Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Joe S Pack who wrote (40978)	11/6/2003 11:52:19 AM
From: AC Flyer	Read Replies (6) of 74559

>>very soon China will be the dominant world economic power<< Nat: Don't misunderstand, I am not attacking China or the Chinese. Quite the opposite in fact, I earn my daily bread distributing Chinese products in the US, but... The above statement is nonsensical on its face and I am surprised that it could have been made by someone with a PhD. Why? Simple arithmetic. How so? Well, the US economy (~$10.80 trillion) is approximately nine times larger than the Chinese economy (~$1.23 trillion). This means that China must achieve a GDP growth rate that is nine times that of the USA in order to add an equivalent amount of economic activity to the Chinese economy. Or, to put it another way, US GDP growth of 4% adds more than three times the amount of economic activity to the US economy (~$0.43 trillion) that 10% GDP growth adds to the Chinese economy (~$0.12 trillion). Bottom line? Unless you expect China to show sustained GDP growth rates in the 30%+ range, it is flat out silly to make the statement made by your friend.

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