BEIJING (AP) — China is set to overtake Japan as the world's second-largest economy in a resurgence that is changing everything from the global balance of military and financial power to how cars are designed.
By some measures it has already moved to second place after the U.S. in total economic output — a milestone that would underline a pre-eminence not seen since the 18th century, when the Middle Kingdom last served as Asia's military, technological and cultural power.
China is already the biggest exporter, auto buyer and steel producer, and its worldwide influence is growing. The fortunes of companies from Detroit automakers to Brazilian iron miners depend on spending by China's consumers and corporations. And rising wealth brings political presence: Chinese pressure helped to win developing countries a bigger voice in the World Bank and International Monetary Fund.
"Japan was the powerhouse driving the rest of Asia," said Rob Subbaraman, chief Asia economist for Nomura Securities. "Now the tide is turning and China is becoming a powerful influence on the rest of Asia, including Japan."
China's rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world's lowest. Beijing has launched two manned space missions and is talking about exporting high-speed trains to California and Europe while families in remote areas live in cave houses cut into hillsides.
Japan's people still are among the world's richest, with a per capita income of $37,800 last year, compared with China's $3,600. So are Americans at $42,240, their economy still by far the biggest. But Japan is trapped in a two-decade-old economic slump, the U.S. is wrestling with a financial crisis, and China's sheer economic size and the lure of its vast consumer market adds to its clout abroad.
Its explosive growth has driven conflicting shifts in Asia and beyond, triggering a scramble for commercial opportunity but fueling unease that the wealth is helping to finance a military buildup to press the communist government's claims in the region.
"I think everyone in the region is trying to benefit from Chinese economic dynamism but at the same time is trying to make sure China does not become a regional hegemon," said Greg Sheridan, foreign editor of The Australian newspaper.
Exactly when China passes Japan formally will be unclear until after this year ends. It depends on shifting exchange rates and data reported in different forms by the two governments.
Chinese GDP in 2009 was $4.98 trillion and Japan's was $5.07 trillion. In 2010, Chinese GDP was $1.335 trillion for the April-June quarter — a period for which Tokyo has yet to report. China is growing at 10 percent a year, while Japan's expansion this year is forecast at no more than 3 percent.
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Friday, July 16, 2010
Boeing chooses site for S.C. 787 Dreamliner parts plant
Boeing has chosen a site in North Charleston, S.C., for its new 787 Dreamliner interiors-fabrication facility, the company announced Thursday.
Boeing announced in May that it would put an interiors plant near the company's second 787 assembly line, which is under construction in North Charleston, as part of a plan to make that line independent of Washington.
On Thursday, Boeing said it will buy land for the interiors plant in North Charleston, about 10 miles from the assembly line, from Stone Mountain Industrial Park Inc. The company expects to start construction in the fourth quarter of this year.
"This decision is another significant step toward creating a solid aerospace presence for future generations to come in South Carolina," Ray Conner, vice president and general manager, supply-chain management and operations at Boeing Commercial Airplanes, said in a news release. "The selected location for our new interiors facility will provide us with the continued flexibility we need to leverage our production capability and meet the needs of our 787 customers."
The plant will make such parts as stowbins, closets, partitions, class dividers, floor-mounted stowbins used by flight attendants, overhead flight-crew rests, overhead flight attendant crew rests, video-control stations and attendant modules.
Boeing announced in May that it would put an interiors plant near the company's second 787 assembly line, which is under construction in North Charleston, as part of a plan to make that line independent of Washington.
On Thursday, Boeing said it will buy land for the interiors plant in North Charleston, about 10 miles from the assembly line, from Stone Mountain Industrial Park Inc. The company expects to start construction in the fourth quarter of this year.
"This decision is another significant step toward creating a solid aerospace presence for future generations to come in South Carolina," Ray Conner, vice president and general manager, supply-chain management and operations at Boeing Commercial Airplanes, said in a news release. "The selected location for our new interiors facility will provide us with the continued flexibility we need to leverage our production capability and meet the needs of our 787 customers."
The plant will make such parts as stowbins, closets, partitions, class dividers, floor-mounted stowbins used by flight attendants, overhead flight-crew rests, overhead flight attendant crew rests, video-control stations and attendant modules.
Chinese economy starts to cool down
he Chinese economy grew at 10.3 per cent in the second quarter over the year before, down from the previous three months as government efforts to cool the housing market and infrastructure investment began to bite.
The comparable first quarter figure was 11.9 per cent, when many economists feared China was close to overheating. For the first half of the year, the economy expanded by 11.1 per cent.
Although the slowdown was expected, other figures on Thursday suggested the economy could be cooling more quickly than forecast, including a drop in the expansion of industrial production to 13.7 per cent in June, year on year, from the 16.5 per cent increase in May.
