High chance that China may become the world's largest economy in less than a decade?

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

Not a single one of the other Asian economies has EVER been able to successfully transition away from the mercantile model.

And not even Japan with its 127 million people (and counting down) was able to grow without essentially offshoring jobs and manufacturing away from larger nations (the US).

So again, explain to me how China - 5 times larger than the US - is going to be able to make the transition.

It will take a very very long time for China to transit from the mercantile model. For one, Chinese provinces are the size of large countries. Each city or province is at a different stage of development. It is possible to have 'developed' consumer economy oriented regions while others are stuck at the mercantile model for decades or even a century to come.

And if China itself runs out of abundant cheap labor, China can always tap onto the cheap labor pool in neighboring countries, the Philippines, Vietnam, Indonesia, especially so when a lot of businesses in China are started by ethnic Chinese businessmen from South East Asia with operations in both regions.

	in US$ (Nominal)	in US$ (PPP)
Republic of China	16,987	31,892

	in US$ (Nominal)	in US$ (PPP)
Hong Kong	30,755	44,413
Macau	40,390	30,000

Rank	Province	in RMB¥	in US$ (Nominal)	in US$ (PPP) [1]
1	Shanghai	72,536	10,444	19,795
2	Beijing	61,876	8,909	17,063
3	Tianjin	54,034	7,780	15,017
4	Zhejiang	41,967	6,043	11,428
5	Jiangsu	39,483	5,685	10,700
6	Guangdong	37,402	5,385	10,175
7	Shandong	32,995	4,751	8,956
8	Inner Mongolia	32,157	4,630	8,721
9	Liaoning	31,199	4,452	8,462
10	Fujian	30,031	4,324	8,155
11	Jilin	23,497	3,383	6,365
12	Hebei	23,164	3,335	6,291
—	China	22,698	3,268	6,149
13	Heilongjiang	21,723	3,128	5,882
14	Shanxi	20,345	2,929	5,495
15	Hubei	19,840	2,857	5,383
16	Xinjiang	19,727	2,840	5,385
17	Henan	19,523	2,811	5,304
18	Shaanxi	18,212	2,622	4,939
19	Chongqing	17,952	2,585	4,880
20	Ningxia	17,784	2,561	4,844
21	Hunan	17,487	2,518	4,743
22	Qinghai	17,347	2,498	4,707
23	Hainan	17,087	2,460	4,649
24	Sichuan	15,368	2,213	4,163
26	Guangxi	14,891	2,144	4,051
25	Jiangxi	14,728	2,121	4,070
27	Anhui	14,465	2,083	3,921
28	Tibet	13,795	1,986	3,752
29	Yunnan	12,547	1,807	3,407
30	Gansu	12,085	1,740	3,278
31	Guizhou	8,789	1,265	2,389

http://en.wikipedia.org/wiki/List_of...GDP_per_capita

[c1ue]

Re: High chance that China may become the world's largest economy in less than a decade?

So who's going to volunteer to be the peasant serf in the New Mercantile Feudal Order? Isn't there already massive discontent between rural and urban?

Secondly the China GDP numbers are highly misleading in another way: as the final assembly point for components from all over Asia, the last wholesale price of the product is counted toward GDP revenue.

But in reality China gets a much smaller actual amount in its coffers.

The iPhone is a fine example: it sells for around $180 wholesale, but China's share of this is about $25.

The $180 counts towards GDP but in reality most of that economic activity goes to other nations.

I refrained from mentioning this previously thinking surely you understood, but clearly you do not: 24,100 Mercedes Benz do not make China the world's 3rd largest economy.

Daimler Benz's 2009 report showing revenue breakdown by region:

(millions of euro)
Western Europe: 36,458
Germany: 18,788
NAFTA: 19380
sub-NAFTA: United States: 16569
Asia: 12435
sub-Asia: China: 4349

No matter how you look at it, the statistic quoted is meaningless. China's MB share is only 1/3 of Asia's overall - with China's population being more than 1/3 of Asia's.

China's MB purchasing is only 1/4 of the US' despite a 5x population, and in turn is even a smaller percentage vs. Germany's.

Lastly 100,000 MBs could be owned by the 10M oligarchs arising out of China's "pseudo capitalism".

Doesn't mean the rest of the country is improving.

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

The iPhone is a fine example: it sells for around $180 wholesale, but China's share of this is about $25.

