The Great Leap Forward

And this time it’s one that has been achieved in a little under 24 hours. China’s economy is now – officially speaking in any event – 17% bigger than it was yesterday. It will now be a neck and neck race for 4th place in the world economy league this year (the UK is the current holder) and a foregone conclusion next year.

Over the years a lot of people have suggested that China’s growth numbers were ‘rigged’, what they never contemplated howeveris that they may have been rigged downwards.

Also, as I noted here, China is now the world’s number one investment destination, and the number one exporter of ICT products.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

7 thoughts on “The Great Leap Forward

  1. I am currently reading Le Grand Bazar mondial by Laurence Benhamou. Best sourcing and outsourcing thriller ever. Some examples:

    China produces 99% of the world’s clothes-pegs, 97% of kitchen dustbins, 95% of electric can openers, 95% of stuffed animals, 93% of portable electric radiators, 92% of badminton rackets, 92% of Christmas decorations (festoons), 95% of shoes in 15 different categories, 90-95% of silk clothing, 90% of children’s bicycles.

    China produces 50% of global exportations for some 2.000 products. Even food, when China’s arable land is pretty scarce at 3% of its surface.

    The author estimates that China could cost the USA 600.000 textile jobs in the short term. Most textile jobs in Europe have already gone (not only to China, by the way).

    Also, China appears to have huge state-of-the art factories, next to an unlimited source of cheap labour, the likes of which are unseen in the West. And the quality of their products is getting better fast, in some cases already surpassing Western ‘quality brands’.

    The West is exporting its know-how to China by placing very detailed commands there. Not only for consumer goods but also for water turbines… The current 5.000 or so Chinese suppliers will see their number increase by 20.000 in the coming years. 75% of the world’s textile machinerie in 2003 was bought by China.

    Already China is hiring Western stylists and designers and preparing to create their own brands… our creativity is being outsourced as well.

    There is much more, but the one thing that struck me most is that a further expansion of China will mostly hurt… cheap labour countries like Morocco, Tunis, Mauritius, Bangladesh.

  2. BTW, I know the above would have made a great post but I still need to do some more research (and work for a living).

  3. “I know the above would have made a great post”

    Yes, well meanwhile thank you for enhancing mine :).

    “And the quality of their products is getting better fast”

    This is what is known in the trade as the learning-by-doing effect.

  4. China’s banking sector and stock market is a big mess to put it mildly. One must ask what could China achieve if her financial system were at least partly as efficient as that of the U.S.

  5. “One must ask what could China achieve if her financial system were at least partly as efficient as that of the U.S.”

    Well, we might be just about to find out the answer to that question :). I agree, thoroughgoing financial reform is about China’s number one priority right now.

    Btw, (Pavel), I’ve just put some more stuff at the end of the Lutz post.

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