China Just Overtook The US As The World's Largest Economy

[MDMAlliance]

freedquaker said:

MDMAlliance said:

There's also the fact that China is cheating by artificially keeping their currency low.  That will eventually come back and bite them in their butts.

I am not exactly sure about their practices but additionally, one needs to look into the share of consumption in the economy. We don't typically do this, as the shares usually do not change as much between countries (or at least stable over time) but Chinese economy is an ANOMALY. What do I mean by that?....

Now, the well being of people is not measured in income but CONSUMPTION, and for example, if you are investing most of your income, and there is hardly anything left to consume, then you may LOOK wealthy but you are actually MISERABLE. In US, the share of consumption is 70% whereas it is measly 35% in China. This means, whatever number you see in Chinese GDP/cap PPP, the Chinese actually end up spending only 35% of it.

Let me give you an example....

GDP-PPP(2013), from IMF

US : $ 53.001

Consumption share : $37100

China : $ $11.868

Consumption share : $4.154

 

So the difference is much larger than it appears...

I actually have a class where we had to discuss this topic, and this was one of the things I was going to bring up, but the professor thought I was talking too long already, as I was talking about the need for a transitioning labor force as China would need to do to increase their production while not having to spend larger amounts of money for operation as the pressure to create a more fair wage for the people working in the factories.