Economics

质疑中国经济实力

Nov 6, 2014 Joseph S. Nye, Jr.

东京—世界银行最近宣布，用购买力平价衡量，中国经济将在今年超过美国。但这远非中国全球经济地位的写照。

购买力平价可以在一定程度上比较不同国家的福祉，但它受人口规模影响很大。用卢比兑美元市场利率衡量，印度是世界第十大经济体，若用购买力平价衡量，它是第三大经济体。此外，实力资源——如进口石油或先进战斗机发动机的成本等——使用与支付货币的汇率来衡量更合理。

诚然，总规模是经济实力的重要方面。中国拥有极具吸引力的市场，也是许多国家最大的贸易伙伴——这些都是中国领导人不惮于利用的优势资源。

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0 Comments on this paragraph, 23 Comments on this article

IVI Grupp Nov 20, 2014

On Nov 9th, a public lecture on "Feminist Writing in China" covered a book about abuses, suffered by many female, internal migrants to Chinese cities (including its author): "Northern Girls; Life Goes On" by Sheng Keyi. The author's title ("To Survive") was not used; its published title only begins to convey the harshness of the abuses, ie, when one examines the original Chinese & knows the context well. The book has been widely read in China, both by women abused & those of higher station, so it will be interesting to see if & how the problem will be addressed, in the years ahead.
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Jonathan Lam Nov 18, 2014

Gamesmith94134: China’s Questionable Economic Power
I am not sure why Mr. Nye is questioning the economic power in China; and apple is not comparable to orange in much power bargaining given that interdependent relationships depend on asymmetries. Perhaps, it is the PPP that surpassed United states and “China has an attractive market and is many countries’ largest trading partner – important sources of leverage that China’s leaders are not afraid to wield.” I doubt very much china would attempt to compete with the financial clout as Mr. Nye said renminbi-denominated trade still represents just 9% of the global total, compared to the dollar’s 81% share. So, the question is the paranoia as self-inflicted; and how does China would ever consider as the economic power even with its 4trillion reserve or surpluses? Besides, there is no way Chinese workers can earn$46,000 per capita when they are in $6000 now; but the question is on American productivity can produce such windfall without inequality and balance on its accountability.
As an American Chinese, it is my belief that China would progress more than 3.9% in the next year; because its proclivity of second to the best that the race on to lead is not significantly important for the next coming years. Even though I would suggest the rate on growth in China should not exceed 4.6% if domestic growth had fragments and bubbles in real estate burgeon on inequality and risks on shadow banking that bankrupt the locals create chaos; but thanks to the foreign investment, it sustained its 7% overall while everyone else were paddling along with their economy even in America’s 2-3.5%.
In answering the global brands, Chinese may not come to the top. However, the major electronics manufacturer chose its essence on the low-middle prices to continue in the secondary market; and with its 4 trillion surpluses, it gave loans went countries oversea to expand its premises including “silk road” on land and at sea. Besides, China added its momentum to the R&D in providing “the second to the best” to accommodate the need than profit including military weaponry and commercial goods through its defense duplexes.
Moreover,” it means that aggregate GDP, however it is measured, is inadequate to determine when – and whether – China will overtake the US in economic power.” It sounds as sour wine if China would appreciate its growth with lower per capita to formulate it mass production and full employment. Besides, American trade policy mutilates and sanction on the defiant and create inequality for its partners; and GDP may not the factor to grow in power now relatively too many other nations are set in vanity. Ironically, America turns into isolationist that it can no longer produce compatible goods to the poorer ones based on its per capita and profit margin; we may not see metropolis in America could have suffered the Detroit Syndrome, but Japanification in general is definitely not a overstatement.
“Second to the best” is the best fits to survive if only if China would remain keep its feet on the ground. Then, the question is on America how much goods can it produce after $46,000 per capita? Would an I-pad sandwich be sufficient to cheer on those working less than 30 hours a week----real hero if they can live on?
GDP is not a basis for growth, it needs ingredients.
May the Buddha bless you?
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Paulo Sérgio Nov 17, 2014

It's true that China does not have any brands at this time that inspire people much other than China itself, which of course has become a very powerful brand - or returned to a level of considerable weight, if historians are to be included.

