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As the old Avis rental car slogan used to say: "When you're No. 2, you try harder."
With the growth rates that its economy has turned in the past few years, no economist could ever accuse China's leader of not trying hard. China now claims to have jumped over Japan to take over the No. 2 spot in the world economic pecking order.
China's next target: The No. 1 U.S. economy.
In fact, some experts believe that China could catch up to the United States' $14.4 trillion economy in as little as 10 to 15 years.
"The stark, inescapable reality for those who would dismiss China is that China's growth is not only very real, but has the greatest upside potential in recorded history," says Money Morning Chief Investment Strategist Keith Fitz-Gerald, who predicted this scenario several years ago.
Yi Gang, the country's chief currency regulator and director of the State Administration on Foreign Exchange, said that China has achieved the No. 2 spot during an interview in China Reform magazine. China came close to surpassing Japan in 2009 and has continued its torrid economic growth ever since.
China's $4.81 trillion economy grew by 11.9% in this year's first quarter and 10.3% the second, with gross domestic product (GDP) expected to grow at a better-than 9% clip in the second half. China's annual growth since its market reforms of 1978 has averaged more than 9.5%.
Yi said that although the country will not be able to keep up a robust growth rate of 9% - 10% each decade, if China can maintain a rate of at least 5% - 6% through the 2020s, it would reach 50 straight years of rapid growth - what he calls "unprecedented in human history." Its current 30-year climb has helped it surpass the economies of Britain and France in 2005 and Germany in 2007.
Money Morning's Fitz-Gerald predicted that China would overtake Japan two years after passing Germany.
Where China still lags behind its closest economic competition is in the area of per-capita income. With a World Bank ranking of 124, China comes in at $3,800 a year, which is a far cry from Japan, which is ranked No. 32 at $37,870, and the United States, ranked No. 17 at $46,513.
By maintaining an average annual GDP growth rate of 8%, China could overtake the U.S. economy by 2025 - with a per capita GDP that's less than one-third the comparable U.S. number.
Money Morning's Fitz-Gerald actually sees China snagging the top spot even earlier - maybe as soon as 2020 - less than 10 years from now.
"There's no doubt there's going to be ups and downs, and there's going to be bubbles and growth spurts, just like we've experienced in our own economies, but data like this suggests that it's just par for the course," Fitz-Gerald said.
Fitz-Gerald cites China's poor water quality and immature financial markets as the only impediments to its growth, but having a limited variety of financial instruments has also been a positive factor for China.
"It means China has not engaged in the nonsense that drove the rest of the world to financial oblivion," said Fitz-Gerald.
Skeptics who think China's communist environment will impede its financial strength simply aren't looking at all the facts, Fitz-Gerald.
"Where is it written that you have to be democratic to be capitalist - except in our own book? The China of the future is likely to include a blend of capitalism, communism and democratic principles that are in their infancy today," said Fitz-Gerald.
Although China has gained political clout with its increasingly powerful financial position, Yi said that the country's No. 2 spot did not mean it was eager to make the yuan a global currency soon.
"China is still a developing country, and we should be wise enough to know ourselves," Yi said. "We must be modest and we still have to keep a low profile. If other people choose the yuan as a reserve currency, we won't stop that as it is the demand of the market. However, we will not push hard to promote it."
China's increased ranking gives yet another reason for investors to ensure they are part of a market offering historic profit opportunities. Fitz-Gerald continues to reiterate his urging for investors to double their exposure to China.
Said Fitz-Gerald: "The dragon is coming to lunch. The only decision investors have to make is whether you will be at the table or on the menu."
News and Related Story Links:
- The Wall Street Journal:
China Central Banker Says Growth to Slow Long Term
- Money Morning:
Money Morning Mid-Year Forecast: Why China's Economy Will Exceed Expectations in the Second Half of 2010
- SellSellblogspot.com:
Advertising No. 2 Greatness: Avis.
JUMPING IN ON THE MEAT WAGON IS A BIT NAIVE, THIS WAY IS FOR UNEDUCATED
BUSINESSMEN, SOON INDIA IS GOING TO BE A BIG ECONOMY, THEN INDONESIA AND
SO ON.
WE SHOULD INDUCE CORRECT AND INVESTMENT FOR LONG TERM RETURNS ATTITUDES. NOT ROB AND LETS GO WHEN ROBBING IS OVER. THINK OF YR CHILDREN AND THEIR
FUTURE. WHAT IS ALL THIS TALK ABT CHARITY ???. IT WAS JAPAN. NOW CHINA AND NEXT ?????SPACE TAKING OVER AMERICA ???. FOR ALL U KNOW, THE SPACE ALIENS HAVE
MORE WEALTH THAN EARTHLINGS.
The numbers you are using are skewed The US economy is down to 11-12 trillion and
will continue to shrink as the deficit continues to grow and strangle the life out of it!
China will overtake us sooner than expected because we will default on our debt and
the dollar will be replaced as the world currency and you already know these things!
When these two events happen what do you think the GDP will be then? This will
happen before 2025 as the interest on the debt surpasses 1 trillion dollars a year plus
social security is already broke paying out more than it collects! What is so frightening
about the story is the military implications this has as China's military will reach super-
power status thus changing the balance of power in the world!
