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Chinese economy overtakes the U.S.’s to become the largest

marketwatch.com

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Re: Chinese economy overtakes the U.S.’s to become the largest

#31

Post by yarou »

>Yes, when you look at mere international exchange rates, the U.S. economy remains bigger than that of China, allegedly by almost 70%.

The irony is that the US has been running up debt for decades upon decades. The US economy is equivalent to someone that has an unlimited credit line, who pays absolutely nothing while continuing to spend lavishly.

This article does not bring any new information or shed any light on the truth about our global economy, such as the creation of externalities that deprive human beings of basic rights. All this article does is present an old narrative (the financial news equivalent of race baiting). Grab the datasets yourself, do your own analysis, and don't listen to yellow journalist rags like this which are clearly promoting an agenda.

GDP, PPP, etc are metrics which have a low signal-to-noise ratio, because the speed with which capital moves renders any units to measure economic output meaningless. USD is still the reserve currency for most of the world (at least for the countries who account for the lion's share global economic output). Even if that were to change to RMB or [insert fiat currency], the current corrupted system will continue to exist and exploit. Do yourself a favor and become educated about cryptocurrency. Learn why this current global economic system is corrupt and a new form of enslavement. Then you'll realize that we don't need central banks. You will realize that you are not a child that needs to be constantly monitored by a nanny state. And so your enlightenment begins.

Re: Chinese economy overtakes the U.S.’s to become the largest

#32

Post by simonh »

tinco wrote: post #18
legitquest wrote: post #11

Why does total GDP matter so much? China has over a billion people. A much more accurate metric is GDP or even PPP GDP per capita. Only when China has 3x larger economy than US economy will it be of the same size per capita to the U.S.

Because on the global power scale it doesn't really matter if half your population is starving or not. And if you want to compare the peoples wealth, remember the one percent rule. How much richer does the US have to be for its bottom 50% to be as wealthy as The Netherlands' bottom 50%? It's all numbers games, this number is about global economic power, the sort that could have all sorts of real (nasty) consequences.

It's not at all about real global power, it's about domestic economic capacity. As soon as China tries to start exerting it's economic muscle abroad, it has to compete on international terms which means adjusting costs to take advantage of domestic costs doesn't matter anymore.

For example, does China's GDP at PPP 'equality' with the US mean it can fford as many nuclear submarines as the US, as many aircraft carriers? As many advanced state of the art stealth bombers, fighters, tanks, spy satelites and naval bases? No, it doesn't, all it realy means is it can afford as many roads and bags of rice as the US.

As soon as China starts investing in, developing or buying international standard technology and eqipment it has to start investing or spending international standard capital to do so, and PPP doesn't help anymore. Even in the case of 'soft power' such as financial support and investment in other countries, that has to be done in foreign currency. Suddenly the domestic purchasing power advantage of the Yuan becomes an equal and opposite disadvantage.

Re: Chinese economy overtakes the U.S.’s to become the largest

#33

Post by muyuu »

legitquest wrote: post #11

Why does total GDP matter so much? China has over a billion people. A much more accurate metric is GDP or even PPP GDP per capita. Only when China has 3x larger economy than US economy will it be of the same size per capita to the U.S.

Because it's not a per capita thing how large a military you can afford, or how strongly you can lobby.

On a per capita basis the US is world's #10.

The US is the most important country in the world because of its aggregate power, of which the total GDP is an important factor.

Re: Chinese economy overtakes the U.S.’s to become the largest

#35

Post by nothrabannosir »

seanmcdirmid wrote: post #10
kozhevnikov wrote: post #4

Earlier quoted context omitted.

Substitute Frappuccino for a burger and it is the Big Mac index. http://www.economist.com/content/big-mac-index

Ironically, Big Macs are on sale right now for 10 kuai in Beijing.

Nice. Maybe not in China, but some countries force McDonald's to lower their BigMac price to hack that index.