In recent times, Chinese brands have been making good rounds, the likes of Huawei and Alibaba would be known to investment gurus, the tech savvy and the internet shopper increasingly.

While China still relies on imitation - the important thing is it is taking Western ideas and making money and connections with it -- high speed rail and wind energy are key examples. This past week, the country's key aerospace concerns unveiled a number of aircraft that I couldn't help but think of as key to growing engineering and manufacturing capacity in the field.

In geopolitical calculations, we know China is now a powerful economy, but it is still not the type of command economy like its neighbour Japan. There's definitely an awful lot of spend on R&D innovation that is not yet worrying many western commentators, such as this author. But, I think this is a mistaken position to hold because China is clearly building the necessary critical mass to launch forward future innovation, by [future] more enlightened scientists, innovators and entrepreneurs. It's always boring at first.

Also, the flip side is China's population is aging fast, and may be older than that of the US before the middle of this century, depending on what happens with US immigration laws. But the US has always been a country with borders open to the brightest and willing. Total US population may be approaching half that of China before this century is out. If the country maintains its R&D-to-market-and-profit prowess, and maintains a relatively large and wealthy middle class, it will maintain a very important, and very powerful position in the world economically. But it must fix key items such as education and a fractured political system.
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Edward Campbell Nov 11, 2014

Like anyone whose career has been closely tied to Imperial America, Nye's wee essay could have been predicted, written word for word in advance.

About as exciting as watching a real tortoise fall behind in a race with an elephant.
- Kai Kaufmann Nov 14, 2014
  
  Edward: Going back to Plato's dialogues and Galilei (e.g. Salviati, Sagredo and Simplicio in his "Dialogue concerning the two chief world systems), races that really mattered had three+ participants. This led Simmel and then Ronald Burt to talk of the "tertius gaudens" which you are currently witnessing as well.
  Regards from Europe westwards and eastwards
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Alex Imas Nov 10, 2014

Is the last part really accurate? I imagine, given current conditions in the US, the Chinese dumping Treasuries (at a discount) would weaken the dollar and improve the competitiveness of American exports, while the Fed still has the resources to buy up that debt without interest rates exploding.
- Kai Kaufmann Nov 10, 2014
  
  You still seem to believe in the storch, Santa Claus and Baron von Münchhausen pulling himself up from the swamp with his own bootstraps, Alejandro.
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Vid Beldavs Nov 10, 2014

China is clearly extremely powerful in high speed rail with multibillion dollar contracts in many places around the globe. There are many other areas where China is emerging as a global leader including solar power, gene sequencing and electronics manufacturing. The globally known brands will come. The creation of a brand is a known art, it takes the consistent creation of quality matched by outstanding marketing. China is having a tremendous impact on the advancement of Africa as well as on countries such as Mexico and India where large infrastructure projects are underway. It really does not matter how many globally recognized brands China has. China produces over half of the world's cement. So it is becoming the leading global expert in cement, very important to most of the world, less to those that consume luxury goods. This all suggests that there is the basis for a new form of partnership between the US and China that can help lift both to the next level. A very promising realm would be the peaceful uses of outerspace. Most countries now have a serious interest in the Moon. What a perfect opportunity for strategic partnership!
- Kai Kaufmann Nov 10, 2014
  
  You missed the last lesson, my friend, when the topic involved Africa, Mexico, India, etc.:
  
  http://www.project-syndicate.org/commentary/are-services-the-new-manufactures-by-dani-rodrik-2014-10
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Nirmalan Dhas Nov 10, 2014

It is quite obvious that China has been carefully cultivated as a manufacturing base encircled by carefully placed constraints that allow it no more than the use of its labor and resources to manufacture certain products to carefully laid out specifications and quality standards at the cost of considerable pollution and the generation of a "middle class" - ie a limited number of individuals trapped within a perceptual paradigm that locks them into the growth model of development - that will ensure continued servility to this set of constraints. This may do little good to the species Homo sapiens but it ensures that China remains firmly embedded as a manufacturing base that nurtures the illusion of itself as a rapidly emerging global superpower. The power to manipulate perception is perhaps the greatest weapon ever deployed.
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Lance Brofman Nov 10, 2014

Even if it was widely understood that the shift of the tax burden from the rich to the middle class was the cause of the depression, it would still be extremely difficult to remedy the situation. The enormous shift in tax policy favoring the rich has been a world-wide phenomena going on for many years. After the Socialist party candidate François Hollande won the presidential election, France enacted tax laws that gave France the most progressive tax system among the 20 largest industrial nations. However, the world-wide the tax systems have become so much less progressive in the past decades, that if the tax code that France has today were applied to France in 1969, France would have had the most regressive tax system among the 20 countries in 1969.

