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Thread: China Surpasses Germany as Third Largest Economy

  1. #1
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    China Surpasses Germany as Third Largest Economy

    China has taken Germany's spot as the world's third-largest economy after the United States and Japan, statistics released on Wednesday showed.

    Beijing's national statistics bureau released corrected figures for the year 2007, revising the gross domestic product (GDP) growth upwards from 11.9 percent to 13 percent, the largest increase since 1993.



    Total GDP figures were revised upwards by 777.6 billion yuan ($113.8 billion, 86.2 billion euros), or 3.1 percent, to 25.73 trillion yuan, thereby overtaking Germany's output, experts said.



    According to Germany's statistics office, the country's GDP was just below 2.49 trillion euros ($3.3 trillion) in the previous year.



    While the revised numbers grant China a spot in the top three, experts are less upbeat about the country's economic outlook. Growth predictions for 2009 vary between 5 and 8 percent, dragged down by the global economic downturn.



    China's National Statistics Office said it would wait for the 2008 growth rates, expected for next week, and exchange rates calculations, before commenting.



    "Up to now we have drawn no conclusions," a spokesman said.



    The World Bank in Beijing confirmed the calculations, saying China was likely to have overtaken Germany.



    "As far as I can see, the basic approach to the calculation is correct, although we would have to run the numbers to double check," World Bank economist Ardo Hanssen said.



    Experts said the higher base for 2007 entailed lower growth rates than the 8 or 9 percent predicted for 2008. Exports declined sharply towards the end of the year.



    China's slowing economy could also be observed by a marked decline in energy consumption, electricity operator China State Grid said.



    Germany still ahead in per capita income

    Stephen Green of the Standard Chartered Bank in Shanghai said China may have overtaken Germany a long while ago, "since unofficial activity in China is larger than Germany."



    "Moreover, at the end of the day, GDP is not a race -- what really matters is per capita incomes," Green said.



    Germany ranks 23rd in global per capita income in 2007, while China came in at number 132.



    The second upwards correction of the 2007 data led some analysts to believe that the government statisticians wanted to cover up the overheating of the Chinese economy.



    "Now they can tell us the truth," Yuan Gangming of Beijing University said.



    DPA news agency
    http://www.dw-world.de/dw/article/0,,3944657,00.html

  2. #2
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    Congratulations to the Chinese people.
    While I'm very critical of the disrepects for human rights of the China government, the country deserve the economic prosperity for all the hard work and intelligence the people have invested to improve their livings.

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    Regular Le_Scientifique's Avatar
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    And they are second when checking GDP (PPP)

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    Former Staff Senior Contributor Ironduke's Avatar
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    Quote Originally Posted by Le_Scientifique View Post
    And they are second when checking GDP (PPP)
    I don't think it's a very useful measure in this regard, as China being the second largest economy by PPP doesn't translate into purchasing power on the international stage. Relatively speaking, it means that their cost of living is lower (rent, housing, food) at current exchange rates.
    "Every man has his weakness. Mine was always just cigarettes."

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    Quote Originally Posted by Ironduke View Post
    I don't think it's a very useful measure in this regard, as China being the second largest economy by PPP doesn't translate into purchasing power on the international stage. Relatively speaking, it means that their cost of living is lower (rent, housing, food) at current exchange rates.
    It's still a good domestic indicator

  6. #6
    Officer of Engineers
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    Keyword - domestic. PPP should not and is not used to compare different economies but only to describe local situations.

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    What measurement of GDP would give the most accurate indicator of size and growth rate, real GDP or nominal GDP?

    Nebula82.

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    I think we need to write a FAQ for PPP vx GNP.


    Anyways, as for national power, the following is what the Chinese government uses.



    Comprehensive National Power (CNP) (Chinese: 综合国力; pinyin: zōnghé guólì) is a putative measure, important in the contemporary political thought of the People's Republic of China, of the general power of a nation-state. Unlike most Western concepts of political power, Chinese political thinkers believe that CNP can be calculated numerically by combining various quantitative indices to create a single number held to measure the power of a nation-state. These indices take into account both military factors (known as hard power) and economic and cultural factors (known as soft power). CNP is notable for being an original Chinese political concept with no roots in either contemporary Western political theory, Marxism-Leninism, or pre-20th century Chinese thinking.