Why would anyone WANT to be 'first' in rat-racing over little pieces of paper called money? Capitalism is a pyramid scheme… the freemason pyramid scheme symbol is right there on the back of the USA dollar. You want to be 'first' at having a society chasing greenpapers as its 'value' and 'success'? I'll stick with chasing morals, fairness, and equality as MY favorite 'value' and 'success' measuring criteria. Pyramids always flop from getting too top-heavy from everyone trying to get-a-leg-up on everything. The capitalism pyramid scheme is just like the sure-to-fail childhood pyramids. Upper 1/3 are heads-in-the-clouds while the kids on the bottom get crushed from having the weight of the world on their backs. You'd think the USA would have learned not to use pyramids back when we outlawed such servitude systems in the playgrounds. But, apparently not. Do a Google IMAGE SEARCH for 'pyramid of capitalist' to see how the free marketeers pyramid scheme was first discovered to be a con/sham… in 1911. Everyone knows capitalism is a Chicago mob-like "pay-up-or-lose-your-wellbeing" felony. When will we bust it? The USA allows monetary discrimination. It allows "join the competer's church or die" felony extortion to 18 year olds (get a job aboard the pyramid or starve). The competer's church that ate a nation (capitalism) is quite a widespread self-BSing religion, it is. Competition is NOT healthy and never was. Only cooperation is healthy. COMMUNE-it, ya know? Its the part of 'commune' that you haven't been programmed to hate.
Isn't that back-of-the-dollar pyramid… a Columbian freemason symbol? And WHERE is the USA gov located? District of Columbia? (Not even part of the USA!) How much more blatant can ya get? The "Fed" runs a pyramid scheme called the free marketeers. If you're using the "federal reserve note" certificates, or using no-other-living-thing-on-the-planet entitles of ownership, you're bought into a servitude/slavery con/sham… called capitalism. Pyramiding 101.
Larry "Wingnut" Wendlandt
MaStars – Mothers Against Stuff That Ain't Right
(anti-capitalism-ists)
Bessemer MI USA
Right on! Ride on! – The USA Sham… It's Native Land, Taken From Peaceful Peoples…
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Why would any well read person be surprise? China has been the dominant economic, political, and military power of the world for over 85% of its 6000 years history. The US is just a young start with superpower status for a mere 60 years and waning earlier and faster than the Roman, the Incas, and the ex British Empire. From that historical perspective, the US is not even in the league of world powers, too short a tenure.
After 30 years of torried growth, China is back as the Middle Kingdom again. He is the largest in everything: exporting country, auto market, Internet market, energy consumption, cell phone market (400 million), solar and wind energy market, etc. The list is beginning to run longer than the longest and oldest monument on the World Heritage List — the Great Wall. Bye bye uncle sammy.
Certainly China is rising fast and well may overtake the US in terms of GDP but for how long?
China doesn't have the solid foundations of a civil society based on the rule of law. The Chinese Government is acutely aware of its own country's failings and is doing its best to rectify them. However, the population is so huge and China has moved so fast it's now difficult for the government to keep its control on housing prices, interest rates, movements on the stock exchange, steel and raw resources prices etc.
China well up up like a skyrocket on a Spring Festival night. Zooming brilliantly skyward before exploding and falling back to earth! The factors that determine whether or not China is building a solid foundation based on increasing prosperity are moves toward building a vastly improved education that fosters originality and innovation, a greater spread and increase in consumer spending both in the city and the countryside, the ability to control and reduce polluting industries and the ability to keep housing prices at an affordable level.
To be fair, China is putting in place the rudiments of civil society through the increased participation of NGO's and charity groups and the realisation that sport is not just about Gold Medals but collegiality, cooperation and enjoyment. However, there is still a long way to go and the path is strewn with corrupt government officials and the suddenly rich!
[…] (Monday), in fact, headlines declared that China was making the move to leapfrog Japan and become the world's second-largest economy. With those two catalysts, and China's economy continuing to grow at 10% per annum, gold investors […]
[…] (Monday), in fact, headlines declared that China was making the move to leapfrog Japan and become the world's second-largest economy. With those two catalysts, and China's economy continuing to grow at 10% per annum, gold […]
The Dr. Ross Grainger's, AustinUSA or former Australian P.M. Minster etc. blurt on as to how China was the "dominant economic, political and military power for 85% of its 6000 year history" is such crap that it's hilarious. To grasp that reality one merely needs to look at the Wikipedia timeline and observe how China was in total disarray from 650 to 1450. And the only reason it 'kicked-on' after that, is because Europeans turned up to buy their wares. Thus, generating wealth for China. As for China's great navy, I have to inform those who believe the rubbish about such that it was, in fact, Arab mariners from 900 until the arrival of Europeans in the early 1400's who were the equivalent of todays TNT & UPS in shipping China's products overseas. To substantiate that prevails with Indonesia being a Muslim nation. And, not to forget that it was people from Indonesia who colonised Madagascar. In addition, not one single invention/innovation has emanated from within China since the 600's. Of course, today China is an incredible entity. due, to it pilfering Western inventions and ideas. However, due to its one-child policy and dreadful pollution – it's estimated 200 million will be either dead or severely incapacitated by it. So come 2030 it will be at a point of no return – well, its almost there now, actually. By 2050, China will resemble a scene from Escape from New York.