A major component of the shift of the tax burden from the rich onto the middle class involves the corporate income tax , whose incidence falls entirely on the owners of corporations. Corporate income taxes were 4% of GDP in 1969 and are now less than 1%. The reduction in corporate taxes has not necessarily been the result of political power on the part of corporations. Rather it was part of an international “bidding war” among countries to see who could induce corporations to move from one country to a jurisdiction to another with a lower corporate tax. Even if were politically feasible, the United States could not unilaterally reinstate the corporate income tax rates back to 1969 levels.

That it would take the cooperation of more than twenty nations to give up some of their sovereignty and agree on reinstating corporate income taxes illustrates just how difficult it would be to adopt tax policies that could overcome the cycle of overinvestment. Thus, even if the depression ends capital will soon again accumulate too rapidly. Then the productive capacity of the business sector will again outpace the ability of the household sector to absorb the increasing production. This will bring on another period of weak economic conditions and corresponding low interest rates. Alternately, we will see a Japan-like period of extended low interest rates as the current depression, as I define it lasts indefinitely.."
http://seekingalpha.com/article/1543642
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ronald segler Nov 10, 2014

China should observe what has happened in the Middle East, how Western ideas have ruined the cultures and lives of these middle eastern countries. China should not try to match or surpass Western ideas, but should slow down and nuture the growth of its people and its own country. Just look at the U.S. and Europe and notice how unhappy their people are, and how superficial their economies are.
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Kai Kaufmann Nov 9, 2014

Sure, Mr Nye. Don't worry about China, don't worry about the European Union. Don't even worry about the robots. If I were you, I would rather worry about the truth. Maybe you have heard of E. Howard Hunt, his connections with the JFK story, the Nixon story and the Bush senior story, and then trace it to 2001. (No need to go into details such as Waco siege, Tim McVeigh, etc.).

All murky, but limited stuff, staying within N degrees of separation with N a small number, say six plus/minus a few.

In case you want to really challenge yourself, everything you ever IMAGINED YOU WERE, try "The Panopticon Puzzle" at http://goo.gl/XfPkAF and solve it for any N.

PS. If I think about Lynne/Dick Cheney on the one hand, and Eminem on the other, I always wonder who loves the United States more.

PPS. Congratulations to the US population for electing a president whose campaign was based on the modern-day equivalent of Gorbachev's "perestroika" (change), and to Edward Snowden for leading the way towards "glasnost" (transparency).
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hari naidu Nov 8, 2014

In spite of Nye's resume, it seems he's here seeking to plant some ingenuous political thoughts on global comparative economic models and whatnots. The fact of the matter is that mainland China has developed rapidly as a global player thanks mainly to US strategic policy on PRC entry to WTO. This essay would be utter intellectual nonsense if not for globalization - under Clinton Admin. - which opened the frontiers of international finance and trade transactions.

IMF concept of PPP is not the issue here. It's an analytical tool for comparing international purchasing power specially of emerging markets.

For a defense/intelligence expert, Nye is trying to minimize the impact of PLAs capacity to tactically impact Pentagon's strategic outlook in Asia and Far East.
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Andrew Zimin Nov 8, 2014

Messrs Amercians pleasing to ignore the forest for the trees.
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Richard S. Stone Nov 8, 2014

China has about an extra Billion poor people to worry about, even compared to the entire US population. And not just poor, but excruciatingly poor. China has to grow at a great rate to keep those people from starving or revolting.

China has, as I see it, taken a lot from the lesson of Singapore, in the sense that the Asian peoples are willing to endure political repression if growth is good and obvious. But Singapore is a Duchy, not anything like the full country of China. China cannot stumble or the consequences will be ugly.

China cannot therefore take any grand steps to upset its apparent path to success. So threats of dumping its dollars are just misleading. Yes, it's on one end of a continuum of things that could be done, but how would it help?

