PTA News Bureau
The man, who directs the entire economic forecasting process at the Massachusetts-based IHS Inc leading a team of 5,000 industry and information researchers, analysts and subject matter experts, says the rapid growth of China is no threat to the leading position of the US and Europe. “While they may lose ground to China in industrial sectors, they are still far ahead in terms of high-tech and intellectual products,” IHIS’ Chief Economist Nariman Behravesh said.
Commenting on China’s growth and the decline of the US and Europe, he said Beijing has reported rapid growth during the last three decades. Describing this as “spectacular and unprecedented,” he noted that it has grown at an annual average rate of around 10 per cent a year since the early 1980s. “No other country has accomplished such a feat,” he said.
Going forward, IHS expects China to grow at a rate of about 7.5 per cent over the coming decade. “Arithmetically, this means that sometime in the mid-2020s, Chinese GDP will overtake that of the US.”
However, he added that this is a little misleading. “At that point the average Chinese worker will still earn only about one-fourth of the income of the average American worker. But since China’s population is nearly four times that of the US, its size will be equivalent to that of the US.” Likewise will be the case of its industrial sectors.
China has been growing very rapidly in part due to massive investment by the central and provincial governments. China already has huge amounts of excess capacity in industries such as steel, chemicals and autos, Behravesh he said.
“However, this does not necessarily mean that they are a threat – yet – to the US and Europe. The quality of US and European industrial products is typically higher than those from China.”Also, because of rapidly rising wages in recent years, China is losing competitiveness.
PTA News Bureau
(full Text PTA October/November issue)