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Putting China Into Perspective
By Shlomo Maital
Writing in The Atlantic (August issue), Matt Schiavenza (“China’s Dominance in Manufacturing – in One Chart) helps us put China’s massive industrial capacity into perspective. In just over 3 decades after launching free-market reforms, China massively dominates global manufacturing. Here are a few of the numbers:
● China makes 320 m. PC’s every year, 91% of world output!
● China makes 109 m. air conditioners (80% of world output), 320 m. energy-saving lamps (also 80% world market share), 21.8 gigawatts of solar cell production capacity (74% of global market),
● 1.1 b. cell phones, (71%), 12.6 b. pairs of shoes (nearly two pairs for every human being alive on the planet, or 63 % of world output),
● 1.8 b. tons of cement (60% of world output), 51.5 m. tons of pork (half of world output), 1.8 b. tons of coal (half again), and 77 m. metric tons of shipbuilding capacity (also half).
So in virtually all the world’s key manufacturing areas, China produces at least half of world output. And now, China is designing a new jet liner, to be created and produced in China, to compete with Boeing and Airbus.
Rising wages are pricing China out of manufacturing? Don’t hold your breath, Schiavenza counsels. China has many advantages still, and in addition, a huge domestic market, that can replace any export demand that flags.
China’s Miracle
By Shlomo Maital
1970 2001
CHINA adjusted for inflation (rmb b.)
Gross domestic product (GDP) Q 225.3 9,593
Exports of goods and services X 4.1 2,478
Imports of goods and services IM 4.2 2,246
Household consumption expenditure C 142.6 4,409
General government consumption expenditure 17.5 1,314
Gross capital formation Ig 65.4 3,638
I’ve been reviewing macroeconomic data for China, 1970-2001. And the numbers are astounding. The world’s most populous nation has moved from a country disconnected from world trade, with almost no exports or imports, and abysmal poverty, a Cultural Revolution in which millions starved, in which backyard furnaces tried and failed to make steel – to a nation that has grown by an average of 10% yearly. GDP has risen by almost 45 times, doubling five times..and then some. Exports have risen by 600 times, which is 8 doublings! And investment (capital formation)? That rose almost 60 times, or almost 8 doublings!
This has never happened in history. No country has come close, let alone with the world’s most populous country.
How did all this happen? A leader named Deng Xiao Ping was placed under house arrest, during the Cultural Revolution, and had a lot of time on his hands. He looked around the world, saw countries that were rich and growing, and countries that were poor and stagnant – and decided that ‘rich’ was better than ‘ideology’. The rest is history.
Lots of people seem to believe the ‘bubble’ will burst, and even wish it would, complaining about civil rights, human rights, etc. China will soon be the world’s biggest economy. We all should wish China well – because if China’s growth slows, so will all of Asia, and then all of the world. Ask not for whom the bell tolls…..
TIMnovate 