Yesterday China was announced to be the world’s second largest economy, overtaking Japan. As the article suggests, China has grown to have much greater influence over world markets and politics, especially commodity markets where China’s rapid growth has diverted resources and created new suppliers.
Another article emphasizes that China’s large economy does not imply that it is wealthy. The population is so large that per capita GDP is only $3,600 in China, compared to $46,000 in the US. Poor income distribution is also a problem and exaggerates the real poverty of most Chinese.
The question not many try to answer, Can China continue to grow at such a phenomenal rate?
Assessing what China’s newfound clout means, though, is complicated. While the country is still relatively poor per capita, it has an authoritarian government that is capable of taking decisive action — to stimulate the economy, build new projects and invest in specific industries.
That, Mr. Lardy at the Peterson Institute said, gives the country unusual power. “China is already the primary determiner of the price of virtually every major commodity,” he said. “And the Chinese government can be much more decisive in allocating resources in a way that other governments of this level of per capita income cannot.”