China's economic dominance, sooner than we think?

from the Economist Spheres of influence


A NEW book, discussed in this week's Economics focus, by Arvind Subramanian of the Peterson Institute for International Economics argues that China's economic might will overshadow America's sooner than people think.

By 2030 China's share of global economic power will match America's in the 1970s and Britain's a century before. Three forces will dictate China's rise, Mr Subramanian argues: demography, convergence and "gravity". Since China has over four times America's population, it only has to produce a quarter of America's output per head to exceed America's total output. Indeed, Mr Subramanian thinks China is already the world's biggest economy, when due account is taken of the low prices charged for many local Chinese goods and services outside its cities. China will be equally dominant in trade, accounting for twice America's share of imports and exports.

Is the economic threat of China just a trendy fear tactic to sell books / get blog reads? Or is China's economic power truly going to change the world, overtake the US, and soon? I've lived there... the government/ bureaucracy/system/economy seem to be a mess when actually talking to the people and seeing it take place first hand, and not to mention some of China's economic/financial prowess is a facade imo (Shanghai), but they still are 1.3bil+ people, with a HUGE middle class, and nonetheless an extreme force to be reckoned with. Personally - am I considering living another year in China to develop more business contacts/network? Yes. Would I have my kids learn Mandarin? Yes, but am I shaking in my boots? no.

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (17)

Sep 9, 2011 - 2:13pm
imnottheonlyone, what's your opinion? Comment below:

When I was growing up in Miami, my mom was a private teacher at an small exlusive day care where most of the clients came from Fisher Island (look it up). Those wealthy caucasians and hispanics had hired chinese nationals with prestigious academic training in linguistics and the like to teach their pre-k kids mandarin co-currently with English. And this was what-- a little more than a decade ago.

I'm not an expert, but I think peterson's analysis is usually on the right-track so this worries me haha.

  • 1
Sep 9, 2011 - 2:16pm
pacman007, what's your opinion? Comment below:

China will be the dominant force very soon. This isn't some made up bullshit, it's reality. We will become the SECOND country. It's sad but it was bound to happen sooner or later. Might as well man up to this fact and start grinding. India still has problems but give them 20-30 years and they'll be knocking at the door as well...

I can almost hear China whispering to us..."step ya game up pimp"

Sep 9, 2011 - 4:07pm
eokpar02, what's your opinion? Comment below:

I will never understand the concern about America's economic position compared to another countries. Does someone in Japan wake up every morning and express outrage/fear at the fact that their countries economic position was eclipsed by China's? Do you think the Danes,Brits, Spaniards, etc cared when there gross output was eclipsed by another country?

I am not cocky, I am confident, and when you tell me I am the best it is a compliment. -Styles P
Sep 10, 2011 - 6:43am
leveredarb, what's your opinion? Comment below:
eokpar02:
I will never understand the concern about America's economic position compared to another countries. Does someone in Japan wake up every morning and express outrage/fear at the fact that their countries economic position was eclipsed by China's? Do you think the Danes,Brits, Spaniards, etc cared when there gross output was eclipsed by another country?
I never understand this issue either ,but then again I am not american and don't need to rationalize the world to fit into a framework of my country being the greatest nation on earth (to quote herman cain).
Sep 10, 2011 - 11:20pm
eokpar02, what's your opinion? Comment below:
leveredarb:
I never understand this issue either ,but then again I am not american and don't need to rationalize the world to fit into a framework of my country being the greatest nation on earth (to quote herman cain).

Americans approach a point of jingoism. I had an interesting debate with someone in Boston a month or so ago about China. I said that Chinese rise would be great for the US since a significant portion our countries exports are complex machinery and even more complex electronics. The fine, but delusional fellow said "WE ARE NUMBER ONE", and once China becomes more powerful the world will end.

I am not cocky, I am confident, and when you tell me I am the best it is a compliment. -Styles P
  • 1
Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Sep 10, 2011 - 9:35am
tradingonwheels, what's your opinion? Comment below:
eokpar02:
I will never understand the concern about America's economic position compared to another countries. Does someone in Japan wake up every morning and express outrage/fear at the fact that their countries economic position was eclipsed by China's? Do you think the Danes,Brits, Spaniards, etc cared when there gross output was eclipsed by another country?
Well the brits cared
Sep 10, 2011 - 1:25pm
FinancialNoviceII, what's your opinion? Comment below:
eokpar02:
I will never understand the concern about America's economic position compared to another countries. Does someone in Japan wake up every morning and express outrage/fear at the fact that their countries economic position was eclipsed by China's? Do you think the Danes,Brits, Spaniards, etc cared when there gross output was eclipsed by another country?

I completely agree. If China does exceed the US as a superpower, do you know what will happen? There will be two superpowers rather then one. American economists and any other people who comment on the topic have the insecurities of a fat kid.