    There is a general consensus that the United States is the nation with the highest CNP and that mainland China's CNP ranks far behind not only the United States but other developed nations such as Germany, the United Kingdom, and France. Although some Western assessments of China suggest that China will be able to match or overtake the United States in the 21st century, the most recent Chinese projections of CNP suggest that this outcome is unlikely[citation needed].

    According to Social Sciences Center, a government-sponsored Chinese thinktank, the 2006 list of top 10 countries with the highest CNP score are as follows:
    Country Score
    United States 90.62
    United Kingdom 65.04
    Russia 63.03
    France 62.00
    Germany 61.93
    China 59.10
    Japan 57.84
    Canada 57.09
    South Korea 53.20
    India 50.43

    Within Chinese political thought, the main goal of the Chinese state is to maximize China's CNP. The inclusion of economic factors and soft power measures within most CNP indices is intended to prevent China from making the mistake of the Soviet Union in overinvesting in the military at the expense of the civilian economy.

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    Contributor Hitman817's Avatar
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    Quote Originally Posted by xinhui View Post
    I think we need to write a FAQ for PPP vx GNP.


    Anyways, as for national power, the following is what the Chinese government uses.



    Comprehensive National Power (CNP) (Chinese: 综合国力; pinyin: zōnghé guólì) is a putative measure, important in the contemporary political thought of the People's Republic of China, of the general power of a nation-state. Unlike most Western concepts of political power, Chinese political thinkers believe that CNP can be calculated numerically by combining various quantitative indices to create a single number held to measure the power of a nation-state. These indices take into account both military factors (known as hard power) and economic and cultural factors (known as soft power). CNP is notable for being an original Chinese political concept with no roots in either contemporary Western political theory, Marxism-Leninism, or pre-20th century Chinese thinking.

    There is a general consensus that the United States is the nation with the highest CNP and that mainland China's CNP ranks far behind not only the United States but other developed nations such as Germany, the United Kingdom, and France. Although some Western assessments of China suggest that China will be able to match or overtake the United States in the 21st century, the most recent Chinese projections of CNP suggest that this outcome is unlikely[citation needed].

    According to Social Sciences Center, a government-sponsored Chinese thinktank, the 2006 list of top 10 countries with the highest CNP score are as follows:
    Country Score
    United States 90.62
    United Kingdom 65.04
    Russia 63.03
    France 62.00
    Germany 61.93
    China 59.10
    Japan 57.84
    Canada 57.09
    South Korea 53.20
    India 50.43

    Within Chinese political thought, the main goal of the Chinese state is to maximize China's CNP. The inclusion of economic factors and soft power measures within most CNP indices is intended to prevent China from making the mistake of the Soviet Union in overinvesting in the military at the expense of the civilian economy.
    Thanks, I would like to read more on this Issue. If you had some sources for me, I would appriciate it.

  10. #10
    Herodotus
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    Quote Originally Posted by xinhui View Post
    I think we need to write a FAQ for PPP vx GNP.


    Anyways, as for national power, the following is what the Chinese government uses.



    Comprehensive National Power (CNP) (Chinese: 综合国力; pinyin: zōnghé guólì) is a putative measure, important in the contemporary political thought of the People's Republic of China, of the general power of a nation-state. Unlike most Western concepts of political power, Chinese political thinkers believe that CNP can be calculated numerically by combining various quantitative indices to create a single number held to measure the power of a nation-state. These indices take into account both military factors (known as hard power) and economic and cultural factors (known as soft power). CNP is notable for being an original Chinese political concept with no roots in either contemporary Western political theory, Marxism-Leninism, or pre-20th century Chinese thinking.

    There is a general consensus that the United States is the nation with the highest CNP and that mainland China's CNP ranks far behind not only the United States but other developed nations such as Germany, the United Kingdom, and France. Although some Western assessments of China suggest that China will be able to match or overtake the United States in the 21st century, the most recent Chinese projections of CNP suggest that this outcome is unlikely[citation needed].

    According to Social Sciences Center, a government-sponsored Chinese thinktank, the 2006 list of top 10 countries with the highest CNP score are as follows:
    Country Score
    United States 90.62
    United Kingdom 65.04
    Russia 63.03
    France 62.00
    Germany 61.93
    China 59.10
    Japan 57.84
    Canada 57.09
    South Korea 53.20
    India 50.43

    Within Chinese political thought, the main goal of the Chinese state is to maximize China's CNP. The inclusion of economic factors and soft power measures within most CNP indices is intended to prevent China from making the mistake of the Soviet Union in overinvesting in the military at the expense of the civilian economy.
    That is interesting. Do you know what factors they are calculating? Soft power is difficult to quantify at times.

  11. #11
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    Hitman817 and Herodotus

    There ya go.


    http://irchina.org/en/xueren/china/pdf/mhh3.pdf

    The Rising of Modern China:
    Comprehensive National Power and Grand Strategy1
    Hu Angang
    Chair professor and director,
    Center for China Studies at Tsinghua University,
    Men Honghua
    Associate professor and research fellow ,
    Center for China Studies at Tsinghua University

  12. #12
    Regular Le_Scientifique's Avatar
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    Quote Originally Posted by Officer of Engineers View Post
    Keyword - domestic. PPP should not and is not used to compare different economies but only to describe local situations.
    Quote Originally Posted by WorldBank.org
    Purchasing power parities
    Purchasing power parity (PPP) conversion factors take into account differences in the relative prices of goods and services—particularly non-tradables—and therefore provide a better overall measure of the real value of output produced by an economy compared to other economies. PPP GNI is measured in current international dollars which, in principal, have the same purchasing power as a dollar spent on GNI in the U.S. economy. Because PPPs provide a better measure of the standard of living of residents of an economy, they are the basis for the World Bank’s calculations of poverty rates at $1 and $2 a day. The GNI of developing countries measured in PPP terms generally exceeds their GNI measured using the Atlas method or using market exchange rates.
    I don't see why you dismiss PPP so easily.
    If Chinese people get 2.14 times more goods and services for each USD-equivalent yuan they spend than their americans counterparts, it's worth mentionning.

  13. #13
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    Quote Originally Posted by Le_Scientifique View Post
    I don't see why you dismiss PPP so easily.
    BECAUSE IT DOES NOT TRANSLATE! You can only get that service at that price IN CHINA!

    Case in point - our diets. On average, their meals cost less than ours but that's because their calloric intake is less than ours. Their diet is vegetable centric but ours is meat centric. Their vegetables costs less than ours but our meat costs less than theirs.

    However, at best, they have meat once a week (and usually chicken or pork). On average, we have meat at least once a day, if not twice a day.

    So, you tell me, do our PPP compare? No! It obviously does not.
    Last edited by Officer of Engineers; 16 Jan 09, at 04:18.

  14. #14
    Former Staff Senior Contributor Ironduke's Avatar
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    Quote Originally Posted by Le_Scientifique View Post
    I don't see why you dismiss PPP so easily.
    If Chinese people get 2.14 times more goods and services for each USD-equivalent yuan they spend than their americans counterparts, it's worth mentionning.
    PPP absolutely cannot measure the strength of a national economy in the international economy. It doesn't change the price of iron, gold, petroleum, timber, or durable goods.

    Here is a short definition from Wiki:
    Aside from this volatility, consistent deviations of the market and PPP exchange rates are observed, for example (market exchange rate) prices of non-traded goods and services are usually lower where incomes are lower
    "Every man has his weakness. Mine was always just cigarettes."

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    I wasn't previously aware that Chinese people have difficulty when it comes to accessing meats. Regarding meat prices, according to this Guardian article and the University of Illinois news bulletin, the price of pork is still lower in China than it is in the United States; the Guardian lists 20.9 RMB/kg, while it costs about 2.87 per pound in the United States. That means it's somewhere around 40% less to buy pork in China than it is in the United States. Of course, average incomes in China are 1/20th that in the United States...

    http://www.guardian.co.uk/environmen...30/food.china1
    http://www.farmdoc.uiuc.edu/marketin...ml/070708.html
    Last edited by Inst; 16 Jan 09, at 07:35.

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