China may not overtake america this century after all
1. CHINA MAY NOT OVERTAKE
AMERICA THIS CENTURY AFTER ALL
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With the recent decades of surging progress from China, many believe
that they could be running out of steam. The government may even be
slowing the natural expansion as they are trying to dial down the speed
of expansion, in hopes that they can avoid a boom-bust cycle that most
of the western nations are trapped in.
With aims of a moderate 7 percent growth, the explosive expansion,
through limiting the possible investment, may be winding down on
purpose. But other argue that the economic engine is just running out
of juice and that the government’s attempts at reducing the growth
rates to moderate levels are just a guise.
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The data may also be altered to help with the perceived confidence in
the business communities. Although the growth data is calculated from
the standard sources, there have been rumors that the companies, such
as the utilities companies, are asked to massage the numbers. The
overall consensus is that the data may be inflated by as much as 10
percent.
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Even with these overstated data points, most economists and analysts
close to the Chinese economy believe that the growth will crash, and
then level off between 3 to 4 percent over the next few decades. With
these lowered growth estimates, it is important to note that even as the
US is in recovery mode it’s rate of growth is still under 3 percent- the
lower end of China’s eventual stabilized growth figures.
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In 2012, the GDP comparisons of China and the US, when adjusted for
currency exchange, had China at about 75% of the US’s purchasing
power. Upon further analysis, some of the environmental economist
point to the fact that much of the Chinese GDP is still based on
liabilities that will need to be changed and upgraded over the coming
years, and adjust the relative purchasing power to a figure that is under
50%. With these statistics in mind there are many that believe China
won’t surpass the US this century.
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The US debt crisis is still being felt, but many people, including George
Soros, believe that China’s state banking system is poised for a similar
bust. These claims can be further supported when you look at the
amount of credit that China has been issuing, with a jump of more than
100 percent in the last four years; about $11 trillion-which is the size of
the entire US banking system.
With all of these figure in mind most people believe that China,
although it is still going to outpace the US in growth, probably won’t
pass the US, at least in the immediate future.
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