China and the economic centre of gravity

Very good FT video with Martin Sandbu and James Kynge discussing the fact that although the Chinese economy has grown at an alarming rate over the last 40 years, will it become the global superpower? Some of the main points:

  • Global economy is now becoming more regionalised
  • From 1979 to 2018 China’s GDP growth rate averaged 9.5%
  • 2,000 years ago everyone was poor – centre of gravity of global economy followed population size
  • Key change in the mid ’90s, when China began to allow the sons and daughters of farmers to migrate from the village to these big factory towns.
  • Liberalised global trade in 1980’s helped China access markets
  • China still very much a developing nations – ranks 61st in terms average per-capita income but got an excellent infrastructure.
  • China’s middle class approx 400m but that means approx 1bn of the population are poor
  • Middle income trap – getting from poor to middle income is a very different process from getting to middle income to high income.
  • Economy needs to change from a growth model based on accumulating labour and capital to a growth model led by technological development and technological progress.
  • China is either a global leader or at least close to the cutting edge, wind and solar power, online payment systems, digital currencies, aspects of artificial intelligence, 5G telecoms, drones, ultra-high-voltage power transmission.
  • Three major trading hubs – EU, US and China – with trade being more regionalised. China reluctant to lose export markets in EU and US as they are big drivers of exports
  • Three trading blocs will lead to protectionism and decoupling of supply chains. unless the EU, the US, and China can sort out their differences.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s