Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

China Leapfrogs Japan To Become World’s No. 2 Economy

Economics / China Economy Aug 02, 2010 - 05:53 AM GMT

By: Money_Morning

Economics

Best Financial Markets Analysis ArticleKerri Shannon writes: 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."

Source : http://moneymorning.com/2010/08/02/china/

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules