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Physicist, Startup Founder, Blogger, Dad

Monday, January 24, 2005

Goldman optimistic on China growth

The graph below seems a bit speculative to me, forecasting US GDP growth rates at about 3% and China at 7-8% for the next 50 years or so! Actually, it underestimates where China is today, using official exchange rates rather than PPP. If the size of the economy right now is actually $6 trillion, the PPP value, rather than $1.5 trillion, the nominal FX value, then Goldman is forecasting a more reasonable average annual growth rate of about 4.5%.

There is some recent precedent for this line of thinking. You can see here that the value of the Yen went up by more than a factor of 2 after the Plaza Accord, meaning the implied size of the Japanese economy (in nominal FX terms) more than doubled in less than 5 years. Presumably the PPP figure is more meaningful. (For related discussion, and definition of Purchasing Power Parity, see here.)



WSJ: "Sustaining long periods of strong growth is hardly unprecedented. If China edges out the U.S. in, say 2041, as a Goldman Sachs research paper predicted in 2003, it will have done so in about 65 years. The U.S. took about 100 years to surpass Britain as the world's No. 1. Japan rose to second place from the ruins of World War II in 30 years.

China has many of the advantages that the U.S. and Japan enjoyed in their ascents. Like the U.S., it has land in abundance and a sizable domestic market, which drives internal demand. Like Japan, China has a highly educated population, an undervalued currency and access to capital and technology.

China also has a history of economic supremacy, having been the world's largest economy for much of the 700 years starting around 1000. In an echo of today's capital and technology transfers, the introduction of early-ripening rice and later of New World crops like maize and sweet potatoes created food surpluses, allowing the buildup of porcelain and silk industries that dominated global trade, says Kent Deng, an economic historian at London School of Economics. As late as 1730, historians say, the country produced a third of the world's manufactured goods. China currently dominates about 12% of world manufacturing."

12 comments:

Anonymous said...

http://www.nytimes.com/2005/01/24/international/asia/24china_kr.html?ex=1107574046&ei=1&en=a58f624e5244a3a2

January 24, 2005

Daring Young 'Monks' Sell Trinkets With Greatest of Ease
By JIM YARDLEY

XINGLONG, China - The bald man in a monk's flowing robe pounded a drum, and a dull, rising beat echoed through the darkened streets with a promise of something in short supply in this grim, isolated town: entertainment.

The circus had come to town, in the form of a dirty pink bus carrying about 20 men claiming to be disciples of China's most revered Kung Fu traditions. But this would not be a fighting exhibition. The men promised to eat metal balls, sleep on beds of sharpened blades and perform other acts of physical wonder.

All for the low price of 3 yuan, or about 36 cents, cheap even for China. They pitched a striped tent on a vacant lot littered with broken concrete, beat the drum and waited. In a town where the closest city is three hours away by narrow mountain road, people came.

"This is not a movie," said the announcer, who provided commentary and pounding disco music during the show. "This is not a video. This is a real live show."

It was less certain whether these were real live monks. But that did not matter to the more than 100 people who crowded into the tent on a cold winter night, many of them squealing young children whose usual entertainment is state television.

Anne

Anonymous said...

What a fine blog, how nice those who visit.

Anne

Anonymous said...

An aside: A most intelligent article, but I really could not set this under "Smarter Child."

http://www.nytimes.com/2005/01/24/science/24women.html?ex=1107573671&ei=1&en=8fe349cb4f9155be

January 24, 2005

Gray Matter and the Sexes: Still a Scientific Gray Area
By NATALIE ANGIER and KENNETH CHANG

When Lawrence H. Summers, the president of Harvard, suggested this month that one factor in women's lagging progress in science and mathematics might be innate differences between the sexes, he slapped a bit of brimstone into a debate that has simmered for decades. And though his comments elicited so many fierce reactions that he quickly apologized, many were left to wonder: Did he have a point?

Has science found compelling evidence of inherent sex disparities in the relevant skills, or perhaps in the drive to succeed at all costs, that could help account for the persistent paucity of women in science generally, and at the upper tiers of the profession in particular?

Researchers who have explored the subject of sex differences from every conceivable angle and organ say that yes, there are a host of discrepancies between men and women - in their average scores on tests of quantitative skills, in their attitudes toward math and science, in the architecture of their brains, in the way they metabolize medications, including those that affect the brain.

Yet despite the desire for tidy and definitive answers to complex questions, researchers warn that the mere finding of a difference in form does not mean a difference in function or output inevitably follows.

Anne

Anonymous said...

