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NYT: “China Passes Japan to Become No. 2 Economy”

NYT: “China Passes Japan to Become No. 2 Economy“:

After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.

The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

Related post: “More on China, the U.S., GDP, and economic power.”

More on China, the U.S., GDP, and economic power


One of the great pleasures I derive from blogging here is receiving feedback from knowledgeable and thoughtful readers. One such reader — a person who has asked not to be identified — wrote in to correct my Dec. 11 post about American misperceptions of Chinese economic might.

As you’ll recall, I linked to a post by the inimitable James Fallows, in which he pointed out a recent Pew report about American views on global economic power.

The report found that 44 percent of Americans think that China — not the U.S. — is the “top global economic power.” This despite the fact that in addition to other telling factors, China’s GDP is less than one third of America’s. (See chart on the right.)

As it happens, there’s more to the story. As the reader pointed out in an email to me, the issue is not merely the 44 percent of those surveyed who picked China. In addition, it’s telling to note that just 5 percent of respondents named the “EU countries.”

Indeed, when it comes to GDP alone, a look at the 2008 numbers from sources like the IMF and the CIA World Factbook demonstrate that the European Union’s collective economy is, in fact, larger than America’s. (See the graph of national GDPs; bigger version here.)


The CIA World Factbook’s 2008 report, for instance, says that the EU’s economy is worth $18.14 trillion — compared to $14.44 trillion for the U.S.

The IMF’s estimate is similar, while the World Bank puts the U.S. ahead of the Eurozone, since the Eurozone excludes the U.K. This Wikipedia page — List of Countries by GDP (nominal) — summarizes of the three reports quite nicely.

Now, back to the Pew report. Let’s not forget that the question was not “which country (or union) has the world’s largest GDP?”

Rather, the question was which country is the “world’s leading economic power.” Since the EU and Eurozone are not a single country, one can argue that they don’t wield as much economic power as the U.S. That’s because America, of course, is a single economic entity, while the EU cannot always act in a unified way based on the desires of its constituent members.

Fascinating stuff.

American misperceptions about China’s economic power


Note: I have updated this post here.

Excellent post from James Fallows pointing out that a new Pew report shows that 44 percent of Americans think that the “top global economic power” is China. Just 27 percent of respondents correctly picked the U.S.

Yes, China owns a lot of American T-bills. And yes, China’s economy is developing rapidly. But China’s economic might is not as great as many people assume.

From an Oct. 22nd story in the Economist headlined “The Odd Couple: America should be much more confident in its dealings with its closest rival”:

China’s economy is still less than a third the size of America’s at market exchange-rates. Its GDP per head is one-fourteenth that of America. The innovation gap between the two countries remains huge. America’s defence budget is still six times China’s.

(Emphasis mine.)

Check out Fallows’s post (linked to above) for more info.

China-Myanmar pipeline project

WSJ: “Myanmar’s Neighbors Advance Pipeline Project

HSIPAW, Myanmar — China and its neighbors are moving ahead on a multibillion-dollar oil-and-gas pipeline project that promises to greatly enhance the financial strength of Myanmar’s military regime and boost its political clout in Asia.

That promise comes as the U.S. is seeking new ways to weaken Myanmar’s regime, which has used force and imprisonment to subdue political opposition and ethnic separatists over the years, and which some analysts fear could someday pose a threat to other countries as it builds up its military. Past strategies, including the use of economic sanctions to hobble Myanmar’s junta, have largely failed.


When completed, the pipeline will help unlock large untapped deposits of natural gas off Myanmar’s coast and carry it hundreds of miles to southern China, expanding Myanmar’s role as one of Asia’s important energy exporters and enhancing its influence over other countries that rely on its supplies.

(Emphasis mine.)

There’s also a video and some graphics that are worth checking out.

UPDATE: This story appears to be available to non-WSJ subscribers via Google News, but the link I provided above seems to be subscriber-only.

UPDATE 2: I meant to mention this earlier, but U.S. Senator Jim Webb, who met with Aung San Suu Kyi in August, has often warned of China’s growing influence in Myanmar. News of this pipeline project would obviously be a case in point.

James Fallows podcast on China and technology


Don’t miss award-winning journalist and author — not to mention uber-blogger — James Fallows discussing all things China and technology-related on the Sept. 2 installment of the Motley Fool podcast. You can find the 25-minute episode here. Fallows, a correspondent for the Atlantic Monthly, recently returned to the US after living in China for several years.

President Bush’s Bangkok Speech

President Bush’s foreign policy speech here in Bangkok this morning focused on China and Myanmar.

Wall Street Journal:

U.S. President George W. Bush expressed his concern about the fate of political dissidents in China and his determination to bring an end to the “tyranny” of the military regime in Myanmar a day before he is expected to attend the opening of the Olympic Games in China.

In the speech delivered Thursday in the Thai capital, Mr. Bush stressed that the stability and prosperity of Asia require the strong involvement of both China and the U.S. to ensure that the region sustains its role as an important growth engine for the global economy.

