the end is nigh: 2016 dollars, bigger, China, point, still

sharksfan

The Age Of America Will End In 2016 When China Blows Past Us — IMF

http://finance.yahoo.com/blogs/daily-ticker/age-america-end-2016-china-blows-past-us-154221921.html%20?sec=topStories&pos=main&asset=&ccode=

[China's economy will be bigger than the U.S. economy by 2016, says the IMF, using a special measure of economic size called "purchasing price parity."]

Measured in dollars, the U.S. GDP will still be 70% bigger than China's by then, but the trend is unmistakable: At some point, barring a wreck of China's economic freight train, China will eclipse the U.S. to become the largest economy in the world.

What will this mean?

Well, psychologically, it will mean that Americans will have to get used to the idea that they're not the biggest kid on the block anymore. For most participants in the global economy, China will have become the most important trading partner and market, and China's economic policies, not America's, will dominate the global conversation.

Similarly, and perhaps more momentously, China's military will eventually be larger than the U.S.'s, which will mean the U.S. will no longer be the most powerful country in the world. It's easier to have influence over other countries when you can speak softly and carry a big stick. Once China vaults past the US economically, it will have the wherewithal to carry an even bigger stick--unless the US wants to continue to bankrupt itself by outspending everyone else despite its smaller GDP.

Adding to the change in fortunes is the fact that America's financial situation is vastly weaker than China's: We have a huge deficit and massive debts; China, meanwhile, funds our consumption (by lending us money) and runs a surplus. Over the next couple of decades, therefore, much of the US resources that might have gone into growth and infrastructure spending, will be used instead on interest payments, budget cuts, and social programs. This will likely make the US feel poorer, especially relative to the explosive growth in China.

Regardless of when the exact date comes, in other words, we're headed for a new world order--one in which China, not America, will be the center of the world.

segalm

maybe we'll become france soon so i can riot every time i have to work a friday.

'Feel my baguette, sommet!'

Zestt

Even if China surpasses the US in GDP per capita, why would this hurt the US, other than through ego?

IAmNeil

AlphaSeeker Wrote:
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> So what? From a living standard standpoint, US
> will still beat China for years to come.
>
> US passed UK more than 100 yrs ago, UK still one
> of the most developed country in the world.

More to the point, we will all eventually have a higher living standard as a larger workforce comes on line and we are able to divide labour to the highest degree. I think it is to be embraced as the Chinese are becoming more and more open - market wise & politically. As long as we can trade goods in open markets, great. First Russia, then China. Even Cuba is coming round to the idea - they are allowing citizens to buy their houses.

bbtomato

I don't think China will have as much political influence either, no matter how big their GDP gets for a long, long time to come.

Being a country that doesn't speak English, they are really out of the loop. The western world will still look to the US and the Eurozone for leadership. Don't think it matters if China has a bigger GDP. China doesn't have any friends except countries like: Russia, North Korea, and Vietnam who are not exactly team players.

I've seen this in India. India, despite having borders with China, spends all of its time trying to look pretty for the the US and the UK. Culturally speaking, they have aligned themselves as such completely wanting nothing to do with their neighbors. GDP growth in India will surely help offset China's advantage.

I predict that we'll see mutual benefit in the long term (except for the American middle class who is just gonna have to accept lower wages) and that China's clout will never be as important as the combined clout of the Eurozone, the US, and India.

svgleeson

Excellent point about GDP vs GDP/capital. While China may become a bigger economy as a whole it will take a lot longer for an average Chinese person's propensity to spend coming close to the level of a US consumer.

Black Swan Wrote:
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> ^ Agreed
>
> As Chinese middle class grows they'll lose wage
> competitiveness and demand for US goods will
> increase, so I'd expect it to be possibly
> beneficial for US growth.
>
> People keep confusing total GDP with GDP per
> capita. There's definitely a balance between the
> two. Uniting all of Africa into one extremely
> large, poor nation is not going to make it more
> powerful than a European nation with a similarly
> sized GDP spread over a much smaller population.

RMontgomery

Fair point, I was merely stating that China finally matching our GDP does not equate to military domination and the end of the US as we know it. The situation you're describing already exists with Germany, Russia, the UK, Japan and China for that matter. I mean a showdown with any of those would essentially result in mutual annihlation, which is never good for anyone. So, basically, China matching the US in GDP is not some magical light switch that transforms the world overnight. Honestly, when other US citizens get alarmed about some perceived loss of absolute superiority (that likely never have existed in reality) I just point to the UK and France and say they seem to be enjoying life just fine, and they were once dominant superpowers themselves.

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"Without American production the United Nations could never have won the war."
-Joseph Stalin, Tehran Conference: 1943



Edited 1 time(s). Last edit at Wednesday, April 27, 2011 at 03:58AM by Black Swan.

hassan

^ Oh my.
I should create a cult.

adehbone

I guess the point I'm making is that having a rich neighbor is usually a positive thing. Canada, for instance, benefits tremendously from being next to the US. Similarly, a rich China might benefit the US, even if they are farther away.

LorrinCFA

^ Agreed

As Chinese middle class grows they'll lose wage competitiveness and demand for US goods will increase, so I'd expect it to be possibly beneficial for US growth.

People keep confusing total GDP with GDP per capita. There's definitely a balance between the two. Uniting all of Africa into one extremely large, poor nation is not going to make it more powerful than a European nation with a similarly sized GDP spread over a much smaller population.

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"Without American production the United Nations could never have won the war."
-Joseph Stalin, Tehran Conference: 1943