China’s Future

Brad DeLong outlines his notes from a talk on China:

China Today

* 1.3 billion people: population growing at 0.6% per year, 1.12 male/female newborn ratio
o All in a space the size of U.S. east of the Mississippi
* Economic growth: up to 10% per year
o Investment: 43% of GDP
o Industrial production growth: 30% per year
* Economy size: $2 trillion GDP ($1,500 per person per year)
o $6 trillion PPP GDP ($4,500 per person per year) (cf. U.S.: $40,000)
* Economy sectors: agriculture 15%, mfg mining 52%, services 33%
o But: labor: agriculture 50%
* Economy distribution:
o Top 10%: 33% of income
o Bottom 10%: 2% of income
* Exports: $500 billion a year and growing…
o Coasts disconnecting from the interior…

China’s Problems

* 400 million people on the coasts
o 800 million people in the interior
* 400 million people in the cities
o 800 million people in the interior
* People doing well:
o Beijing
o Coastal cities
o Party bosses
o Peasants near coastal cities
o Migrant workers
* People doing badly:
o Heavy industry
o Rural peasants without migrants in their families
* The Communist Party’s task
o Move 10 million people a year into the coastal cities
o Find them jobs
o Make them happy

How long can China keep growing?

* 400 million peasant workers whose productivity is 1/3 the average
* 100 million manufacturing workers whose productivity is 4 times the average
* Do the math:
o Basic mechanization of agriculture plus transfer of 250 million peasants will triple the size of China’s economy and its desired manufacturing exports..

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Rajesh Jain

An Entrepreneur based in Mumbai, India.