Playing With Numbers

June 1, 2011

For centuries, China was the world’s largest economy (from tenth to fifteenth century) and if experts at the International Monetary Fund and others are correct, China will soon regain the title as the world’s largest (healthy) economy.

However, it is confusing. If we listen to The Economist in The X Factor, we are told that India’s economic growth may soon outpace China’s.

The Economist says, MORGAN STANLEY thinks it could happen in 2013; the World Bank thinks it might happen next year. Many pundits have speculated about when India’s growth might outpace China’s.

However, the International Monetary Fund’s (IMF) World Economic Outlook says that has already happened since China grew by 10.3% in 2010 and India by 10.4%.

Then from Yahoo Finance we learn the IMF says, “According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016.”

After reading the previous paragraphs, it sounds as if India will grow its economy past China and China will outgrow the United States leaving the US in third place.

In fact, India is far from growing a larger economy than China or the US.

In 2010, India’s economy ranked 10th globally or fourth depending how you stack the numbers.

India’s nominal GDP was placed tenth at $1.53 trillion, while another way of looking at the numbers says India ranked fourth at $4.06 trillion, but its public debt was $758 billion or 55.9% of GDP with $201 billion in exports and $327 billion in imports and a credit rating of $1.164 trillion.

This means India, like the US, is spending more than it earns.

China, on the other hand, had a nominal GDP of $5.88 trillion but a GDP (based on PPP) of $10.08 trillion placing it 2nd globally.  China’s public debt was 17.5% of GDP, which is a long way from India’s 55.9%.  Everything else about China leaves India far behind China’s economy.

India’s exports were more than seven times lower than China’s $1.506 trillion while its imports were almost four times lower than China’s $1.307 trillion and China has a credit rating of $8.156 trillion—much higher than India.

China is likely to resume its role as the world’s largest economy by 2015.

Any way we look at it, how can India beat China unless they are talking about the annual percent of economic growth?

Considering how much smaller India’s economy is, they would have to have a lot more growth to equal China dollar for dollar.  If India’s economy grew by 10.4% and its economy was either $1.53 trillion or $4.06 trillion (depending how one looks at it), that is still a far cry from China’s 10.3% economic growth based on a much larger GDP.

On the other hand, America, the world’s largest economy, looks like a cancer patient with six months to live.

America may have the world’s largest GDP at $14.66 trillion but having $14 trillion in public debt at 93% of GDP just about cancels that out.  Even India is doing better.

Then America’s exports were $1.280 trillion compared to $1.948 trillion for imports telling us more money is pouring out than coming in. How will America pay off its debt if losses outpace earnings?

The Economist seems to want people to think India is beating China but the numbers tell a different story. To beat China, India has to grow a much larger economy and reduce its public debt while erasing an illiteracy and poverty rate that’s embarrassing for a country touted as the world’s largest democracy.

Anyone that studies history knows that a democracy survives if the citizens are literate and understands the issues.

Discover India Falling Short


Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

To subscribe to “iLook China”, look for the “Subscribe” button at the top of the screen in the menu bar, click on it then follow directions.

Bald Eagle Capitalism

April 24, 2011

The Economist’s
cover for the March 12, 2011 issue of what the British call a newspaper disguised as a magazine had a cover with Bamboo Capitalism splashed in big print over a picture of a bamboo forest with people riding red butterflies.

The Economist says, “China’s success owes more to its entrepreneurs than its bureaucrats.”

 True, but The Economist also says China’s economic success has often been vaguely attributed to “capitalism with Chinese characteristics”… taken to mean, “Bureaucrats with heavy, visible hands have worked much of the magic.”

Hmm, I never saw it that way. I don’t think the Party in Beijing sees it that way either or cares what anyone in the West thinks.

Although The Economist goes on to point out that government bureaucrats have less to do with China’s success than most think, it is a fact that government intervention in China’s economy helped China survive the 2008 global financial crises caused by America’s obese, debt ridden, diabetic, cancerous capitalist economy, which I have termed Bald Eagle Capitalism.

Bamboo Capitalism is a good term to identify China’s “capitalism with Chinese characteristics”.  In China, bamboo is considered a symbol of luck. It is flexible. People may eat part of it. It stays green most of the time. It is used in construction, to cook food, make floors, furniture, etc. In ancient times, warriors used bamboo as armor.

The flexible way Chinese entrepreneurs are allowed to do business is the primary reason for China’s economic success, but the central government’s control over property values and banking also deserves credit — an area the US government turned a blind eye to, which led to the 2008 global financial crises and about 64 trillion dollars in global losses along with tens of millions of lost jobs around the world.

The documentary Inside Job revealed the infamous Wall Street architects of the 2008 global financial crises and how they are still in charge at the same jobs where they caused the crash in the first place.

If these same men and women had lived in China, China’s bureaucrats may have quickly executed them so the same crises might not happen again as soon as it may repeat in the West.

In fact, Bald Eagle Capitalism is a fit term to describe the US economic system.

The Bald Eagle is not only the national bird, it is a bird of prey and although it will eat fresh fish, its primary source of food is from carrion, which vultures (a term to describe the people behind the 2008 global financial crises) feed on too.

The Bald Eagle’s diet is opportunistic and varied. The Bald Eagle will also eat the garbage from campsites, picnics and dumps.

Bald Eagles are an endangered species, as is the American economy.

Discover how High-Tech Entrepreneurs Thrive in China


Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.