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China will soon be world's biggest exporter

· US and Germany will be overtaken by 2010
· Beijing must tackle inequality, says OECD

Larry Elliott, economics editor and Jonathan Watts in Beijing
Saturday September 17, 2005
The Guardian


China's explosive rise to economic superpower status was confirmed yesterday by the west's leading thinktank in a new report predicting that it would leapfrog the United States and Germany within five years to become the world's biggest exporter.

Despite growing social strains and international concerns, the Organisation for Economic Cooperation and Development said there would be no let-up in China's breakneck growth.

China is not a member of the OECD - a group of the world's richest developed nations - but the Paris-based organisation published its first report yesterday on a country that has been transformed within a quarter of a century from struggling peasant economy to industrial titan.

It already accounts for 6% of world exports and its potential to supply the globe with low-cost manufactured goods has caused tensions in the global trading system, exemplified by the recent "bra wars" row. The OECD said China's share was on course to rise to 10% by 2010, by which time it would overtake the US.
Despite 25 years of gross domestic product (GDP) growth at an annual rate of more than 9%, China is not expected to slow in the near future. The thinktank predicted that the world's most populous nation would overtake Britain, France and Italy to become the fourth largest economy within five years.

Hardly a day goes by without new evidence of China's surge up the ranks of the richest economies. This week Ernst & Young released a report predicting it would surpass the US as the world's second largest consumer of luxury goods within 10 years.

The accounting firm forecast 10% to 20% annual growth rates in the sector until 2015, by which time sales are expected to exceed $11.5bn (£6.4bn), or 29% of the world's total, second only to Japan.

A separate study by the China Academy of Social Sciences predicted that the middle class would more than double in size by 2020 to account for about 40% of the 1.3 billion population.

If such statistics are not convincing enough, you need only look at the cityscapes of powerhouses such as Beijing, Shanghai and Chongqing, where the transformation is apparent in the forest of skyscrapers, shopping malls and roads.

But the OECD also identified areas that will have to be reformed if Beijing is to complete the transition from a centrally planned economy. These include strengthening the financial system, further steps to allow the currency to float freely and measures to reduce inequality.

Chiming with last week's report from the UN, the OECD said there was evidence of a growing gulf between urban and rural China and between rich and poor on the eastern seaboard. "Although economic dynamism has helped reduce the number living in absolute poverty, income levels are still low and inequality is on the rise, not only between the cities and rural regions, but also within the more prosperous coastal provinces," the OECD said.

The thinktank added that to reduce the gap in incomes, the government should make it easier for people to move from the country to the cities, but urbanisation should also be carefully managed, partly through a reform of the land law.

The strains of China's spectacular growth are increasingly apparent. Energy shortages cause frequent brown-outs on the industrialised eastern seaboard during the peak demand periods of midsummer and midwinter. To ease demand, the factories of Shenzhen have to halt production one day a week and the lights on Shanghai's Bund, the old financial district, are cut on many nights.

Some of the biggest problems have been in the area of the environment and health. According to the UN and the OECD, China's ability to meet the millennium development goal of cutting infant mortality by two-thirds is being hampered by unequal access to healthcare, and this point was also emphasised by the OECD.

But the state is no longer the main force for change. The OECD noted that, as a result of "profound shifts in government policies, the private sector is now driving China's remarkable economic growth". Over half of China's GDP was produced by privately controlled enterprises, it added.

guardian.co.uk

   

Here's a thought, buy domestic you unpatriotic bastards.

   

Assuming china doesn't make the foolish decision to attack Taiwan, assuming that western china doesn't go into uprising, assuming that they don't mess with the freedoms enjoyed in hong kong, assuming they somehow manage to feed all of their citizens, assuming they fix their pollution problems, assuming that china doesn't mess with mongolia, and that there are no new players to compete with chinas dominance, and that china's growth doesn't slow down, and that the workers don't revolt....

assuming all that, and by relying on forged economic data then yes.... China might become the worlds largest exporter

   

The juggler has far too many balls in the air at once and soon it will fail. China's economy is too much for any one party to control and the strains are showing.

   

Interesting fact:

Highlander (fishsticks, etc) from Nova Scotia produces some sort of seasoned fish fillets. They catch the fish here, clean them, ship them across the world to China to be seasoned, and send them back here for packaging and distribution.

The way I see it, China will have to improve their human rights policies before they can worry about taking over the economy, but their cheap labour is the most significant thing they've got going for them... a Catch 22 of sorts.

   

....sure a very effective suggestion when Canada is a NET EXPORTER for many products...let us hope the world does not listen.

I could go on a rant about economies of location and specialization of labour but what is the point. The bottom line is that international trade results in economic optimization. The real issue is what socio-economic shortcomings and human rights violations trading nations are willing to accept in the nations they do business with.

   

Well most Western nations have proved themselves to be whores and hypocrites when it comes to China. There isn't anything that they won't do for the mythical access to Chinese markets. Taiwan, is one of three democracies in eastern Asia(I'm still a little iffy on South Korea being a true democracy), yet the West, including Canada, is willing to sell it down the road. They supported that Ukrainian farce, yet continue to ignore China's continuing aggression towards Taiwan and the ethnic cleansing still taking place in Tibet.

   

Either China's economy buckles, or there will be confronation in the coming years. Either between the West and the behemoth, or between India and her foe.

   

but is there the implication here that some people didn't know that China is the world's biggest, richest and most powerful country? Remarkable!

   

   

Well the US has been doing quite a bit to equip and supply taiwan with highly advanced equipment (i.e. kicks the ass of the chinese rustbuckets).

Although the sale of an SSBN-Ohio class submarine, with nukes, might end the issue of warfare between the nations in a more permenent fashion, and the best part is the US wouldn't be violating any non-proliferation treaties since after all, we subscribe to the one china policy and china already has nukes.

   

But with the resources at Canada's disposal there is very little that could not be made within our borders. There will still be things Canada must import (how about bananas as an example?) just like every other country. Buying locally, however, keeps costs down as the product does not have to travel as far during production. Take the "fishsticks" post as an example. They send them all the way around the world to get them seasoned?! Something is inherintly wrong in the system. By buying domestic you are helping to create jobs and fuel our own economy within which we have some measure of control in terms of human rights, etc. The bottom line is that international trade is fantastic, but not for goods that we should, and could, be growing, processing, and creating from start to finish here in Canada.

   

Well this is not entirely true. There are many things that we are unable to produce, or that we are unable to produce in sufficient quantity, in order to satisfy our own demand at a cost that makes it economically feasible. We also produce products or natural resources for which we have no hope of consuming and as a result, we benefit from taking to international market. The buy domestic argument may emotionally ring true for things like produce at your local market to support Cdn farmers, but on the grand scale it just isn't an economic possibility.

   

So what you're saying is that to produce goods economically we need to use easily replaceable slave labour? Itching to build another railroad are we?

   

   

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