China overtakes Japan as No.2 economy: FX chief

[Rock]

Even though I doubt DCX is a MIT trained economist.

Repatriate, why do you doubt him? If he says that's what he is, shouldn't you take him at face value until he gives you reason to do otherwise? I know many people often pose and lie on forums but that doesn't make everyone automatically guilty until they prove themselves genuine. Let the guy write more. If he does, his expertise or lack thereof will eventually become self-apparent.

[Rock]

Personally, I would not consider a country to be "developed" until it reaches $12,000-$14,000 GDP per capita. That is the criteria used for Taiwan and S. Korea in the past. China will be halfway there in 2015.

Momopi, remember this benchmark is a moving target. $10,000 from 1970 would today be worth $55,200 based on CPI, $45,100 based on a GDP deflator, $56,800 based on unskilled labor wages, $66,500 based on production worker compensation, $91,600 based on nominal GDP per capita, and $137,000 based on relative share of GDP.

[momopi]

Personally, I would not consider a country to be "developed" until it reaches $12,000-$14,000 GDP per capita. That is the criteria used for Taiwan and S. Korea in the past. China will be halfway there in 2015.

Momopi, remember this benchmark is a moving target. $10,000 from 1970 would today be worth $55,200 based on CPI, $45,100 based on a GDP deflator, $56,800 based on unskilled labor wages, $66,500 based on production worker compensation, $91,600 based on nominal GDP per capita, and $137,000 based on relative share of GDP.

It also depends on which benchmark you want to use. The World Bank defined "high income economy" at GNI per capita of ~$12,000 in 2009. As a personal opinion, I'm willing to accept a GDP per capita of $12,000-$14,000 in 2010-2015 date range for a "developed" country.

...as compared to $46000 in US...

Does this reflect American's average salary in any way? Because 46K sounds pretty high.

The national median income of $44,389 (2005 census data) is household income and not personal income. Median income is not a good number to use for "average salary":

2005 US household income distribution:
up to $25,000 = 28.22%
$25,000 to $50,000 = 25.65%
$50,000 to $75,000 = 18.27%
$75,000 to $100,000 = 10.93%
>$100,000 = 15.73%

By the above figures, the median is $44,389, but 28.2% made $25,000 or less, and 26.7% made more than $75,000.


=============

http://articles.latimes.com/2010/jul/13 ... r-20100713

Products made in China often cost more there than in the West
The premium prices frustrate shoppers as well as those who see getting Chinese consumers to open their wallets as crucial to balancing the global economy.

[Rock]

Personally, I would not consider a country to be "developed" until it reaches $12,000-$14,000 GDP per capita. That is the criteria used for Taiwan and S. Korea in the past. China will be halfway there in 2015.

Momopi, remember this benchmark is a moving target. $10,000 from 1970 would today be worth $55,200 based on CPI, $45,100 based on a GDP deflator, $56,800 based on unskilled labor wages, $66,500 based on production worker compensation, $91,600 based on nominal GDP per capita, and $137,000 based on relative share of GDP.

It also depends on which benchmark you want to use. The World Bank defined "high income economy" at GNI per capita of ~$12,000 in 2009. As a personal opinion, I'm willing to accept a GDP per capita of $12,000-$14,000 in 2010-2015 date range for a "developed" country.

...as compared to $46000 in US...

Does this reflect American's average salary in any way? Because 46K sounds pretty high.

The national median income of $44,389 (2005 census data) is household income and not personal income. Median income is not a good number to use for "average salary":

2005 US household income distribution:
up to $25,000 = 28.22%
$25,000 to $50,000 = 25.65%
$50,000 to $75,000 = 18.27%
$75,000 to $100,000 = 10.93%
>$100,000 = 15.73%

By the above figures, the median is $44,389, but 28.2% made $25,000 or less, and 26.7% made more than $75,000.


=============

http://articles.latimes.com/2010/jul/13 ... r-20100713

Products made in China often cost more there than in the West
The premium prices frustrate shoppers as well as those who see getting Chinese consumers to open their wallets as crucial to balancing the global economy.

Hey stop editing your posts while I'm in the middle of responding, lol! Are you Guan Gong?