Sep 10, 2011 - 3:03am
MittRomney, what's your opinion? Comment below:

China is overdone

Sep 10, 2011 - 12:42pm
noname1001, what's your opinion? Comment below:

China's cool...but too many sino-forests.

I have to return some video tapes.
  • 1
Sep 10, 2011 - 4:03pm
Barboone, what's your opinion? Comment below:
noname1001:
China's cool...but too many sino-forests.

+1 for being a realist.

"The higher up the mountain, the more treacherous the path" -Frank Underwood
Sep 10, 2011 - 2:33pm
MagicKarp, what's your opinion? Comment below:

I think the biggest problem for China will be dealing with the side-effects when its currency appreciates. They will either have to be able to produce high quality, highly-specialized goods, or they will have to have extremely efficient corporations that will be able to offset increased variable costs in ways other than cost of the products they sell. China does not posess either capability at the moment.

Sep 10, 2011 - 4:02pm
Barboone, what's your opinion? Comment below:
AndyLouis:
from the Economist Spheres of influence

You believe anything this leftist/communist magazine tells you? Boy, you better get your sources straight. Otherwise, the only thing you will be doing in a front office; is shinning shoes.

"The higher up the mountain, the more treacherous the path" -Frank Underwood
  • 1
Sep 12, 2011 - 11:45am
AndyLouis, what's your opinion? Comment below:
barboon:
AndyLouis:
from the Economist Spheres of influence

You believe anything this leftist/communist magazine tells you? Boy, you better get your sources straight. Otherwise, the only thing you will be doing in a front office; is shinning shoes.

obviously not because I'm being critical and asking you monkeys in the forum! wow "leftist/communist" ?! that's a whole new forum thread altogether, wanna start it in the forum? "Is the Economist leftist/communist?"

WSO Content & Social Media. Follow us: Linkedin, IG, Facebook, Twitter.

  • 2
Best Response
Sep 10, 2011 - 4:59pm
trazer985, what's your opinion? Comment below:

A few facts that aren't recited often about China.

30% of China smokes.

There are 250 million ghosts in China (unofficial citizens who aren't on the census, because of the 1 child policy).

There are 80 million more men than women, because of the same policy.

These social issues will have a huge impact on the country in the near future. Assume 2 billion people. 600 million of them smoke (these people are by definition in the working age bracket, or are retired). According to a european 2006 survey into smoking, 25 of men and 19% of heavy smokers (5+ a day), will develop lung cancer (not accounting for other cancers or respiratory infections).

Imagine the population the UK and the Netherlands combined all being male, and it not being possible at all to get married, (or most likely, a girlfriend for most of your life. All because of your country's policy. You going to take it sitting down, develop feelings towards your fellow man?

Impossible to quantify these impacts, but its a ticking time bomb and a half...

Sep 11, 2011 - 11:36pm
International Pymp, what's your opinion? Comment below:

China is already a dominant force in the world. If you come here, you will feel it. There's nothing like it anywhere else in the world.

Sep 12, 2011 - 7:57pm
AndyLouis, what's your opinion? Comment below:
International Pymp:
China is already a dominant force in the world. If you come here, you will feel it. There's nothing like it anywhere else in the world.

can you give some examples of how one would "feel it" ? just curious - what city are you in and what do you do there?

WSO Content & Social Media. Follow us: Linkedin, IG, Facebook, Twitter.

Sep 13, 2011 - 4:40am
International Pymp, what's your opinion? Comment below:

Libero sunt voluptas magnam illum et. Corrupti saepe iste non pariatur veritatis quae. Quidem quia praesentium consectetur et itaque. Ducimus eveniet ducimus quia qui commodi.

Start Discussion

Career Advancement Opportunities

July 2022 Investment Banking

  • Jefferies & Company (▲03) 99.6%
  • Lincoln International (= =) 99.2%
  • RBC Capital Markets (▲07) 98.8%
  • Bank of America Merrill Lynch (▲01) 98.4%
  • Houlihan Lokey (▲06) 98.0%

Overall Employee Satisfaction

July 2022 Investment Banking

  • Lincoln International (▲06) 99.6%
  • Jefferies & Company (▲11) 99.2%
  • Greenhill (▲07) 98.8%
  • Rothschild (▲01) 98.4%
  • Evercore (▽01) 98.0%

Professional Growth Opportunities

July 2022 Investment Banking

  • Jefferies & Company (▲04) 99.6%
  • Lincoln International (▲04) 99.2%
  • RBC Capital Markets (▲09) 98.8%
  • Houlihan Lokey (▲07) 98.4%
  • Bank of America Merrill Lynch (▲04) 98.0%

Total Avg Compensation

July 2022 Investment Banking

  • Director/MD (9) $661
  • Vice President (37) $394
  • Associates (191) $246
  • 2nd Year Analyst (117) $162
  • 3rd+ Year Analyst (17) $156
  • 1st Year Analyst (369) $150
  • Intern/Summer Associate (78) $147
  • Intern/Summer Analyst (292) $92