The $180 counts towards GDP but in reality most of that economic activity goes to other nations.

I refrained from mentioning this previously thinking surely you understood, but clearly you do not: 24,100 Mercedes Benz do not make China the world's 3rd largest economy.

I'm aware of this, the so called 'low margin' that prevented China from revaluing the yuan.

$25 maybe the share of the contract manufacturer, but you must also consider the wages, rent paid out to the Chinese workers making the stuff, transporting the stuff, moreover, most IT components are made in China, all these need to go into the equation as well. Everything considered, China's share might well be 40%.

And that's only for monetary aspects. There are also non-monetary aspects - such as technology transfer (from Apple to OEM manufacturer necessary to make the stuff) and training.

I'm sure you know HTC, it was formerly the OEM and later the ODM for Palm.

http://www.palminfocenter.com/news/9...re-odm-orders/

Palm Taps HTC for Future ODM Orders
Posted By: Ryan Kairer Friday, January 18, 2008 8:52:55 AM

Rumor: Digitimes is citing a report from the Chinese-language Commercial Times newspaper that HTC has recently signed Palm back up for unspecified manufacturing orders. Palm has previously utilized HTC in the past to produce the Treo 650 and the 700 series. Reportedly, Palm decided to move away from the company as HTC began to build out their own brand and market directly to consumers. Some of Palm's most recent devices such as the Centro and Treo 680 have been manufactured by Inventec Appliances.

If indeed accurate, the report likely indicates that Palm will utilize HTC to supplement their existing manufacturing capability or has been awarded a new ODM contract for a future device. Palm has recently announced a new ODM strategy for its Windows Mobile business as its aims to streamline development and work closer with its ODM partners. Palm has also recently had a change in its Engineering leadership.

Look where's Palm today and where HTC is today.

http://www.internetnews.com/mobility...enovo+Bite.htm

The Tawain-based phone giant was widely viewed as the likely buyer of Palm. But now speculation turns to Lenovo, or Palm toughing it out on its own.

April 23, 2010
By Andy Patrizio: More stories by this author:

Palm may have invented the smartphone, but that isn't accounting for much these days, as the company's sales have slowed drastically and it finds itself in need of a buyer to stay alive. What company would buy Palm and why is unclear. All too often, Palm is being mentioned as an acquisition target just for its patent portfolio.

HTC of China had been considered a leading candidate to purchase the company but now has gotten cold feet and backed out, leaving one other possible buyer. The alternatives after that get worse. Enterprise Mobile Today examines.

http://www.themoneytimes.com/feature...-10109721.html

Lenovo, the only one interested in acquiring Palm

by Priyanka - April 25, 2010 - 0 comments Bookmark and Share
According to a news report by Reuters Friday, Hong Kong-based computer manufacturer Lenovo is the only one left in the market that is interested in acquiring the sinking and struggling Palm. Some analysts believe that acquiring Palm might be beneficial for Lenovo to get into the U.S. market since Palm is already an established and recognized name there.

According to a news report by Reuters Friday, Hong Kong-based computer manufacturer Lenovo is the only one left in the market that is interested in acquiring the sinking and struggling Palm.

Report also suggested that Lenovo is thinking about making an offer as soon as possible.

Before this Taiwanese manufacturer HTC was considered the hot favorite for taking over Palm but as per an insider, after reviewing Palm’s books, it decided not to pursue the matter further as “there just weren’t enough synergies to take the deal forward.”

However, both Lenovo and Palm declined to comment on the ongoing speculations about the possible sell-out of Palm.

Lenovo to benefit from purchasing Palm?
Ever since speculations about Lenovo considering acquiring Palm has started, market analysts are busy calculating what it could mean for Lenovo.

Some analysts believe that acquiring Palm might be beneficial for Lenovo to get into the U.S. market since Palm is already an established and recognized name there.

Before this, Taiwanese manufacturer HTC was considered the hot favorite for taking over Palm.

"I'm not sure how easy it would be, but it's definitely a possibility. Buying Palm would be an easier way to get into the U.S. market than going it alone or by offering yet another Android option,” said Carolina Milanesi, wireless analyst at Gartner.

However, other group of analysts believes that Lenovo is making a huge mistake by choosing to acquire Palm for its plans to launch itself into the highly-competitive smartphone market, which has players like Apple and Google.

"Lenovo is really new to the game, so I can't see how buying another fledgling smart phone maker like Palm would help either of them. Palm has really been struggling, so I'm not sure that it makes sense,” said Soumen Ganguly, principal at Altman Vilandrie & Co.

Palm can survive, believes CEO
Irrespective of what analysts are predicting about Palm’s future, its CEO Jon Rubinstein still believes that company will survive even without a buyer.

“I believe Palm can survive as an independent company. We have a plan that gets us to profitability,” said Jon Rubinstein, chief executive officer at Palm.

Rubinstein added that company is not opposed to looking into good offers and could think about letting other mobile manufacturers use its smartphone operating system to increase revenue.

“If there’s an appropriate strategic relationship or business deal that makes sense to us then of course we would license webOS because obviously the more scale we get the more the benefit there is to us. If someone comes to the board with a reasonable offer of course it’s something we have to consider,” said Rubinstein.

So who's going to volunteer to be the peasant serf in the New Mercantile Feudal Order? Isn't there already massive discontent between rural and urban?

This already a non-issue in the "New World Order", just send out the army - http://www.guardian.co.uk/world/2009/jul/08/uighur-china-protests-ethnic-violence

Stones and iron rods can't fight with machine gun fire.

[c1ue]

Re: High chance that China may become the world's largest economy in less than a decade?

I'm aware of this, the so called 'low margin' that prevented China from revaluing the yuan.

$25 maybe the share of the contract manufacturer, but you must also consider the wages, rent paid out to the Chinese workers making the stuff, transporting the stuff, moreover, most IT components are made in China, all these need to go into the equation as well. Everything considered, China's share might well be 40%.

And that's only for monetary aspects. There are also non-monetary aspects - such as technology transfer (from Apple to OEM manufacturer necessary to make the stuff) and training.

The $180 price is what Apple pays. The $25 is everything excluding component costs - thus is probably more than what anyone in China actually receives.

As for technology transfer - I don't know about HTC but any technology transferred to China regarding the iPhone would be entirely due to illegal copying.

None of the solid state components are designed nor made in China.

As for HTC - Taiwan isn't China. Unless you're the Chinese government, that is.

[bart]

Re: High chance that China may become the world's largest economy in less than a decade?

Is discontent a bad thing when you can afford to live in gated communities ? "They" don't seem to think so...

"They" have blinders, don't know their history, discount black swans way too much and think they can both buy their way out of anything or use their power to get out, or both.

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

As for HTC - Taiwan isn't China. Unless you're the Chinese government, that is.

In my opinion, they are all the same. Taiwan claims that Communist China is part of Taiwan and vice versa.

When the crunch really comes, businessmen will just move to whichever side that is stronger. Just like what they did when China turned communist - flee to HK and Taiwan.

[c1ue]

Re: High chance that China may become the world's largest economy in less than a decade?

When the crunch really comes, businessmen will just move to whichever side that is stronger. Just like what they did when China turned communist - flee to HK and Taiwan.

As one whose family had to flee mainland China or get 're-educated', I strongly disagree with this statement.

And my maternal grandfather wasn't a either businessman or a politician, though he did work for government (air force).

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

As one whose family had to flee mainland China or get 're-educated', I strongly disagree with this statement.

And my maternal grandfather wasn't a either businessman or a politician, though he did work for government (air force).

I see where you are coming from. I'm talking about business not politics. Not just Taiwan and HK, a lot of Asian countries are already economically very highly interlinked with the PRC, not just the ROC.

[c1ue]

Re: High chance that China may become the world's largest economy in less than a decade?

I see where you are coming from. I'm talking about business not politics. Not just Taiwan and HK, a lot of Asian countries are already economically very highly interlinked with the PRC, not just the ROC.

By your definition, so too is the US highly interlinked with the PRC.

Yet there is no concept of the US and the PRC being 'one'.

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

By your definition, so too is the US highly interlinked with the PRC.

I don't see how the US is highly interlinked with the PRC. Wall Street maybe because they do business in China, but definitely not the US per se. There are always alternatives to outsourcing - the buyer can always choose who to buy from, not the other way round.