The government said it was relaxed about the reduced pace of economic activity. “The slowing will help our economy avoid overheating and assist in the transformation of our economic model,” said Sheng Laiyun, spokesman for the National Bureau of Statistics.
However, the weakness has unnerved investors at a time when many hoped China could help sustain a global economy that shows signs of faltering in the US and Europe.
It could also put Beijing under domestic pressure to unwind some of its recent tightening measures, especially in housing.
“How to achieve a soft landing of the property market will really be a serious challenge,” said Liao Qun, chief economist at Citic Bank International. A prolonged slowdown in real estate would have an impact on industries from steel to electrical appliances, he said, yet the authorities would not want to relax policy before they were convinced prices had dropped.
China publishes growth figures on a year-on-year basis but does not release a sequential, seasonally-adjusted growth figure which would give a more accurate impression of the direction of economic activity. Private sector estimates vary considerably, with Goldman Sachs putting the implied quarter-on-quarter growth rate at 8 per cent on an annualised basis, while Standard Chartered estimated 10 per cent.
While the pace of new lending has been slowing since last autumn, the principal tightening measure has been the campaign since mid-April to try to limit speculation in the property market and stem loans to investment companies operated by local governments.
The weakening in activity appears to have blunted the recent surge in inflation, with the consumer price index falling from 3.1 per cent in May to 2.9 per cent in June and factory-gate inflation down from 7.1 per cent to 6.4 per cent.
At the same time, exports and consumption have remained robust, with the government announcing today that retail sales grew 18.3 per cent in June over the same month last year, following a 44 per cent increase in exports in June, year-on-year. Fixed asset investment increased 25.5 per cent in the first half of the year, which economists said implied an increase of 24.7 per cent in June, year on year, slightly down from 25.4 per cent in May.
Qu Hongbin, economist at HSBC, said the predictions about a hard landing in China were “overplayed”, adding: “This is just a slowdown towards more sustainable growth, not a meltdown.”
The official China Securities Journal said in a front-page editorial on Thursday that the government should extend active fiscal policy and refrain from further policy tightening to prevent a sharper slowdown.
“In the second half of the year, external demand will gradually weaken and the dividend from the trade surplus will fall. This requires an increase in overall social investment and a halt to tightening of both fiscal policy and monetary policy,” the paper wrote.
The comparable first quarter figure was 11.9 per cent, when many economists feared China was close to overheating. For the first half of the year, the economy expanded by 11.1 per cent.
Although the slowdown was expected, other figures on Thursday suggested the economy could be cooling more quickly than forecast, including a drop in the expansion of industrial production to 13.7 per cent in June, year on year, from the 16.5 per cent increase in May.
The government said it was relaxed about the reduced pace of economic activity. “The slowing will help our economy avoid overheating and assist in the transformation of our economic model,” said Sheng Laiyun, spokesman for the National Bureau of Statistics.
However, the weakness has unnerved investors at a time when many hoped China could help sustain a global economy that shows signs of faltering in the US and Europe.
It could also put Beijing under domestic pressure to unwind some of its recent tightening measures, especially in housing.
“How to achieve a soft landing of the property market will really be a serious challenge,” said Liao Qun, chief economist at Citic Bank International. A prolonged slowdown in real estate would have an impact on industries from steel to electrical appliances, he said, yet the authorities would not want to relax policy before they were convinced prices had dropped.
China publishes growth figures on a year-on-year basis but does not release a sequential, seasonally-adjusted growth figure which would give a more accurate impression of the direction of economic activity. Private sector estimates vary considerably, with Goldman Sachs putting the implied quarter-on-quarter growth rate at 8 per cent on an annualised basis, while Standard Chartered estimated 10 per cent.
While the pace of new lending has been slowing since last autumn, the principal tightening measure has been the campaign since mid-April to try to limit speculation in the property market and stem loans to investment companies operated by local governments.
The weakening in activity appears to have blunted the recent surge in inflation, with the consumer price index falling from 3.1 per cent in May to 2.9 per cent in June and factory-gate inflation down from 7.1 per cent to 6.4 per cent.
At the same time, exports and consumption have remained robust, with the government announcing today that retail sales grew 18.3 per cent in June over the same month last year, following a 44 per cent increase in exports in June, year-on-year. Fixed asset investment increased 25.5 per cent in the first half of the year, which economists said implied an increase of 24.7 per cent in June, year on year, slightly down from 25.4 per cent in May.
Qu Hongbin, economist at HSBC, said the predictions about a hard landing in China were “overplayed”, adding: “This is just a slowdown towards more sustainable growth, not a meltdown.”
The official China Securities Journal said in a front-page editorial on Thursday that the government should extend active fiscal policy and refrain from further policy tightening to prevent a sharper slowdown.
“In the second half of the year, external demand will gradually weaken and the dividend from the trade surplus will fall. This requires an increase in overall social investment and a halt to tightening of both fiscal policy and monetary policy,” the paper wrote.
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