I think I get your point on there being various ways to decide when a country has achieved developed status. I just wanted to keep the comparison 'apples to apples'. If that particular range of 12-14K nominal per cap was applied to Taiwan and Korea back when they reached that threshold, I would adjust it up modestly for past and anticipated inflation rates when applying it to China in 2015. The thought of a developed China scares me in some ways. The window is closing.

[momopi]

Back in the 1980s-1990s, the magic number that Asian Tigers looked to was $10,000 GDP per capita:
Japan: Reached $10,000 GDP per capita in 1984
Hong Kong: 1987
Singapore: 1989
Taiwan: 1992
S. Korea: 1995

Taiwan had GDP per capita of $3,000 in 1984, $6,000 in 1988, and $10,000 in 1992.

We find China (and Asian commentators) using the same $10,000 mark today (20 years later):

http://english.peopledaily.com.cn/90001 ... 75811.html
Beijing's per capita GDP exceeds $10,000

http://english.peopledaily.com.cn/90001 ... 01469.html
Per capita GDP in south China's Pearl River Delta Region approaches $10,000

http://english.chosun.com/site/data/htm ... 00381.html
More Chinese Cities Reach $10,000 Per-Capita GDP


IMO it's not that they're comparing apples to oranges, it's just $10,000 is a nice round number. @_@ Plus unlike Americans that count in 1,000 (one thousand, ten thousand, one hundred thousand), Chinese count in 10,000 (one wan/10000, ten wan (10,0000, one hundred wan (100,0000).

China is estimated to have GDP per capita of $6,861 in 2015, roughly where Taiwan was in 1985. By that number, it places China 30 years behind Taiwan. But China is a big county with uneven economic development from coastal area to inland areas, so national averages really doesn't always reflect local conditions. The same applies to US:

http://en.wikipedia.org/wiki/Household_ ... e_by_state

Consider, the median household income in New Jersey is $70,000 in 2008, versus $38,000 in West Virginia.


Even on small island states like Taiwan, the income level varies a lot:
http://en.wikipedia.org/wiki/Taipei#Economy

Despite the Asian financial crisis, the economy continues to expand at about 5% per year, with virtually full employment and low inflation. As of 2007[update], the nominal GDP of the core city of Taipei has accrued to an amount of nearly US$160 billion, while the metro region of Taipei has a GDP (nominal) of around US$260 billion, a record that would rank it 13th among world cities by GDP. The GDP per capita of Taipei is US$48,400, and the second highest in Asia behind Tokyo, which has a GDP per capita of US$65,453.[45] If outskirts, neighboring cities, and townships are taken into account, the GDP per capita would fall to US$25,000.[45]


Just an opinion, I don't think we should read too much into the national GDP per capita numbers.

[Repatriate]

Back in the 1980s-1990s, the magic number that Asian Tigers looked to was $10,000 GDP per capita:
Japan: Reached $10,000 GDP per capita in 1984
Hong Kong: 1987
Singapore: 1989
Taiwan: 1992
S. Korea: 1995

Taiwan had GDP per capita of $3,000 in 1984, $6,000 in 1988, and $10,000 in 1992.

Global inflation should be taken into consideration when you put these numbers up. The GDP per capita in the U.S. in 1988 probably barely cracked $20,000. I am somewhat amazed that it was only $6,000 in Taiwan in 1988. I remember visiting Taiwan back then as a kid and thought Taipei looked pretty advanced and had lots of electronics and other odds and ends that were not in the U.S. yet. Standard of living also seemed pretty good.

Also the $10,000 benchmark now is relatively meaningless.

[globetrotter]

"In 2004, I was in a dealership in Shanghai and a Buick Regal cost an equivalent of US$45,000, "

Yeah, and last year I was in Manhattan and an apartment costs $1 million.

Shanghai is not representative of China. If you have an MIT econ degree you should know this coming out of the gate.

In my home town, nowhere small rural city China, autos are 30k to 60k CNY. That's $4400 to $8800 USD. A Buick, here, without the Shanghai taxes, license, buying the Shanghai plates due to severe and extreme controls on the number of vehicles they allow registered in the City, and the bribes, here the cost is $120,000 CNY. There is a 'cars to the country' program and there are big price breaks to buy here.

How do I know? I go to dealers and ask and look around.

Cost of living here is $90 a month. I know you don't believe me, and I am sure you will throw out a bunch of figures that their life sucks and they are poor.

