Chinese economy will overtake America’s - thanks to Chinese values of thrift and hard work
Peter Wong says China's economy is going from strength to strength because of ordinary people's ability to save, while spendthrift America sinks under its welfare burden
The latest data from the International Monetary Fund shows that, in terms of purchasing power parity, China's gross domestic product in 2014 is estimated to have surpassed that of the US. That has made for uncomfortable reading for those long aware of China's rise, but who have prided themselves on America's continued domination.
Of course, in terms of nominal GDP, in which exchange rates are taken into account, American output is still higher than China's. And America's per capita GDP remains significantly higher. But, at the rate of China's present economic growth, the output gap can easily be closed within a decade.
With regard to per capita GDP, China will not outperform the US in the foreseeable future. However, it is important to understand that the competition for global leadership is actually determined by the country's overall economic strength. While many European countries (such as Switzerland and Norway) have higher production per capita than America, their small populations and scale allow for very limited influence in the global arena.
It is no wonder therefore that one commentator, for example, sees China's rise as a historical moment, describing it a "geopolitical earthquake with a high reading on the Richter scale". He further cited the fates of the British, French and Spanish empires as a result of their declining economies, implying that the US is on the same path.
I hesitate to be too enthusiastic about the rise of China's economy and its newfound international status based solely on these numbers. After all, the US still holds an absolute advantage when it comes to attracting internationally acclaimed talent across various sectors from around the world. It has the highest number of Nobel laureates in innovation and technology, and China's closed-door plagiarism can only come so close.
So how can the Chinese, still relying heavily on labour-intensive, low-technology manufacturing exports, catch up?
The US still leads when it comes to the quality of the top echelon of its society. The problem, however, is that the majority contribute little to the economy compared with their overseas counterparts. China's advantage lies in its mainstream - its low-income and middle-class public, who boast superior diligence and more resilient attitudes in general. This provides a sound platform for China's rapid rise.
