CHINA’S ECONOMY AND THE WORLD

WHEN THE DRAGON CEASES TO ROAR

Benjarong Suwankiri and Naris Sathapholdeja

Bangkok Post, March 4, 2011

Chinese economic growth of 9.1% in 2009 was a source of optimism for a world mired in the biggest financial crisis since the Great Depression. This alone was enough for emerging markets to start growing again, with China leading the pack. And the rest is history.

Will China remain important? Today, it is the world's second-largest economy. Its gross domestic product (GDP) is one-third that of the US, or two-thirds if you adjust for cost of living - what economists fancily call "purchasing power parity-adjusted". By any measure, that makes China a very large economy, but it remains poor compared with the Group of Three (G3) economies of the US. the EU and Japan.

With per capita GDP at US$4,000 - not very far behind Thailand - China is no match in the view of cynics for the $46,000 per capita GDP of the US. But when adjusted for purchasing power, the gap closes considerably, with both Chinese per capita GDP at $7,500 and that of the US about the same. In other words, it takes 6.1 Chinese to equal to one American. China has 1.3 billion people, the US has 307 million _ that's a factor of 4.2. Not there yet.

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