The Wikipedia page mentions countries doing this, and, seeing the quality and price of Big Macs in some places compared to other Mc burgers, it's not surprising. E.g. the Argentinian one was half price of everything else, it was an awful burger, meat covering half the bun. And it was never advertised, only conspicuously tucked away at the bottom of the menu in a corner of the shop:

http://i.imgur.com/MbCaZnG.jpg

How's it in China, compared to other burgers?

Re: Chinese economy overtakes the U.S.’s to become the largest

#36

Post by jeroen94704 »

I don't really understand the fascination with nominal GDP, be it in US$ or PPP. Those numbers are heavily influenced by the size of a country's population, which according to wikipedia ranges from something like 100,000 all the way up to 1.3 billion. That's four orders of magnitude!

That's like comparing a Formula 1 car and a Peugeot 107, and then deciding the guy in the Formula 1 car is a better driver because his lap times are faster.

Re: Chinese economy overtakes the U.S.’s to become the largest

#37

Post by nothrabannosir »

dagw wrote: post #16
justquest wrote: post #5

Earlier quoted context omitted.

This a good explanation, but I have to point out that for this particular example (being able to buy Frappucinos in China because they're cheaper), the opposite is true. Fun fact: Starbucks is significantly more expensive in China than in America, even if you use the currencies at their current exchange rates. Not fun fact: I live in China, and I like Starbucks.

Are there any local coffee shops that sever 'western' style coffee? And if so are they also more expensive than Starbucks in the US. Also what is the local equivalent of a cappuccino and what does that cost. PPP generally deals with equivalent goods and not identical goods, especially when the goods have to imported at great expense to one country. I mean even here in Sweden Starbucks is a good 50% more expensive tha…

Yes, and they are, also, ridiculously expensive. A (awful) capuccino can easily cost 30 kuai, where a very nice plate of rice with bacon and garnish from a low-end shop will cost you 10.

The entire drinking coffee outside game is just shockingly expensive in China. At least I haven't found the cheap ones.

1 us ~= 6.15 kuai

Re: Chinese economy overtakes the U.S.’s to become the largest

#38

Post by justincormack »

seanmcdirmid wrote: post #8
tomp wrote: post #2

> These calculations are based on a well-established and widely used economic measure known as purchasing-power parity (or PPP), which measures the actual output as opposed to fluctuations in exchange rates. So a Starbucks venti Frappucino served in Beijing counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders. > PPP is the real way of co…

Frappuccinos are more expensive in Beijing than Seattle (I know, I have a habit...). Actually, many things in China are more expensive than in the states: if you want the "lower cost of living", you have to be willing to endure the "lower standard of living" that is possible in China without as much stigma as in the US. If you want a nice apartment, nice safe food, decent education for your kids, a car, medical care,…

Frappuccinos are sold as a luxury aspirational product though. Thats what the PPP adjustment is supposed to adjust for, although the PPP calculation makes a lot of assumptions, and could well not be that good a measure.

Re: Chinese economy overtakes the U.S.’s to become the largest

#39

Post by melvinmt »

legitquest wrote: post #11

Why does total GDP matter so much? China has over a billion people. A much more accurate metric is GDP or even PPP GDP per capita. Only when China has 3x larger economy than US economy will it be of the same size per capita to the U.S.

Just one of many reasons why it matters: More Total GDP = More Military Spending.

Re: Chinese economy overtakes the U.S.’s to become the largest

#40

Post by jsprogrammer »

yarou wrote: post #31

>Yes, when you look at mere international exchange rates, the U.S. economy remains bigger than that of China, allegedly by almost 70%. The irony is that the US has been running up debt for decades upon decades. The US economy is equivalent to someone that has an unlimited credit line, who pays absolutely nothing while continuing to spend lavishly. This article does not bring any new information or shed any light on t…

Just curious how you think the US economy could expand without increasing debt.

My understanding is that the amount of transactions occurring is dependent on the amount of money in circulation. The amount of money in circulation is directly dependent on debt through the fractional reserve banking system.

Under the current system, the only way to 'grow the economy' is to increase the volume of transactions or use money creating transactions (bank loan).

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