I’m pretty sure that by mid-century, China will be a developed country with an efficient economy generating a huge share of its energy needs of renewable energy sources. That’s my prediction.
Next to China, there are two other prospective candidates: Indonesia and Brazil. These three countries are growing fast despite the aftermath of the Great Recession of 2009, they’re investing billions in huge infrastructure projects, they have an enormous supply of laborers and they’re investing in education and knowledge-based sectors of the economy. Furthermore, the three countries also have a sizable supply of natural resources, though China needs to import most of the resources it needs due to its rapid pace of economic development.
China’s influence on geopolitics and the world economy is massive and impossible to overlook. In 2009, China became the world’s new export champion after surpassing Germany and simultaneously, China surpassed the United States as the world’s largest car market.
The ongoing global recovery is in large parts due to the giant Chinese economic stimulus package. Chinese growth is pulling the world economy out of recession. As British Foreign Secretary David Miliband put it, “after 1989, capitalism saved China. After 2009, China saved capitalism.”
Just recently, China and the ASEAN nations of Southeast Asia created the world’s third largest free trade area after NAFTA (Mexico-U.S.-Canada) and the EU.
This year, China might well overtake Japan as the world’s second-largest economy.
Now Goldman Sachs is forecasting that China is set to overtake the United States as the world’s largest economy by 2027, if present growth rates can be sustained.
Since China’s population by 2027 will be roughly five times the population of the United States, that would mean China’s per capita GDP had to rise to 20% of the per capita economic output of an average American. That is a plausible scenario, however, I doubt that this will happen before 2050.
There is this saying “There is nothing permanent except change” which suggests that most predictions based on the condition of the continuation of current trends are prone to fail.
Inevitably, China will one day become the world’s largest economy. However, this will only happen when China learns to tap the intellectual capacity of its people rather than their raw labor force. Education, the protection of intellectual property, space for creative thinking and a less controlled and restricted economic environment are the preconditions of a transition that would enable China to take on today’s leading knowledge-based economies.
Rather sooner than later, China will reach a point at which its current model of growth won’t work anymore. The environmental challenge China is facing, the inflating real estate bubble and overproduction are major obstacles on China’s path to the top.
More interesting charts: http://www.whatmattersweblog.com/energy-charts/
As you can see on this chart, China’s share of world GDP is still tiny compared to the United States’.
The bottom line, however, is that China is indeed set to become a developed country in the foreseeable future. The long-term orientation of its domestic as well as foreign policy and the diligence of its people are a great foundation for a stable medium-income developed economy.
Not only do I expect China to join the ranks of developed nations in the coming decades, but I also expect that China will become the leader in alternative energy technologies. This has many reasons, but first and foremost, it is an economic necessity for the country.
Its reliance on fossil fuel imports, the skyrocketing energy consumption and out-of-hand air pollution in most Chinese cities force its leadership to firstly, limit the growth of fossil fuel consumption, secondly, increase efficiency across the board, thirdly, remove tailpipe emissions from inner cities and fourthly, generate as much energy from more sustainable and (in the long term) cheaper energy sources.
Another factor contributing to this development is that China can’t challenge the technology leadership of Western countries in internal combustion engine technologies. But when it comes to electric cars, battery technology, photovoltaic cells, etc., China is already ahead of the competition.
In the summer of 2009, I had a discussion with a NYC hedge fund manager who argued that China is ahead of the United States in terms of know-how in alternative energy and smart energy policies. I agree.
China is already the number one PV cell producer in the world and becoming the leader in electric car technology.
Chinese car manufacturer Geely announced the launch of its all-electric Nanoq which is expected to hit European and American markets later this year. The five-seater has a top speed of 81 mph and has a range of up to 125 miles on a single charge.
BYD, which stands for Build Your Dreams, a major Chinese battery manufacturer, is also aiming at establishing itself as a leading manufacturer of battery-electric cars.
Electric cars help the Chinese government to reduce the need for fuel subsidies which cost the state billions of dollars per year and support those the most who drive the biggest cars.
Chinese companies will soon have an edge over Western competitors in the electric vehicle market which will see enormous growth over the coming decades and a lot of support from governments around the world in an effort to curb carbon dioxide emissions and reduce dependence on dwindling oil reserves from unstable regions of the world.
http://www.timesonline.co.uk/tol/comment/leading_article/article6984237.ece
http://www.autocar.co.uk/News/NewsArticle/AllCars/246312/
Although the overwhelming majority of almost 80 percent replied they were going to buy a car with a combustion engine, it is remarkable that more than 20 percent see themselves buying a car with either an electric motor or some other technology.
