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Thread: When China becomes the biggest economy

  1. #1
    Administrator CatInASuit's avatar
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    Default When China becomes the biggest economy

    China has recently overtaken Japan to become the world's second largest economy and is predicted to overtake the USA in 20 years or so at the same rate of growth.

    What is the impact on the world likely to be if/when China does become the World's biggest economy?

    Will it be the de facto superpower in the world replacing the USA or will we return to a two superpower state?

    Will China survive to become the largest economy or will internal tensions tear it apart. Can it survive in it's current one-party controlled state or will their be a push for freedoms from the middle classes, who are the main beneficiaries of this expansion.

    What will happen to the USA when it does occur, will it try and compete or will it fall back alongside other nations. What would be the loss of prestige if the most important person in the world become the Chinese premier who was being feted at every turn instead of the POTUS?
    In the land of the blind, the one-arm man is king.

  2. #2
    Elen síla lumenn' omentielvo What Exit?'s avatar
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    Tough questions. (Please treat all below as starting with a "In my opinion")

    When China becomes #1 it will not be able to maintain the fiction of the low value of its currency vs. the dollar. In fact that fiction cannot have too many years left if China's economy keeps growing. It will be good for the nations with stronger currencies when China's Renminbi is finally fairly valued. It will also slow China's ascent to the top but not stop it. Thus China's growth will eventually help the US and EU. In fact in many ways it helped the US through this long recession.

    It will not be the defacto superpower as the US and close allies (especially the UK) will keep their military up. A Superpower involves more than economy, the USSR was one for a long time with a fairly bad economy and little economic clout compared to the US.

    If China overtakes the US, it will be able to largely maintain the internal status quo as long as prosperity increases and small freedoms are added. I don't think China will tear apart. The party will shift a bit to keep the middle class happy but it will be in small increments and evolutionary rather than revolutionary.

    The USA still can go either way. We still have vast resources and could easily rebuild our manufacturing and technological edge. We can cut back on our military spending (as a percentage) and still be the strongest military in the world. We have such a huge lead in the this area now. But if China has the money, the Premier will pass the POTUS as the most important assuming they dole out the handouts to other nations.

  3. #3
    The Queen Zuul's avatar
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    Quote Originally posted by What Exit? View post
    When China becomes #1 it will not be able to maintain the fiction of the low value of its currency vs. the dollar. In fact that fiction cannot have too many years left if China's economy keeps growing.
    Could you explain why you think this? The whole issue with China and its currency tends to confuse me anyway.
    So now they are just dirt-covered English people in fur pelts with credit cards.

  4. #4
    Elen síla lumenn' omentielvo What Exit?'s avatar
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    I can try but probably not well.

    China's keeps its currency (the Renminbi) low to keep their exports cheap. It means the US and EU and Japan cannot compete in price and we import a lot of goods from China. The pressure is already on to correct this and if their economy grows faster than the rest, the various currency investors will make the correction happen no matter what China's policy makers do. I don't believe it could last too much longer.

    The US is still the #1 economy and the #1 military power, so in times of troubles, investors and banks use the dollar as a safe haven and the dollar rose in value despite our many problems. Eventually the recession will end and investors will take larger risks and the Renminbi will look like a good place. This will act to decrease the value of the dollar against the Renminbi.

    I suspect Loki can explain this far better than I. I am give you an economics 101 POV.

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    aka ivan the not-quite-as-terrible ivan astikov's avatar
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    I don't know enough about world economics to speak sensibly about that regard, but I do know that the last thing the planet needs at current technological levels, is another billion + people living a comparitive life-style to that of a consumerist westerner. At the same time, despite the long-term threat over-exhaustion of non-renewable resources poses, what right do we in the west have to say "Whoaaa, we're running out of stuff; you'll have to hold back on your desires!"? Solving this issue will likely be one of the biggest problems we face in this young 21st century.
    Last edited by ivan astikov; 17 Aug 2010 at 08:39 AM.
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    Well, this thread is helping me decide what language I want to learn next!
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    seem like we had that connection when we looked at each other
    you had a blue shirt on nice asss,dought you will see this but dosnt hurt to try, but id love to play with you. tell me what you where fixing, or the street name,or describe me.

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