Reality Check

Reality Check

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August 16, 2010

China's Economy, Second Largest

By Robert Hashemian, Vice President of Web Development


China's powerhouse economy steamed past Japan's in the last quarter making it the second biggest economy in the world. This event was largely expected but looking at it in a larger picture who could have believed this back in 1978 when China had just embarked on its ambitions economic overhaul?

The question now is when China will overshadow the long-held first position of the US economy. Forecasts based on available data indicate that such an event could take place in as early as a decade. Of course anything could happen between now and 2020 to derail that prediction.

Also it is noteworthy to consider that the ranking is based on the GDP and does not reflect the individual wealth within a country. For per capita prosperity levels, one would need to divide the GDP number by the population number of the country. Of course China with such a large population does not even come close to the front of that list. That honor goes to the tiny country of  Liechtenstein which boasts a per capita GDP of around $122,000. China's per-capita GDP is a mere $7,000.

The other factor to consider is distribution of wealth, and by all accounts China has quite a lop-sided wealth distribution. The country itself may be prosperous but plenty in the country do not share in that prosperity. The US doesn't have a good track record in that area either. Western Europe (excluding the UK), Japan, Australia, and Canada have been much more successful in implementing equitable wealth distribution.


Robert Hashemian is VP of Web Development for TMCnet.com with a keen interest in financial markets. To read more of Robert’s articles, please visit his columnist page. He also maintains his personal Web site at www.hashemian.com.
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