Anne,

A question for you follows extract from NYT article you pointed to:
------------------------------
Yu Xie, a sociologist at the University of Michigan and a co-author with Dr. Shauman of "Women in Science: Career Processes and Outcomes" (2003), said he wished there was less emphasis on biological explanations for success or failure, and more on effort and hard work.

Among Asians, he said, people rarely talk about having a gift or a knack or a gene for math or anything else. If a student comes home with a poor grade in math, he said, the parents push the child to work harder.

"There is good survey data showing that this disbelief in innate ability, and the conviction that math achievement can be improved through practice," Dr. Xie said, "is a tremendous cultural asset in Asian society and among Asian-Americans."
--------------------------

Here is the paradox. "All men (and women :)) are ceated equal", one of the revolutionary ideas of all times (IMHO) did not spring in Asia. In fact, in parts of Asia, the caste system (now fading away, at least in cities), mysticism and fatalism and variants dominant philosophy among people. Yet people in such counties with such backward ideas (middle class comparison) think they can learn math even if they are not blessed with any gift by sheer hard work.

On the other hand, in the country with "all men/women are created equal" ideology, people give up trying to learn math ("algebra is hard"), and think unless they have the 'gift' they cannot be good at it. This is counter-intutive to me.

Why is that?

Anonymous said...

What an important question you have asked. The observation that Anglo Americans appear remarkably more fatalistic about what we might be than Asian Americans strikes me as true, though on an anecdotal level. Why should this be so? We must think about the question and how broadly we wish our frame to be. Can we generalize to Asians, after all there are so many Asian cultures? I am thinking.

Anne

Anonymous said...

Anne,

Most of my 'heroes' in science were/are from the western world. Talking about role models, the US is brimming with them in every field! So I have been baffled by the "math/science phobia" in popular culture here.

One qualification on the article. I think in India at least, there is a notion of genius being someone with unattainable abilities, almost mystical, a God's gift. My understanding of the Western thought is that there is really nothing that is 'divine' about genius, it is explainable (1% inspiration, 99% perspiration). As an example, the English mathematician Hardy had a hard time understanding the Indian mathematical genius, S Ramanujam, who claimed his goddess was the inspiration of the fantastic theorems he would come up with. To the Western mind, that sounds ludicrous, but not to an Eastern one, I think.

But even though genius may be unattainable to an "Eastern" mind, being "good/competent" is to be a goal attainable by any: lot of hard work will get you somewhere, though you won't be a genius, is the belief.

Given that "rationality" is more the norm in the West,
this "math/science phobia" is a big puzzle to me. Why not the "western" idea that "what one fool can understand, another can"? Not being "cool", relative prosperity, intellectual laziness, salaries relative to sports, etc does not fully explain it, I think.

Anonymous said...

Tolstoy's theory of history, as wonderfully developed in War and Peace, would have history at once described thoroughly as all of our histories. Napoleon thought he was France, but France was ultimately each of the gunners of the Grand Army as they marched toward Moscow, and each of the families that provided for the gunners to have left France for what ever symbolic reason. Kutuzov, the Russian commander, knew Napoleon was not France nor was Kutuzov nor the Tsar Russia. The gunners of the Grand Army spent themselves along the way to Moscow, so they capture of Moscow meant nothing. With the gunners gone, Napoleon was of no account. History then for Tolstoy is understood as all of our histories apart from our heroic views that we can make the world after our images.

I will, she hoped, relate this to the discussion of individuality or individual promise when chance permits. Will I be able to :) ?

Anne

Anonymous said...

Wow, that was deep, Anne! Expand some more, please when you have the time.

I feel like a kid in college learning so many interesting things from you and Steve: it is a wonderful feeling!

MFA

Anonymous said...

Same here MFA :) But, you assume I can properly relate the story I told about Tolstoy. We, me too, will find out.

Anne

Anonymous said...

Tolstoy's modest theory of history came to mind, because there is a sense I have from Asian literature and painting that the individual while set in more modest terms than in western literature and painting is thought to be more malleable. Were the child born to a home of scholars, the child can be a scholar. Indeed it is expected that the child will be a scholar. Roles are more transferable beyond talent than we would have them.

There will be more, but Blogger has been awfully slow this day.

Anne

Anonymous said...

Anne,

"...sense I have from Asian literature and painting that the individual while set in more modest terms than in western literature and painting is thought to be more malleable...."

I had not thought of it that way: very perceptive observation indeed!

Just so you know, I am listening/waiting for more :)

MFA

China sweet potato said...

far from Goldman Sachs being too optimistic regarding the potential growth of China's economy they underestimated its growth.This echoes the Chinese media's approach to comparisons with Japan.

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