Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Why Rising Living Standard in China Offers Global Hope

Politics / China Economy May 13, 2019 - 02:02 PM GMT

By: Dan_Steinbock

Politics China’s 70-Year Anniversary    

As living standard rises in China, its global contribution continues to increase. And that means potential for growth, poverty reduction and prosperity in emerging and developing world - new hope.

When Chairman Mao Zedong proclaimed the founding of the People’s Republic of China (PRC) on October 1, 1949, the Chinese people could finally begin to leave behind a century of colonial humiliation and start building a new life.

What remains so poorly understood is how dire were the conditions on that extraordinary day, seven decades ago. While China had sustained its triumph, Chinese living standard was barely 5 percent relative to the United States.


It was a dire starting point.

China’s transitions

After Mao’s establishment of sovereignty, foreign minister Zhou Enlai's “Four Modernizations,” and Deng Xiaoping's the “reform and opening” policies and Special Economic Zones (SEZs), China became the member of the World Trade Organization (2001). That paved the way to a decade of export-led double-digit growth and the ongoing the shift to post-industrialization, which has been accelerated under Xi Jinping’s leadership.

Following the reforms, Chinese industrialization peaked between the late 1990s and the 2008 Western financial crisis. Now the rate of growth is decelerating, which has been the norm to all industrializers from Great Britain in the 19th century to America in the 20th century.

In China, deceleration is a sign that rebalancing toward consumption and innovation by 2030 is on track.

Nevertheless, Chinese living standard continues to climb steadily. It is today about a third relative to the US. In other words, it has multiplied six times relative to American living standard, thus supporting the rise of the world's largest emerging middle-class (Figure 1).

Figure 1         Chinese Economy and Living Standards



GDP per capita: Gross domestic product per capita, constant prices, purchasing power parity; 2011 international dollars. Growth Rate: Gross domestic product, constant prices, percent change 

Trends: Dashed lines

Source: IMF/WEO Database, April 2019.

Emerging economies, the new growth engines

Only since the late 20th century, global economic integration - trade, investment and finance - has begun to benefit large emerging and developing economies. To be sustained, globalization cannot serve just a few wealthy advanced economies, which no longer fuel the global economy. It must also serve poorer and faster-growing economies, which today account for most global growth.

While advanced economies are flirting with protectionism and tariffs, the latter are precisely the wrong policies in the wrong time. As advanced countries have fallen into secular stagnation, they desperately need growth. The rise of poorer economies is not a win-lose game. It also benefits advanced economies.

In the aftermath of the 2008 crisis, all major advanced economies would have fallen into the second great depression without the support of large emerging economies, particularly China. By 2050, the contribution of these countries to global GDP growth is expected to climb to 80 percent.

In the 1980s, the share of U.S. in the world economy was more than 20 percent; in the past four decades, it has steadily declined to 15 percent. At the same time, China’s share has soared from 5 percent to 20 percent. While these (purchasing-power-parity) indicators inflate the pace of progress, the trend lines do herald a coming structural shift in the world economy (Figure).

Figure 2         US and Chinese GDP Share in the World Economy



GDP Share: Gross domestic product based on purchasing-power-parity share of world total

Source: IMF/WEO Database

Global economic development

In the future, the well-being of advanced economies will depend on rising living standards in less-wealthy economies. Just as US leadership supported the role of advanced countries in the 20th century world, China has potential to foster the share of emerging and developing countries in the 21st century.

In particular, China’s Belt and Road Initiative (BRI) can redirect domestic overcapacity and capital for regional infrastructure development to improve trade and relations with Southeast and South Asia, Central Asia, the Middle East and Europe – even across Americas and Sub-Saharan Africa.

The BRI seeks to accelerate modernization in emerging and developing economies, with the participation of advanced nations. Yet, in recent months, Washington has charged the BRI for "debt traps" It is a flawed effort at distraction.

If anything, BRI projects seek to promote more inclusive global economic development. Certainly, China will make its share of mistakes, but it has a track-record in learning quickly from those mistakes.

In the postwar era, Washington and its allies had an opportunity to lift the Third World from abject poverty. Yet, success stories involve mainly those Asian economies that ignored the West's growth lessons, which were too often coupled with conditionality, debt and dependency, in the name of "structural adjustment."

Unlike Marshall Plan, the BRI does not require participation in military alliances. It is not predicated on still another Cold War. It does not seek self-interested economic sanctions against the rest of the world.

Nor does the BRI practice regime change to force its will on the international community. It is focused on 21st century global economic development.

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

© 2019 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dan Steinbock Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules