China Becomes Number 3

The China Post ^ | July 22, 2007 | The China Post / AFP

[JACKRUSSELL]

It was half a century ago when Mao Zedong launched his Great Leap Forward, aimed at making mainland China an industrial power overnight. Backyard furnaces blossomed all over rural China to produce steel. Mao wanted his impoverished and backward country to "overtake Britain" in steel production in 15 years. Later on, he shortened it to one year.

The term "Great Leap Forward" first appeared in the mainland's China's People's Daily in 1957, calling for speedy industrial development after the collectivization of farms. In 1958, Mao Zedong urged his countrymen to "overtake Britain and surpass America," setting the goal of steel production at 10.7 million metric tons for that year.

The slogan Great Leap Forward drove the mainland into a frenzy when primitive blast furnaces popped up in every household, melting ploughing machinery and kitchen utensils for steel. "People's communes" were established to feed people collectively in communal mess halls, free of charge. Agricultural production was disrupted as farmers were mobilized to produce more steel than Britain.

Unfortunately, Mao forgot to ask his big Russian brother, Lenin-medal winning novelist Nikolai Ostrovsky, about how steel was made. Certainly not in one day, Ostrovsky would have advised. Mao's fantasy did not last long before famine struck. From 1960 to 1962, an estimated 30 million people died of famine in one of the biggest famines in human history. In China, it was officially called the "three years of difficulty."

Mao's bold experiment in rapid industrialization ended in disaster, but his dream of overtaking Britain lived on. After his death in 1976, the mainland started in a new leap forward under reformist Deng Xiaoping, who discarded Maoism in favour of capitalism in his drive for industrialization.

Mao did not live long enough to see his dream come true. "Overtaking Britain" was accomplished a few years ago. "Overtaking Germany" is seen as a sure thing this year, as the mainland's GDP in 2006, US$2.8 trillion, was only 3 percent smaller than Germany's US$2.9 trillion. But Germany's growth rate, estimated at 3 percent this year, pales in comparison with China's 11 percent.

This will make China the world's third largest economy, after the United States (US$13.2 trillion), and Japan (US$4.4 trillion). Now for China, it's "overtaking Japan and surpassing America" -- two more to go, that is.

How long will it take? It could be soon; it could also be never. But assuming that China's current pace of GDP growth remains unchanged, it could leap-frog Japan in three or five years if Japan's growth remains as tepid as it has been in the past six years. How about America? It could be in a decade or two.

But this is misleading, in a sense. Even if the mainland overtakes Japan as the world's second biggest economy, it is still a developing country, with a meagre per capita GDP of US$3,400. The mainland's huge population of 1.3 billion makes it virtually impossible to become a developed country anytime soon.

Unless, perhaps, if "purchasing power parity" is taken into consideration. PPP is a formula that adjusts exchange rates to equalize the cost of goods in different countries. It tends to make developing economies appear bigger because one U.S. dollar can often buy more goods in poor countries than in rich ones. One U.S. dollar, for instance, can buy a bowl of beef noodles in Beijing; but it costs five dollars in New York. In terms of PPP, China already has the world's second biggest economy, at US$10 trillion in 2006. That is almost the size of America's. It eclipses Japan's US$4.2 trillion and Germany's US$2.6 trillion. It suddenly boosts the mainland's per capita GDP to a whopping US$7,700. In a year or two, the mainland's GDP in terms of PPP will top the United States.

This Great Leap Forward is real, 50 years after Mao's megalomaniac leap. Mao's dream of overtaking Britain has come true, but he may squirm in his grave because of his betrayal by revisionists and capitalist-roaders. Post-Mao China is money-oriented, leaping toward capitalism with fascinating speed. As recently as 1999, China was the world's seventh biggest economy. It has since leapt past Italy, France, Britain, and now Germany this year, and Japan in no time. This is a nightmare for Mao, to be sure, but not necessarily so for the people. The new Great Leap Forward brought people fortune, not famine. Most people are getting rich and better off. That's why the leap is going on and gaining momentum despite the widening gap between rich and poor and the glaring inequalities and injustices suffered by the disadvantaged who are left out of the boom.

[RichInOC]

Okay, I know what Number One is, and I know what Number Two is...what’s Number Three?

[ken21]

the business week estimate of last year

was that china and india’s economies would converge with

the u.s. of $50 trillion each in 2050.

[mamelukesabre]

Alot can happen in a decade. We will see. I remember when everyone thought the japanese were going to end up owning all of america. That never happened.

[BlackJack]

Yeah and China uses US Technology for Growth

http://money.cnn.com/news/newsfeeds/articles/prnewswire/LNM10216072007-1.htm

The system is a prototype for state-of-the-art delivery of streaming video performing education courses in vocational education in China. The new courseware was developed using Guangzhou TCOM’s EDU v5.0 Education Management System and is delivered to viewers via the MyStarU platform.

