With Current Tempo Of Economic Progress When Will China’s Economy (overall And Gdp Per Capita) Outreach Usa’s?
Posted by China Sourcing CommentatorNov 16
please, I don’t need just your opinion, I would like some credential data (don’t mean links or something) sources, and generally, bases for your claim!!! Maybe it will never outreach (be better), but whatever you say just give some numbers and bases…thanks in advance!!!
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Picky, aren’t you? How much are you paying for this info?
Th answers all depend on the numbers you choose.
The long term growth rate for the U.S. economy has been around 2.5% but some people put it as low as 2% while others prefer 3%http://www.investopedia.com/terms/e/econ…http://www.parapundit.com/archives/00625…
If you trust the Chinese numbers (which many don’t) the growth rate for China has been 10% until recently, but only for a couple of decades. That’s hardly long term.
Let us suppose that the difference in the U.S. and the Chinese growth rates you assume is X%
Depending on your source, you get a nominal GDP for the U.S. of $14.2 trillion and for China of $4.4 trillionhttp://en.wikipedia.org/wiki/List_of_cou…
That is a ratio of 3.18
At a differential growth rate of X%, after N years the ratio of the U.S. GDP to the Chinese GDP will be (compounding annually)
R = 3.18 / (1 + X/100)^N
Take the log and rearrange to get:
N log (1 + X/100) = log(3.18) – log(R)
To compute N when R becomes 1 (GDP parity) recall that log 1 = 0 to get:
N = log (3.18) / log (1 + X/100)
With your choice of X, you can solve this for N.
For X = 8% (i.e. 10% – 2%) I get:
N = 0.502 / 0.0334 = 15 years.
1. China’s economy hasn’t been stable for all that long.
2. The closer the Chinese GDP gets to the U.S. GDP, the lower the Chinese growth rate is likely to become.
So I see this as, at best, an optimistic estimate.
For the per capita GDP, the calculation is basically the same. You need to determine the difference in per capita growth rates (you can’t use the straight GDP growth rates) and then the ratio of the per capita GDPs.
This estimate of the current per capita PPP GDPs gives a ratio of 7.86http://en.wikipedia.org/wiki/List_of_cou…
So unless the growth rate difference is much larger, it will take significantly longer to achieve per capita GDP parity than to achieve overall GDP parity. Given the ratio in populations, this is no surprise.