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Originally Posted by Fiona Shrot
Welcome to WAB, Mthambi!( Or should I call you Manu?)
And I am very glad that your first post was written to reply my post.  |
Hi Fiona,
Was just browsing through the forum. Looks very lively. You can call me manu.
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You talked about the percentage of the spending and the annual GDP. It's a very Chinese way actually. In China, the government likes to emphasis on our rocket-like GDP(after all, the data are not bad)
However, there is three huge problems behind the superficial number of GDP. Guess what?
One: GDP is not a REAL GDP. I mean, it doesnt take the inflation into consideration. Do check the CPI index in China. Or use the GNI instead of GDP.
Two: GDP is not the gross product of the CHINESE. We absorbed so much FDI in the past decade, nevertheless, much of their profits are being transfered back to their home countries. So the GNP << GDP. And GNP can interpret how much new value China gain more clearly than GDP.
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For a large country like China GDP and GNP are usually pretty close to each other (The economic activity between people/companies in China dwarf the external trade). For example from
http://http://www.allcountries.org/c...l_product.html, for 2004, GDP is was 12.7billion Rmb and GNP was 12.9billion. For China GNP is larger than GDP is probably because China has a trade (and current account) surplus and therefore invests more money abroad than foreigners invest in China. (Please look up the definition of current account). Therefore China (the govt + private chinese investors) is likely to make more investment income from assets abroad than foreigners are likely to make from China.
I don't quite understand what you mean by GDP doesn't include CPI. (CPI is an annual rate and GDP is not a rate). If you are saying that GDP growth does not take into account CPI, you are incorrect. All countries report "real" GDP growth. That is (nominal GDP growth - inflation rate). So in Rmb terms China's GDP is growing by 10-11% + 2-3 inflation rate (until this year).
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Three: GDP is a gross number. When you would like to learn about one country's development, you cannot only check economy indexes. The population has to be concluded. Dont believe in the alleged number of only 1.3 billion and that the speed of its increase has been controlled very well by one-child policy. The cardinal number is much bigger than it, and the growing rate is also very quick! So even though China's annual GROSS domestic product growing rate is about 10%, its great effect vanishes when you think about the "AVERAGE" number.
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My point is that because China's population (and hence GDP are so large), the costs for the Olympics are small on a per-person basis. That would not be the case if Olympics were hosted in a small country like Greece.
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Besides, China's GDP is based on huge natural resources consuming, bringing so much pollution that needs to spend a lot of money to deal with; the growing of the population gives the society a heavy burden to frost so many citizens....
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You are right. The best way to make the country more energy efficient is to let the people feel the price rises of commodities. China (and also many other countries like India) subsidize petrol/diesel and hence create more pollution than needed, and at the same time use up budget resources instead of allocating them for health/education etc. If fact subsidizing petrol/diesel costs a lot more than the cost of the Olympics even before factoring in the healthcare costs incurred due to pollution.
http://http://www.rigzone.com/news/a...asp?a_id=51744
http://http://www.uofaweb.ualberta.c...39&nav01=43092
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In short, the Chinese people dont get much more benefits from the GDP, especially this year! 2008 is very tough for the Chinese! No matter luxuries or necessities, their prices are rising like a rocket(I like the word "Rocket", because of Yao) If one never know these but only look at China's GDP number, I think she is very childish!!!!
I knew it was impossible for me to count the financial balance accurately( I already said in the first post " I am not sure about it.") How can I, a junior on campus, get all the unknown numbers? I was just estimating it, and thinking about the worst result and the best result.( One can know its interval more or less)
Olympic Game2008 is a big project and China's gorgeous party in my eyes. Before the party, we need to do the project managing carefully; and after it, all friends go back and it is still the Chinese who deal with the next. So I want to and need to be more prudential, not for boring financial analysis, but For My People!
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One of the reasons China has an inflation problem is that it has been slow to let the Yuan appreciate. This caused huge imbalances in the global economy. Now they are correcting it by letting the Yuan appreciate faster. (It might be interesting to note that this is partially responsible for the sub-prime crisis here in the US: A cheap Yuan was achieved by the Chinese central bank selling lots of Yuan and buying dollars (1.3 trillion worth) and investing most of these in US bonds. This artificially drove down the cost of borrowing (long term interest rates) for the US govt and US consumers leading to unsustainable reckless lending in the US. There are ofcouse other reasons like the US Fed chairman Greenspan keeping short term interest rates too low etc.)
China has many financial/economic problems. Olympic spending is not one of them.
-Manu