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Speaking at a TED Salon in London, economist Martin Jacques asks: How do we in the West make sense of China and its phenomenal rise? The author of “When China Rules the World,” he examines why the West often puzzles over the growing power of the Chinese economy, and offers three building blocks for understanding what China is and will become.
For the first time in as long as anyone can seem to remember, there have been traffic jams in Ulan Bator — a place previously known mainly either as the answer to a trivia question (Which capital city has the coldest average temperature?) or as a historical curiosity: Asia’s Timbuktu, the fabled homeland of Genghis Khan. Until recently, the Mongolian capital had more horses than cars.
CHINA jumped ahead of Japan in 2010 to become the world’s second-biggest economy, but when will it grab the number-one slot? The Economist’s interactive chart allows you to make your own predictions. The relative paths of GDP in dollar terms in China and America depend not only on real growth rates but also on inflation and the yuan’s exchange rate against the dollar. Over the past decade real GDP growth averaged 10.5% a year in China and 1.7% in America; inflation averaged 3.8% and 2.2% respectively. Since Beijing scrapped its dollar peg in 2005, the yuan has risen by an annual average of 4.2%. Our best guess for the next decade is that annual real GDP growth averages 7.75% in China and 2.5% in America, inflation rates average 4% and 1.5%, and the yuan appreciates by 3% a year. Plug in these numbers and China will overtake America in 2019. But if China’s real growth rate slows to an annual average of only 5%, then (leaving the other assumptions unchanged) China would become number one in 2022. Please place your own bets.