| Published on: | 2011-02-16 14:28:57 |
China's economy is booming, and there are many indications to support that fact.
Latest figures from Tokyo, released yesterday, show that Japan's economy was worth $5.474 trillion (£3.414 trillion) in 2010 which is less than China's total of $3.64022 trillion. This means that China is now the world's second biggest economy.
After applying this new data, the top-ten ranking is as follows: US, China, Japan, Germany, France, UK, Italy, Brazil, Canada and Russia.
Doctor Damian Tobin is a Lecturer in Chinese Business and Management at the Centre for Finance and Management Studies at SOAS in University of London. He is also Academic Director of the International Management for China distance learning programme. Dr Tobin spoke exclusively to The Fresh Outlook about China's economical leadership:
“In a way, it was predictable; at some stage this was going to happen,” said Dr Tobin referring to China having overtaken Japan. However, he acknowledges that Japan also experienced fast economic growth over recent decades before being halted by recession, similar to that which China is having now.
Today, the BBC reported that analysts see China replacing the US as the world's top economy in about a decade. “It's realistic to say that within 10 years China will be roughly the same size as the US economy,” said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.
Dr Tobin agreed with this statement, but warns: “although China has much potential, there are many areas in which it has to improve.” In his opinion, the source of production of both countries is very different. While the US economy is based on high rate technologies, China has focused on a low-cost manufacturing industry, which eventually, “won't lead to the same kind of growth”.
The Chinese challenge
Another point to consider regarding China's lead is the difference between Gross Domestic Product (GDP), the market value of all final goods and services produced within a country in a given period of time, and the GDP at Purchasing Power Parity (PPP) per capita, which is the GDP divided by the average population for the same year.
In other words, GDP (or income) per capita refers to how much money each country's citizens have, instead of the whole country itself (GDP).
Therefore, it is essential to remember the fact that China being economically big doesn't make its population richer. In this sense, a Japanese citizen may still have a higher income per capita than a Chinese citizen.
“Although China may catch the US in terms of GDP, the Chinese challenge is to raise the general living standards of its population, and the test for that is the income per capita,” states Dr Tobin.
By Eva Fernandez
[Image courtesy of dbtelford]
Latest figures from Tokyo, released yesterday, show that Japan's economy was worth $5.474 trillion (£3.414 trillion) in 2010 which is less than China's total of $3.64022 trillion. This means that China is now the world's second biggest economy.
After applying this new data, the top-ten ranking is as follows: US, China, Japan, Germany, France, UK, Italy, Brazil, Canada and Russia.
Doctor Damian Tobin is a Lecturer in Chinese Business and Management at the Centre for Finance and Management Studies at SOAS in University of London. He is also Academic Director of the International Management for China distance learning programme. Dr Tobin spoke exclusively to The Fresh Outlook about China's economical leadership:
“In a way, it was predictable; at some stage this was going to happen,” said Dr Tobin referring to China having overtaken Japan. However, he acknowledges that Japan also experienced fast economic growth over recent decades before being halted by recession, similar to that which China is having now.
Today, the BBC reported that analysts see China replacing the US as the world's top economy in about a decade. “It's realistic to say that within 10 years China will be roughly the same size as the US economy,” said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.
Dr Tobin agreed with this statement, but warns: “although China has much potential, there are many areas in which it has to improve.” In his opinion, the source of production of both countries is very different. While the US economy is based on high rate technologies, China has focused on a low-cost manufacturing industry, which eventually, “won't lead to the same kind of growth”.
The Chinese challenge
Another point to consider regarding China's lead is the difference between Gross Domestic Product (GDP), the market value of all final goods and services produced within a country in a given period of time, and the GDP at Purchasing Power Parity (PPP) per capita, which is the GDP divided by the average population for the same year.
In other words, GDP (or income) per capita refers to how much money each country's citizens have, instead of the whole country itself (GDP).
Therefore, it is essential to remember the fact that China being economically big doesn't make its population richer. In this sense, a Japanese citizen may still have a higher income per capita than a Chinese citizen.
“Although China may catch the US in terms of GDP, the Chinese challenge is to raise the general living standards of its population, and the test for that is the income per capita,” states Dr Tobin.
By Eva Fernandez
[Image courtesy of dbtelford]
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