Sunday, May 28, 2006

Can China Overtake USA as the World Economic Power

An intersting panel on BBC discussed if China will overtake USA as the world power in the next 20 years. The debate was also supposed to include India as a threat but was hardly ever mentioned

The main points from the discussion were

USA trade deficit with China is the largest ever

The greatest protectionist force in the world is China

Creating policy to benefit companies may not be the same as benefiting workers

Questioning if the trade balance is an important factor, as if all countries work on similar playing fields it shouldnt be an issue.

It will be hard for China to continue its sustained level of growth due to current political, bank and wage issues

USA is a very flexible economy and has risen to past challanges

China is currently in a mercantile war with USA and European Countries

Current Republican policies are benefiting multinationals more then smaller companies and is creating a larger dive between the classes

Idea of upskilling manufacturing workers is good except that potential jobs for upskilled workers is also being outsourced to overseas companies.

WTO focuses on Intellectual property rights and business rights i.e protecting corporate rights but not worker rights

In China their is growing middle class, extremely wealthy individuals but their is also a large number of workers living below what we would consider the poverty line.

The shops in china have a large number of products that are are overseas brands that actually may be sourced in china.

It is possible that competition for China and India can create a win win for all countries

My take on this issue

Competition will make USA more economicaly richer but less powerful were the winners will be overseas workers and the losers will be American workers

China's population is ten times larger then Japan, If chinese start consuming chinese products like japanese consumes japanese products, then there is no question that China will become the world economic power

I live and work with a large number indians and I don't think India will end up overtaking USA and especially not China. My main reason is the primary motives of Indians. If India follows gujarati motives or removed the caste system then it would be a different story.

In theory you can only produce a finite amount before there is oversupply and this can already be seen in the chinese garment industry. So their is only a finite amount in which you can grow and in some industries this will be reached in the next few years before it starts reach normal growth levels.

The growing wealth disparity in the US is going to have significantly negative effect on USA when a tipping point is reached. The negative effect is going to come through the ballet box.

USA biggest asset is its brands and ability to brand and I cant see this being threatened in the short term. Biggest advantage USA has over other countries is its African American Sport and Entertainment stars.

In terms of Fiji Going Forward
Need to focus on activities that are indigenous to Fiji eg Fiji Water, Fijian Tourism and exporting Fijian Labour. Other economic activities will be competitive within Fiji but will have problems competing on a global level playing field. The size and population of the country is to small.

So in my opinion the brand "Fiji" will be the most important factor effecting Fiji's economic future


Blogger Peceli and Wendy's Blog said...

It's really great when you see Fiji Water sold over here!
In today's Fiji paper - one of them - I read that Fiji is in the top 7 destinations for tourists and that is a surprise.
In Australia there's a lot of out-sourcing going on, locals will lose jobs while South East Asia and China pick up the jobs with very low pay to the workers. We are going downhill fast!

1:32 pm  

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