Made China

Made China

China Has U.S. In Its Sights After Beating Japan

It is finally official. We have been reporting for months that China was closing in on Japan to become the world's number two economy. On Monday it finally happened.

The Japanese Cabinet Office has admitted that Japan's gross domestic product for the second quarter totaled $1.288 trillion, considerably less than China's $1.337 trillion of output.

What's next?

The United States will be next and the last nation to face a challenge from China. China will vie for top spot in the global economy much sooner than any "expert" currently believes.

The New York Times says the experts it consulted don nott think China can surpass the U.S. GDP before 2030. Pundit Howard Steven Friedman, who bills himself as a "United Nations statistician", warns that China will fall back in the economic rankings due to competition from other low wage nations.

It's not that simple.

After all, China is still leading the world with its double-digit growth. Advanced economies like Japan and the U.S. are struggling to eke out two percent economic expansion. China cannot afford to fall back and Beijing has shown far more determination and skill in handling the economic crisis than western leaders.

The Chinese know that their economy must move up the value chain in order to remain viable in a competitive global market. China has long since beaten the U.S. in higher learning with the number of university graduates there topping six million in recent years.

Increasing domestic consumption is a crucially important goal to keep the Chinese economy growing. Beijing knows that it must break its reliance on exports and serve its own massive markets in order to continue expanding. That's also an important future investment consideration here at the China Stock Digest.
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Already, signs of China's emerging global dominance are appearing in many sectors of the world economy.

1. China overtook Germany last year to become the world's largest exporter.
2. The Chinese now have the world's largest automobile market, knocking the U.S. out of its traditional lead.
3. China leads the financial world with the largest number of IPOs (Initial Public Offerings).
4. China had the world's biggest IPO ever this month with the launch of Agricultural Bank in Shanghai and Hong Kong.
5. China is world's largest consumer of energy and second-biggest importer of crude.
6. The nation is the world's number one market for iron ore and copper.
7. The largest hoard of foreign reserves is in China.

The growth of Chinese influence is quickly making it a dominant force in global economic trends. As the world struggles to recover from the financial crisis, China is still driving strong growth among its Asian neighbors and in countries as far away as Australia. The nation may be seen as impoverished by some pundits but China's global clout is growing with incredible speed.

The growing dominance of Chinese corporations cannot be ignored. China now has four of the world's biggest banks and four of the biggest companies globally by market capitalization. Obviously this is a key target for investment.

Here's why China will surpass the U.S. sooner than the "experts" predict.
China Has U.S. in its Sights after Beating Japan

China is expected to grow by leaps and bounds between now and 2020. Annual GDP expansion will definitely continue at a rate between eight and ten percent a year for the foreseeable future. There is simply no chance that the U.S. can match that rate of growth to maintain its lead.

Keep in mind that China is already closing in on the U.S. economy in terms of Purchasing Power Parity (PPP), the measure of economic strength preferred by the International Monetary Fund and the CIA.

In 2009, the IMF estimated that the U.S. economy generated 14.2 trillion dollars. China's economy generated 8.7 trillion dollars as measured by purchasing power parity, a scale which eliminates distortions caused by currencies and other factors.

By this measure the U.S. economy is only 38 percent larger than China right now. That's a smaller gap than most pundits are willing to discuss. With China's double-digit growth, everyone will be surprised at how quickly this gap closes.

Adding to the acceleration of China's economic growth is under-reporting. Every year China goes back over the books and checks its growth figures. And every year the same thing happens. They realize they got it wrong.

New areas of the economy are found. Growth in areas like the service sector has been often been missed. And hundreds of billions in unseen growth is usually discovered.

I treat every economic report from China as an underestimate. So far I haven't been wrong. China is growing much more quickly than official figures suggest. And fast growth means equally fast future stock gains.

In the future I expect to see more global influence from China. And it won't be purely political influence.

China will drive prices among world markets for raw materials. Chinese corporations will be able to buy out competitors in the global arena. The nation's enormous cash reserves will allow Chinese institutional investors to move markets.

These trends are already apparent. As the Chinese economy rises in wealth, its global influence will follow. China may still be in America's rearview mirror. But it is much closer than it appears. And it is accelerating fast.

Investors take note. I believe China will overtake the U.S. more than one decade sooner than anyone else predicts.

Committed To Your China Profits,

Jim Trippon
Recent Posts by Jim Trippon:
http://www.globalprofitsalert.com/global-investment-news/jim-trippon

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