China’s rise is reversing

by Ruchir Sharma

https://www.ft.com/content/c10bd71b-e418-48d7-ad89-74c5783c51a2


After stagnating under Mao Zedong in the 1960s and 70s, China opened to the world in the 1980s — and took off in subsequent decades. Its share of the global economy rose nearly tenfold from below 2 per cent in 1990 to 18.4 per cent in 2021. No nation had ever risen so far, so fast. Then the reversal began. In 2022, China’s share of the world economy shrank a bit. This year it will shrink more significantly, to 17 per cent. That two-year drop of 1.4 per cent is the largest since the 1960s. These numbers are in “nominal” dollar terms — unadjusted for inflation — the measure that most accurately captures a nation’s relative economic strength. China aims to reclaim the imperial status it held from the 16th to early 19th centuries, when its share of world economic output peaked at one-third, but that goal may be slipping out of reach. China’s decline could reorder the world. Since the 1990s, the country’s share of global GDP grew mainly at the expense of Europe and Japan, which have seen their shares hold more or less steady over the past two years. The gap left by China has been filled mainly by the US and by other emerging nations.


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https://x.com/rnaudbertrand/status/1727146172501086446?s=46&t=U...

This is a good example of the FT misrepresenting economics in order to fit a narrative.

The author says "China’s rise is reversing" because "the nation’s share of global GDP" has been dropping for 2 years. He highlights that his calculations are based on "nominal GDP unadjusted for inflation" which to him is "the measure that most accurately captures a nation’s relative economic strength."

Which is highly misleading... The whole reason why many economists, including institutions like the IMF or the World Bank, do not like to compare countries based on nominal GDP is for the very reason it makes it look like China's GDP is reversing right now... because the US has been suffering from very high inflation (when China didn't) which forced it to increase interest rates (China didn't), which strengthened the USD relative to the RMB. Hardly a sign of economic strength... If it was, Argentina's economy would be soaring...

It's much more accurate to compare countries' GDP based on Purchasing Power Parity (PPP) which reduces currency exchange bias and reflects actual relative living standards of different countries. And when you look at China's share of global GDP based on PPP, here are the numbers (pictured, extracted from the IMF database: imf.org/external/datam…):
- 2020: China is 18.3% of global GDP, the US is 15.78%
- 2021: China 18.51%, US 15.74%
- 2022: China 18.44%, US 15.54%
- 2023: China 18.82%, US 15.42%

In other words, China's share of global GDP continues to rise and the US's continues to drop.

The FT's author concludes his article with "no matter what Xi does, his nation’s share in the global economy is likely to decline for the foreseeable future. It’s a post-China world now." I would bet the exact contrary...

Arnaud Bertrand
@RnaudBertrand
Incredible, Gina Raimondo implores US industry to respect her sanctions because: "America leads the world in AI… America leads the world in advanced semiconductor design. That’s because of our private sector. No way are we going to let [China] catch up."
https://scmp.com/news/world/united-states-canada/article/3243657/us...

This is an incredible admission because the Biden administration's messaging - or shall I say propaganda - on their semiconductors sanctions has so far always been that it isn't to gain or maintain a competitive advantage over China, but solely to prevent China's military from accessing to certain technologies. See for instance what Janet Yellen said on exactly this: "[the sanctions are] tailored toward the specific national security objective of preventing the advancement of highly sensitive technologies that are critical to the next generation of military innovation and [are] not designed for us to gain a competitive economic advantage over any other country." (Src: https://washingtonpost.com/opinions/2023/11/06/china-relationship-g... )

Our Anthony Blinken: "One of the important things for me to do on this trip [to China] was to disabuse our Chinese hosts of the notion that we are seeking to economically contain them... However, what is clearly in our interest is making sure that certain specific technologies that China may be using to, for example: advance its very opaque nuclear weapons program, to build hypersonic missiles, to use technology that may have repressive purposes – it’s not in our interest to provide that technology to China. And I also made that very clear. So, the actions that we’re taking, that we’ve already taken, and as necessary that we’ll continue to take are narrowly focused, carefully tailored to advance and protect our national security. And I think that’s a very important distinction." (src: https://china.usembassy-china.org.cn/secretary-of-state-antony-j-bl... )

Pretty much everyone knew this was 100% bullshit and all done for the purpose of America maintaining a competitive advantage in the technologies of the future, like AI. But now we have the Secretary of Commerce, who implemented these sanctions, say exactly that.

https://x.com/RnaudBertrand/status/1731126664661459367?s=20

Aukus pact will turn Australia into ‘51st state’ of the US, Paul Keating says | Australian security and counter-terrorism | The Guardian


Former prime minister argues Australia has made itself a target by aligning with American ‘aggression’ towards China

https://www.theguardian.com/australia-news/article/2024/aug/08/auku...

Australia’s participation in the Aukus defence pact risks handing military control of the country to Washington and becoming the “51st state of the United States”, according to former prime minister Paul Keating.

Speaking on ABC’s 7.30 on Thursday night, Keating argued that Australia had made itself a target for aggression by joining the military alliance with the US and the UK in implicit opposition to China’s growing power in the Asia Pacific region.

Australia had no quarrel with China, Keating said, and concerns about China’s designs on Taiwan were not justified because the island was “Chinese real estate”.



“Taiwan is not a vital Australian interest,” he said, adding that the American attitude to Taiwan was like China deciding that Tasmania needed help to secede from Australia.

“What Aukus is about in the American mind is turning [Australia into suckers], locking us up for 40 years with American bases all around … not Australian bases,” he



“So Aukus is really about, in American terms, the military control of Australia. I mean, what’s happened … is likely to turn Australia into the 51st state of the United States.”

Keating told the show’s presenter, Sarah Ferguson: “We’re now defending the fact that we’re in Aukus.

“If we weren’t in Aukus, we wouldn’t need to defend it. If we didn’t have an aggressive ally like the United States – aggressive to others in the region – there’d be nobody attacking Australia. We are better left alone than we are being ‘protected’ by an aggressive power like the United States.

“Australia is capable of defending itself.

“There’s no way another state can invade a country like Australia with an armada of ships without it all failing. I mean, Australia is quite capable of defending itself. We don’t need to be basically a pair of shoes hanging out of the Americans’ backside.”

Keating, a longstanding opponent of Labor’s support for the pact, said Australia had not been threatened by China, whose expanding military presence, he said, was in line with its position as the world’s second superpower.