The multimedia content is produced using Adobe Flash(R) video synchronized presentations and demonstrative video clips. Users can view multimedia performing training presentations that include downloadable video files of course materials and are then able to upload their own video files to teachers for analysis, which affords users the opportunity to have questions answered by course teachers.

MyStarU intends to use this new capability to reach hundreds of thousands of young people who are entry social for working. MyStarU’s goal is to deliver education content online without meaningful limitations or restrictions.

[NVDave]

Half a century after the "Great Leap Forward," the ChiComs still don't know how to make steel. I've used Chinese and American ball bearings in a tandem disc (a farm tillage implement) and the Fafnir US-made bearings, properly greased, will last years (NB the plural). In other applications, I've used ChiCom roller bearings side-by-side with a Japanese NTN bearing. The Chinese bearings in the exact same application, receiving the exact same grease at exactly the same service intervals, won't last a week. The steel in the bearing balls themselves is too soft. The steel is of the wrong composition -- as is the steel in the outer races. The balls or needles will start to gall, then they fail. No amount of premium greases will prevent this. The steel is simply too soft. When I put a ChiCom-made chisel, screwdriver, prybar, etc onto a grinding wheel to sharpen it, I can tell from the sparks that there isn't enough carbon and nickel in the steel. Side-by-side with US-made or Japanese-made tools, it is easy to see why Chinese tools are so cheap: they're crap. the labor that assembled them is crap, their steel is crap, their finish is crap. The more I've used Chinese products, the more I don't want to buy them. I've given them their chance, and yes, by golly they're cheap. But 50 years on, they still don't know crap about making steel. They're no longer causing famines by making farmers try to melt iron into steel, but the quality of their steels is still abysmally poor.

[Jedi Master Pikachu]

"Unfortunately, Mao forgot to ask his big Russian brother, Lenin-medal winning novelist Nikolai Ostrovsky, about how steel was made."

The 'Great Leap Forward' was a stupid idea, but the author shouldn't have written this particular quote.

China invented steel; they didn't have to go to the Russians to ask how it was made--they just made lots of shoddy steel and millions starved.

[Jedi Master Pikachu]

Oh, this was supposed to be in the earlier post: PPP is a valid way of measuring economies. It does tend to make developing countries’ economies look bigger than they are in nominal GDP, but if the price of a hamburger is $1 here and 10 cents in country x, a hamburger is still a hamburger, and PPP shows a nation’s comparative wealth.

[Jedi Master Pikachu]

China isn't exactly Japan. It is much larger (in both terms of area/resources and population), and historically has been the largest economy on Earth.

But your point still stands; China's economy could crash if there is popular uprising or a major war. Or even if its economy 'overheats.'

[endthematrix]

"I remember when everyone thought the japanese were going to end up owning all of america. That never happened."

Nixon's détente with China ended that. And so Vietnam and other exploitable lands with rival China. So it goes...

[Erik Latranyi]

Mao’s vision will may come true, but at a great price.....the loss of communism and the rise of capitalism.

Chinese leaders will learn that the growth cannot be sustained with heavy-handed socialistic goverment intervention.

[mamelukesabre]

Someone posted an article here on FR a few days ago that claimed predicted population declines for china similar and that their economic growth will top out in 12-15 years due to populaion declines

[Gengis Khan]

American population pyramid demographics is a ticking time bomb. Except for foreign immigration, America is experiencing a slow decline in fertility rates. When the baby boomer generation of the 60’s grow older and become unproductive US will have an almost inverting population pyramid. There will be less young people in the productive age group and more older people to look after.

[dfwgator]

I know who Number 2 is.

[Gengis Khan]

Another reason Japan didnt overtake US was because the baby boomer generation were in their 20s when they were the most productive. US was then a country with a large number of young work force...... which Asia is at the moment.

[Gengis Khan]

Another reason Japan didnt overtake US was because the baby boomer generation were in their 20s when they were the most productive. US was then a country with a large number of young work force...... which Asia is at the moment.

[MinorityRepublican]

Having children is a liability. There's no incenitive to have kids nowadays.

Get rid of Social Security and we'll be fine.

[mamelukesabre]

THere’s still gov’t pensions and railroad pensions.

[Iwo Jima]

How many American companies are making ball bearings today?

[Jedi Master Pikachu]

The American birthrate is around 2.09, just shy of the 2.1 replacement level—so it would be more of a column than an inverted pyramid. And then, as you mention, there is immigration—both legal and illegal—which boosts the American workforce and population in general. The United States is expected to grow from around 300 million today to 400 in around 15 years. So the population as a whole is definitely not in decline.