China Overtakes Germany

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China’s climb up the value chain has been mirrored by its climb up the global economic rankings. Having overtaken the UK in 2006, it has now (based on the revised figures) passed Germany, according to the Financial Times:

    “China overtook Germany to become the world’s third-largest economy in 2007 after the Chinese authorities revised upwards the figures for growth during that year.

    China’s National Bureau of Statistics said…that the economy expanded by 13 per cent in 2007, a sharp increase from the 11.9 per cent growth rate the authorities had previously stated.

    With only the US and Japan larger than China, the new figures highlight the rapid transformation that the Chinese economy has undergone during the past 30 years since Mao-era controls were eased, although it is experiencing the toughest period in a decade as a result of the global financial crisis.
    The fresh data will reinforce the case to give China and other large emerging economies a bigger role in global financial decision-making, even though China has been hesitant about taking on new responsibilities.

    …Goldman Sachs forecasts that the Chinese economy will overtake that of the US by about 2040. The Economist Intelligence Unit forecasts in terms of purchasing power parity – which adjusts for price differences between countries to reflect actual buying power of local incomes – China will outstrip the US by 2017.

    …According to the IMF, Germany’s GDP was $3,321bn in 2007, using market exchange rates for that year. By the new estimate China’s GDP was $3,382bn. US GDP was $13,807bn and Japan $4,382bn. China is also close to surpassing Germany to be the world’s biggest exporter.”

However, while Europe and the West slip into recession, China is not alone on the leader board. Business Week reports that India may soon see faster growth rates than China:

    “As China’s GDP growth rate dropped to 6.8% during the October-December quarter and is expected to go down further, the Indian government has become hyper-active to achieve at least a 6.5% growth in Q4 to register a win over China.

    If India achieves a better growth rate than China even for one quarter, the message will go across to the world and help India in wooing foreign capital, waiting to chase growth stories. Already, government officials in India have been highlighting reports of a few investment analysts who doubted China’s official GDP numbers and claimed that it could just be in the positive territory in the last quarter.”

A secretary in the government of India confirmed to SundayET that India has a brighter chance of overtaking China in the last quarter of FY09, or Q1 in case of China which follows the calendar year.”
For more on India and China (the dreaded “Chindia”!) see McKinsey’s interview: “China and India: The power of complementary cultures”.

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