China cannot escape some level of regression to the mean, and other economies will improve as competition for manufacturing, and yet China must grow in a sustainable and effective rate. It's a big problem, and all the hopeful rooting by Chinese fanboys cannot make the problem go away.
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Bei De Zhu Nov 7, 2014

Instead of dumping trillions indiscriminately into the economy in QE like the rest of the world, China is again expertly executing a different approach, by laser guiding serious investments in infrastructure project building overseas. It is getting 3 or 4 birds with one stone. Long term financing of such projects brings interest income of 6-10% per annum, much higher than GSEs. The projects are profitable for Chinese engineering companies, and they generate large number of good jobs (by Chinese standard, US$1,500-2,500 a month engineering jobs). Not flighty or exciting like high tech, but a large number of jobs. Further, these projects further drive exports - construction machinery, construction materials, etc. All around, it is a great plan for increasing directed captive foreign demand for Chinese goods and services.

There is no such thing as too much fixed investments; instead there are huge opportunities. Asia alone needs $8 Trillion in such investments by 2020. Worldwide the market for infrastructure building is probably $2-3 Trillion a year. China is clearly leading the pack by a mile. Recent high speed rail wins (e.g,, Mexico) is only the beginning. The Nicaragua canal is easily a $100 Billion project. Here a billion, there a billion, it soon adds up.

All of this took decades of careful planning and nursing - with China price in the infrastructure field, Chinese engineering companies can bid 30% lower than there Western counterparts, and still make money. The systemic competitive advantage is strong.

It is the TREND that counts.
- Andrew Zimin Nov 8, 2014
  
  Sic!
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Nathan W Nov 7, 2014

I think most people could join the CCP if they wanted to participate politically, but certainly it is not as liberal as most other places in that regard.
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Nathan W Nov 7, 2014

China will have a lot more mouths to feed, even when measures of GDP show the economy to be larger.
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Ed Rector Nov 7, 2014

China cound "bring the US economy to its knees by dumping its dollars??!!?"

So just where would China 'dump its dollars'? Might it exchange them for Euros or Yen? That would, of course, drive down the FX value of the dollar stimulating US exports and pressuring Chinese exports to the USA.

So China has not produced a Steve Jobs? - - - - well the USA has produced only one Steve Jobs. China has produced a Jack Ma.

A lot of hubris in this article. China has been growing 7% to 12% (compounded) per annum for more than three decades. It won't be much longer before Chinese pundits are writing stories about haw much the USA is falling behind.-
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Yoshimichi Moriyama Nov 7, 2014

There are far more weaknesses than strengths in Chinese society, and economy cannot function in separation and insulation f from society and culture.

There are such a number of weaknesses that it is not difficult to make Prof. Nye's long list still longer, but I will mention only one, the liberalizarion of the renminbi. China was always and is a peremptorily controlled society, and political authoritarianism is an indispenasble tool to piece society together. Three means are resorted to, armed police, propaganda through school and mass media, and economic control. Of the last, the finacial control or the control of the renminbi has played and will play a very big part. To liberalize the currency would be suicidal to the CCP.

In passing, about twenty-five percent of bank notes circulating in China are faked money. Chinese do not mind it at all; if you should take the faked money to a bank honestly, it is simply confiscated and you are not handed authentic money in exchange.
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Bing De La Vega Nov 6, 2014

I have always questioned China's economic power having shared that view with friends and occasionally online the past few years. The reason is that China thinks it has the deep resources from its own people given its limited resources in the soil and beneath its seas to sustain a conflict outside its walls. 70 percent of its population isc poor. Its so-called middle class is only as good as foreigners are outsourcing there. If and when China enters a conflict regionally or with its main rival the USA, close to or perhaps even more than half of its business in manufacturing mostly generated by foreigners will flee overnight. China surely must know this and therefore its show of biceps to its neighbors is to only get reaction from the USA given its "pivot to Asia" policy recently. And to see the easiest means to grab natural resources it badly needs to keep its economy rolling. Thus its safari to Africa. And while China in a conflict realizes its poor people outside the big cities begin to starve, it will have a bigger r headache at home than its excursion to poor countries in Asia.
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质疑中国经济实力

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