Growth5 Blog

Tuesday, February 2, 2010

China Set to Pass Japan in 2010

With 10.7 percent growth in 4Q 2009, and 8.7 percent gross domestic product growth for the year, China is on pace to pass Japan and become the world's 2nd largest economy behind the U.S. before 2010 is over.

The People’s Daily, the official mouthpiece of the Communist Party, had this to say about China's economy vs. the capitalist approach:
“When the financial crisis forced the neoliberal economic system into a dead end, the shortcomings of the capitalist system were exposed for all to see,” the editorial said. “But a China that was pushed to a crossroads proved its ‘national capabilities’ in taking on a crisis by answering with the advantage of the socialist system with Chinese characteristics.”
A healthy economy in China is a good thing for the rest of the world... not so sure it's doing much for the Chinese. Average income for "city dwellers in 2009 was 18,858 yuan ($2,700), while in the populous countryside it was just 5,153 yuan ($752)."

It's easy to see why China is so concerned about inflation. Even a slight tick in the wrong direction would damage consumer spending and drive up the price of their exports (their current advantage in the world market).

For better or worse, China is our banker. Almost a year ago, we talked about the problems our debt to China was causing us and them. But they need us and we need them, we'll figure it out.

Kudos to us, still number one by a large margin with almost exactly one BILLION less people (couldn't help myself after reading the above quote again).

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