Tuesday, October 14, 2014
"Hysteria watch: The truth about China's economy"
At FoxNews.com, Elizabeth MacDonald brings her extensive business knowledge to bear:
"However, China is not now nor will it become the world’s largest economy in the next decade, despite the hyperventilation.
This short-sighted and incomplete analysis is based on one data point that recasts GDP based on consumer purchasing power, adjusted for local prices and wages. The 'cost of living' narrative says that, because China has more consumers than anywhere else, and because the wages of its workers are growing, just those facts alone will push the Middle Kingdom to the number one ranking.
But the analysis overlooks the serious weaknesses in the Middle Kingdom’s economy, based on a number of statistics released by China, the U.S., and the IMF itself, which shows China is still significantly smaller and less wealthy than the U.S. China does not have the soft economic power in the form of influential brands, nor the wealth that the U.S. has.
Even the IMF does not forecast China overtaking the U.S. later this decade. Currently, U.S. GDP is $16.8 trillion, while China’s is about $9.2 trillion, despite the fact China’s population is more than four times bigger at 1.36 billion."