He also emphasized the U.S.’s economic engagement in the Asian-Pacific region, touting bilateral free-trade pacts with Singapore, Australia and South Korea while signaling Washington’s commitment to pursue similar trade talks with Malaysia and Thailand. Mr. Bush urged China to do more to help achieve a successful outcome to the stalled Doha round of talks at the World Trade Organization to improve access to member countries’ markets.

New York Times:

On the eve of the Olympic Games in Beijing, President Bush said Thursday that he had “deep concerns” about basic freedoms in China and criticized the detention of dissidents and believers, even as he praised the extraordinary gains China has made since he first visited more than three decades ago.

Mr. Bush’s remarks in Bangkok, part of a speech on Asia, distilled and recast previous statements critical of China’s record on human rights. But delivered only hours before his departure for Beijing on Thursday evening, they represented a rebuke to China’s leaders, though a measured one.

Washington Post:

President Bush on Thursday used some of his bluntest language to date on human rights in China, saying in a speech here before he flew to Beijing for the Olympic Games’ opening ceremony that “America stands in firm opposition” to China’s detention of political dissidents and religious activists.

Reuters video on YouTube: “Bush faces China balancing act”

New Rules for Expats in China

Here’s a snip from an Andrew Jacobs story in today’s IHT:

In little more than 100 days, this city will open its arms to an unprecedented deluge of foreigners, many of whom will be pleasantly surprised by the dizzying array of designer boutiques, painfully hip martini bars and libertine pastimes not readily associated with an authoritarian, communist country.

But just as Beijing is promising to welcome 1.5 million visitors to the Olympic Games with newfound openness, public security officials are seeking to tighten controls over daily life, including new visa restrictions that are causing mounting anxiety among the 250,000 foreign citizens who have settled in the capital in recent years. The rules, which were introduced last week with no warning and little explanation, limit new visas to 30 days, making it difficult, if not impossible, for long-term residents to hold down jobs and maintain uncomplicated lives. The restrictions are also infuriating business leaders in Hong Kong who have become used to crossing the border with ease.

“I can’t begin to explain how serious this is going to be,” said Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong. “A barrier like this is going to have a real ripple effect on business.”

(Emphasis mine.)

A Boutique Cruise Along the Yangtze

A Boutique Cruise on the Yangtze [not my image]

That’s the subject of my latest Globorati post.

Asia’s Top Five Craziest Buildings

The Ryugyong Hotel in Pyongyang, N. Korea [not my image]

Hi, all. I’m back.

I have a story at Tripmaster Monkey today about Asia’s craziest buildings. Enjoy (and leave a comment at the bottom of the article, if you like).

My Friend Ben Visits Beijing

My buddy Ben P., an ex-roommate from college days, is an American climate scientist who lives in Melbourne. He recently visited Beijing; here’re some snips from his amusing observations:


Shocking! We found that the 10 km trip from central Beijing out to our hotel could take 1-1.5 hours during rush hour. Drivers appeared to steer with their horns, and cars, bicycles, and pedestrians all hurl themselves at each other with frightening disregard for anyone’s personal safety. Miraculously we only saw one car accident the entire time (although we also heard a rumor that Beijing University loses quite a number of students each year to bicycle accidents). The subway was a similarly chaotic – the cars were packed, but unlike in Tokyo, professional packers weren’t required – the locals appeared to be quite capable of packing themselves in. And let me tell you – if you’ve never been a tall black man packed into a subway car in Beijing with 200 people staring at you – it’s an interesting experience.

The economy:

Neither I, nor any of my colleagues, could reconcile China’s communism with the spirit of entrepreneralism that rages through the Chinese people. Chinese people are more than happy to completely rip you off (let the buyer beware) and will do their best to accomplish this goal. But to be fair, everything is negotiable, so if one is dumb enough to take prices at their face value, he gets what he deserves I suppose. Many of us found that prices could be negotiated down by anywhere from 50% to 90% (although we concluded that westerners lack the basic skills to be good hagglers). What was also interesting was the economic influence that 100 young scientists with a per diem could wield. Stage performances in a bar were altered to accommodate us, we were virtually the sole patrons of an acrobat show one night, and our final night in town, we rented out an entire restaurant (and negotiated down the alcohol prices). One quickly becomes aware that he’s wielding wealth that is quite disproportionate to the average individual. Case-in-point, 6 of us had dinner and drinks one night at local establishment for a grand total of AUS$12 (and that includes the extra main dish that we ended up with by mistake). [But you could pay AUS$4 for a coffee at the aiport, and these kinds of contradictions are everywhere]. Really, the only clear sign that communism is thriving was the absurd amount of overemployment in some establishments. The local supermarket around the corner from us, for example, must have had 4 people “working” in each aisle and three at each cash register. As a consequence, none of them really had anything to do. When I did take something off the shelf, it was immediately replaced. This type of overemployment was rampant and must be juxtaposed against the rural poverty which exists outside the developed areas.

(Emphasis mine.)

[Image: BLP]

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