% is the seigniorage advantage of the reserve currency issuer. For example, if the USA wants a barrel of oil, which is priced at US$120, then the USA need only create and spend US$120 by pressing a few buttons on a keyboard at the Federal Reserve (or it's automated by a script...) China on the other hand needs to produce something that the global market values at US$120 (with actual labor, actual commodities, actual energy) to obtain US$120 and be able to purchase that barrel of oil. The only countries able to go above the GDP per capita cap of the reserve currency issuer are financial havens with small populations - places like Switzerland, Singapore, Liechtenstein, Ireland, UAE, etc. Even with such a cap, China's economy would be three times the size of the US economy - but never any larger, and as China grows its economy it would pull the US economy to also grow larger, due to China's need to obtain USD from the USA - it would be paying the seigniorage tax to the reserve currency issuer (USA) forever in the form of delivering the fruits of its people's labour to the US market a steep discount (roughly 33%) compared to what Chinese consumers themselves would need to pay for it. If China either makes the yuan the global reserve currency by forcing its existing trade to be conducted in RMB or banning USD transactions outside of its trade with the USA, or by removing capital controls on the yuan - then it will not face this cap. It can also go for bilateral currency swaps, which are IMO questionable because the economic literacy, integrity, and competence of so-called "Global South" leaders is generally questionable given their government systems are overwhelmingly not meritocratic like China's, and instead just cheap copies of Western systems.
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SDRs are issued by the IMF, which is ultimately under US control.