Monday, February 11, 2013

Two Symbolic Milestones For China's Growth Reached

For years, both China and Germany have had larger goods exports than the United States. However, as these two countries have had large trade surpluses while the U.S. has had a large deficit, the U.S. has had, and still has a lot larger imports. And until last year, U.S. imports exceeded Chinese imports more than what Chinese exports exceeded U.S. exports. But faster growth in both imports and exports last year meant that China now for the first time has a larger total foreign trade in goods than the U.S. If you include trade in services, the U.S. might still be bigger, but it will probably not be long until China become bigger by that measurement as well.

At the same time, China's GDP grew to 51,93 trillion yuan, roughly $8,3 trillion. This means that for the first time (or at least the first time since the 19th century), China's GDP at current exchange rate is more than half of America's, as its GDP was roughly $15.7 trillion. This means that for China to surpass America in economic might, its relative growth plus real appreciation of the yuan need only be 9.5% per year, a lot less than in the latest 7 years.