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Has China JUST Become The Worlds Biggest Economy?

Posted: January 9th, 2017 | Author: | Filed under: Business News, China, Indeep Media, Socially Engineerd | Comments Off on Has China JUST Become The Worlds Biggest Economy?

Has China JUST Become The Worlds Biggest Economy

By some measures, China is already considered the world’s largest economy. According to a report released last year by the International Monetary Fund that compared international economies by adjusting for exchange rates and purchasing power, China’s economy had already surpassed America’s as the world’s largest.

The Chinese economy is currently worth $US21.3 trillion, just nudging out the International Monetary Fund estimates for the US economy of $18.1 trillion.

This is the first time since 1872 – when the US took the mantle from the UK – it has been knocked off the top spot ::::

The IMF calculated these latest figures by using purchasing power parity – PPP – which enables you to compare how much you can buy for your money in different countries. As money goes further in China than in the US, the figure for China is adjusted upwards.

Without the PPP adjustment, the IMF estimates that China’s economy is worth much less – $US11.4 trillion.

As a comparison, because I like perception and colloquialism, Australia’s GDP is $US1.5 trillion. Another number to take into consideration is the GDP per capita; for the US that is $US57,293, for China $US8,260. Annual salaries are also a little eye opening, especially if you consider the creeping increase in the cost of living in China. The average PRC citizen is $US9,000 a year, while in the US it sits around $US50,000 pa

The US is expected to retain its status as the world’s largest economy for a few years longer than analysts had previously anticipated, thanks in large part to China’s recent financial slowdown. Having just said that, China grew at 6.9% while the US climbed out of its stagnation, growing an impressive 3.5% China exported $US2.3 trillion in goods while the US exported $1.5 trillion.

According to a recent study from the UK based Centre for Economics and Business Research, over the course of the next decade and a half, the global economic landscape is expected to shift seismically from where it currently stands.

China will be the largest economy in the world with a gross domestic product valued at $35.26 trillion by 2031.

Focus Economics says China’s growth target is “expected to be maintained at the current range of between 6.5% and 7.0%, while monetary and fiscal policies will likely remain accommodative.” In the political arena, China’s authorities stated that they are “seriously concerned” after President-elect Donald Trump questioned the “One-China” policy, which has been the cornerstone of China-US relations since the 70s. This incident is adding fuel to an already complicated political relationship between China and Trump. 2017 is going to be lots of things to lots of people, for the US and China it is going to be at the very least, interesting.

RELATED: Australia China Business Week, Hobart 2017

China is Australia’s largest trading partner and is fast on its way to becoming the world’s largest economy. China’s rapidly growing middle class and its proximity offer significant opportunities for Australian businesses.

With the China-Australia Free Trade Agreement – ChAFTA see below – now firmly in place and flexing its potential, Australian business is ensured a place at the export table.

China’s estimated $US1.25 trillion in outbound direct investment over the next decade make it a target for investment attraction across a broad range of sectors.

In recent years, we have seen a substantial increase by Chinese investors in a number of strategic industries including; agribusiness, tourism, commercial property, hi-tech and intellectual property.

Tasmania’s renown and China’s appetite are a robust combination. With an increased focus on food security and internationalisation, Tasmania, with its ‘clean, green and clever’ reputation is in an enviable position to take advantage of China’s hunger for bespoke produce. Our biggest trading partners changing palette will help see agricultural exports from Australia top $9 billion in the next financial year, what is your China plan?

“China’s inability to meet all the increased demand from domestic production renders exciting opportunities to food exporting countries such as Australia,” a report on China’s booming appetite for food imports by the Australia’s Department of Agriculture, Fisheries and Forestry said.

Further, the continuing growth of personal income and educated population will continue to drive opportunities across several industry sectors including: tourism, healthcare, niche food products, technology and renewable energy.

The aim of the ACBW is to help SMEs in Agricul capture the endless cross-border trading and e-commerce opportunities in China,

ChAFTA benefits for Australia:

  • Consumers may see cheaper prices with the 5 percent tariff on Chinese-manufactured products, such as electronics and whitegoods, phased out
  • Tariffs on various Australian commodities (including coal and alumina) and gemstones of between 3-10 percent eliminated either immediately or within between two and four years
  • Tariffs of between 3-14 percent on various Australian manufactured exports eliminated within four years
  • Tariffs of up to 30 percent for beef, dairy, sheep, pork, live animals, hides, skins and leather, horticulture, wine and seafood to be eliminated within 2-9 years
  • Tariff reductions or elimination for some processed foods including canned fruit, orange juice, and natural honey
  • Guarantee that Australian tourism and hospitality operators can operate wholly-owned subsidiaries in China, including hotels and restaurants
  • China will permit Australian firms to establish profit-making aged care institutions throughout China, and wholly Australian-owned hospitals in certain provinces
  • Australian businesses allowed to take a majority stake in joint ventures which provide services in agriculture, forestry, hunting and fishing in China
  • Improved access to partnerships with Chinese firms for legal and financial services in China, but 49 percent Australian ownership limit on financial services joint-ventures
  • Foreign Investment Review Board (FIRB) will continue to screen all investment by Chinese state-owned enterprises
  • Australian firms will have some rights to sue Chinese governments for policy changes that adversely affect their interests

Negatives for Australia:

  • No tariff reductions for sugar, rice, wool, cotton, wheat, maize or canola
  • If Chinese imports of beef or milk powders exceed certain limits, China has the discretion to apply additional customs duties
  • Threshold for Foreign Investment Review Board screening of Chinese investments in “non-sensitive sectors” (ie. excludes agriculture, media, telecoms and defence) rises from $252 million to $1,094 million
  • Chinese firms will have some rights to sue Australian governments for policy changes that adversely affect their interests
  • Chinese investors in projects valued over $150 million will receive additional rights to bring in temporary migrant workers to Australia without local labour market testing

Dates for Australia China Business Week (tasmania) haven’t been confirmed yet, check the ABF website for updates.

source: google source: indeepmedia source: bbcnews

source: bloomberg source: wikipedia source: cebr

source: focuseconomics source: abf

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