Before the 2008 crash, it was common belief that the Chinese economy would overtake the United States in 40-50 years. Then, near the lows in March 2009, Jim O’Neill from Goldman Sachs altered his forecast to suggest that China would overtake the U.S. in “less than 20 years.” Now, after the smoke has cleared, the latest forecast from Citi suggests that even with strong domestic growth, China will become the world’s largest economy in less than a decade.
It is important to note that this matches precisely with what we believe is the goal of the latest Five Year Plan from the Chinese Communist Party as described in the previous post:
“The goal of the national 12th FYP (Five Year Plan) is to smooth the way for the Chinese economy to overtake that of the U.S. in ten years or less. The military MFYP’s objectives are similar: to expeditiously close the gap between the PLA’s capacity and that of the U.S. armed forces.”
US Will Be the World’s Third Largest Economy: Citi
“The goal of the national 12th FYP (Five Year Plan) is to smooth the way for the Chinese economy to overtake that of the U.S. in ten years or less. The military MFYP’s objectives are similar: to expeditiously close the gap between the PLA’s capacity and that of the U.S. armed forces.”
US, ECONOMY, BIGGEST, LARGEST, CHINA, INDIA, EMERGING MARKETS, ECONOMIC GROWTH, POPULATION, DEMOGRAPHIC, RECESSION, RECOVERY
Posted By: Patrick Allen | CNBC EMEA Head of News CNBC.com | 25 Feb 2011 | 04:19 AM ET
The world is going to become richer and richer as developing economies play catch up over the coming years, according to Willem Buiter, chief economist at Citigroup.
“We expect strong growth in the world economy until 2050, with average real GDP growth rates of 4.6 percent per annum until 2030 and 3.8 percent per annum between 2030 and 2050,” Buiter wrote in a market research.
“As a result, world GDP should rise in real PPP-adjusted terms from $72 trillion in 2010 to $380 trillion dollars in 2050,” he wrote.
As the world watches oil prices rise sharply amid unrest in the Middle East, Buiter’s analysis of the world’s long-term prospects offer some hope that better times are ahead but if he is right power will shift from the West to the East very quickly.
“China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050,” he predicted.”
To read the whole article, URL: http://www.cnbc.com/id/41775174/
So, it’s clear that the Chinese rise has actually benefitted from the 2008 crash. Instead of slowing down, the process of overtaking the United States has accelerated. At the same time, the Chinese have accumulated additional reserves while we have taken on more debt.
The other area to watch is the global balance of wealth between OPEC and the Western World. Then last time oil prices were at these levels, the value of OPEC oil and gas recoverable reserves exceeded the total value of ALL of the world’s financial assets. Given today’s price levels, that is likely true today as well. Continuing Chinese growth will cause ever increasing demand for energy and likely ever-increasing prices. So, the other major winner of the financial collapse will be those who control OPEC oil supplies. Given the recent turmoil in the Middle East, we can’t be certain regarding who will control all that wealth. The Muslim Brotherhood is certainly making a play for it now.
The bottom line is that this is an Economic War being waged by sophisticated enemies with an agenda of dominance. It’s time for our leaders to understand this reality as step number one.
All posts Copyright (c) 2011 Kevin Freeman, All Rights Reserved