As for trade, the US imports $300-$400 billion from China (exports about $70 billion). This is less than 3% of the US GDP. http://www.uschina.org/statistics/tradetable.html

The US defense budget is nearly double that amount, and healthcare spending is more than 5 times at 16% -
http://en.wikipedia.org/wiki/Health_..._care_spending

In comparison, Taiwan exports to China are about $120 billion a year which is 17% of GDP.
http://focustaiwan.tw/ShowNews/WebNe...D=201004270027

And about a million Taiwanese people working in China.
http://taiwanmatters.blogspot.com/20...-in-china.html

[c1ue]

Re: High chance that China may become the world's largest economy in less than a decade?

I don't see how the US is highly interlinked with the PRC.

Really? So if China were to vanish, there would be no impact on the United States? If China is not the largest trading partner of the US, it certainly is in the top 3.

In comparison, Taiwan exports to China are about $120 billion a year which is 17% of GDP.
http://focustaiwan.tw/ShowNews/WebNe...D=201004270027

And how much of this $120B is year winds up in the United States?

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

Really? So if China were to vanish, there would be no impact on the United States? If China is not the largest trading partner of the US, it certainly is in the top 3.

And how much of this $120B is year winds up in the United States?

Short term, everyone will lose, the world will sink into depression, but in the long term, there will be both winners and losers.

Commodity exporters are clear losers, particularly oil, iron, steel exporters as there will be less competition for resource and prices will plunge. The same for investors that are invested in the commodity bubble. Net resource consumers will be winners.

Having said this, with oil prices on an upwards trajectory, 10 years from now, if the world economy is good, gasoline prices could easily triple. The US already spends almost half a billion on oil imports (more than the amount spent on Chinese imports). If prices triple, that will be $1.5 billion on oil imports alone.

[c1ue]

Re: High chance that China may become the world's largest economy in less than a decade?

Short term, everyone will lose, the world will sink into depression, but in the long term, there will be both winners and losers.

Sorry, but you've failed your economics test.

Were China to vanish, the world would experience a massive boom.

All the production presently being done in China with outside materials would have to be suddenly replaced elsewhere. This means a massive worldwide industrialization: factories, jobs, etc etc

Sure, the commodity producers would see a short term hit - until the new factories got online.

But the reality is China doesn't consume very much, and a lot of what it does consume is send outwards in the form of exports.

The perfect example? The United States after World War II.

Europe and its already damaged industries (from WW I) was essentially flattened after WW II. The US stepped into the void and unleashed a 2 decade long period of prosperity despite a Cold War. Even the Soviet Union had a 2 decade long period of growth.

[touchring]

Re: High chance that China may become the world's largest economy in less than a decade?

Sorry, but you've failed your economics test.

Were China to vanish, the world would experience a massive boom.

Actually, although I agree with you that the world will benefit eventually because I believe that given limited resources and limited jobs, prosperity is a zero sum game, but I'm not sure so it can happen overnight for the fire economies.

You can convert an engineer into a bubble playing banker or broker in three months, but I'm not sure if you can convert a broker or banker into an design engineer or production technician.

It will take a few generations of college graduates to retrain - a decade or more.

In my opinion, India disappearing will benefit the US much faster than China disappearing. You can train a programmer in a much shorter period of time than you can train an engineer, and besides, the infrastructure is already there, an office desk and a PC with Internet.

Anyway, China vanishing is dream talk. China is already close to becoming an economic super power in the East Asia and South East Asia region.

[ThePythonicCow]

Re: High chance that China may become the world's largest economy in less than a decade?

You can train a programmer in a much shorter period of time than you can train an engineer

Good software architects take many years (a decade or two) to achieve their potential, just as with any other technical discipline. There is a more than ample supply of junior coders and web hackers already in the world, so how fast we can train more of those matters little, except in a few specific cases where some relatively new major product line from a major vendor such as Cisco or Microsoft requires some more trained technicians.

A collapse of the economy in China or India would not, in my view, necessarily benefit the U.S. Much would depend on what else failed in that collapse. The world economy is rather too much interconnected and susceptible to systemic risk factors. Investments in productive enterprises have been misdirected for sometime now by the corruption of the FIRE interests ... not just FIRE actually, but of a world-wide corptocracy of all manner of large international corporations (drug, ag, chem, steel, oil, manufacturing, transportation, shipping, communications, technology, FIRE, media, intelligence, military, weapons, opiates, ...) We cannot just move a million jobs from here to there smoothly. It may take another World War or Great Depression to accomplish that.