Yet I live here and I know what I see.

One of the realizations I had living in Mexico and now China, is that the local standard of living is completely disconnected from the metrices that educated, intelligent Westerners such as yourself cite to 'prove' that a given country is so far behind the USA or other developed Western economy.

You are dealing in abstract data, and, quite honestly, you don't know what you are talking about.

I have gladly traded living in Los Angeles and earing $84k for living in rural China and making $8k a year. Why? - because my standard of living and my quality of life has sky-rocketed, that is why. I experienced a similar effect when I lived in Mexico.

Those numbers you cite are designed to keep Economists like you employed, keep the UN busy cranking out reports, and keep Americans smug in their 'superior' standard of living.

Honestly, it amuses me to no end when someone who has never been to a country, or has visited once to the largest city, argues with a resident about the nature of that nation.

"I don't think we should read too much into the national GDP per capita numbers."

Correct, that is what I am claiming.

[globetrotter]

..And with regard to the USA, I maintain that for average people the Per Capita GDP/Income (yes, I KNOW they are two different calcs) is 16k to 22k when you eliminate the top 20% (like those who live in New Jersey...). My calcs have shown this to be the case, as the top 20% earn most of the income, Remove the rich and upper middle class and you end up with an avg nation, like Chile.

Driving across America, outside the coastal rich areas, those figures make complete sense.

[Rock]

Cost of living here is $90 a month. I know you don't believe me, and I am sure you will throw out a bunch of figures that their life sucks and they are poor.

Yet I live here and I know what I see.

One of the realizations I had living in Mexico and now China, is that the local standard of living is completely disconnected from the metrices that educated, intelligent Westerners such as yourself cite to 'prove' that a given country is so far behind the USA or other developed Western economy.

You are dealing in abstract data, and, quite honestly, you don't know what you are talking about.

I have gladly traded living in Los Angeles and earing $84k for living in rural China and making $8k a year. Why? - because my standard of living and my quality of life has sky-rocketed, that is why. I experienced a similar effect when I lived in Mexico.

Those numbers you cite are designed to keep Economists like you employed, keep the UN busy cranking out reports, and keep Americans smug in their 'superior' standard of living.

Honestly, it amuses me to no end when someone who has never been to a country, or has visited once to the largest city, argues with a resident about the nature of that nation.

I think you were directing the above mainly at DCX but I wanted to throw in a quick response.

Its admirable that you were able to go from LA directly to the sticks of China and thrive there as a white male. But please put the quality of life interpretation in perspective. The definition of good living or at least reasonable living varies tremendously from person to person. Some of us are a lot softer than others. And its not just a west vs. east issue. Its also global city (NYC/LA/Shanghai/Beijing) vs. urban center vs. small city vs. small town vs. countryside issue. Just survey a few dozen long term residents of Qingdao or Chengdu to see how many would be satisfied living where you are now.

Anyway, no more abstract data or figures which you seem to loathe. Just some real life questions. In your town, for $90 a month, could I have my daily 6 cans of cold diet coke and some European or Japanese chocolate treats (my main vices), 24/7 access to fast Internet and a decent Asian cable package, a big private furnished suite with working A/C in the summer, heat in the winter and hot clean water all the time, take the girlfriend out to a decent dinner and show a couple times a week, eat my fill of meat, veggies, and rice at least 2x per day, regularly run on a 400 m track or exercise in a gym with weights, have access to acceptable need based medical care, get around locally either by bus, taxi, or my own motorbike, get together with the guys 2 or 3 times a month for beers, get a haircut once a month, and have plenty of decent toiletries (shampoo, soap, shaving cream, razor blades, etc.)? Could I do all that for $300 or even $500 where you live? And I probably left some things out. Anyway, what I describe above is an extremely basic lifestyle from a western perspective, especially for an older person. Don't you agree?

And keep the land ownership issue in mind as well. Even if China allowed private property ownership as of today, where do you suppose prices would settle relative to comps in the US or Canada? People I meet in Taiwan who endeavor to expatriate to places such as New Zealand, Australia, or Canada often cite quality of life issues such the ability to buy a much bigger house and yard as key motivating factors. But when they talk about moving to China, its usually about business.

Now from a social perspective, I bet China offers a much better quality of life to a frustrated and lonely western male if he is clever enough to take full advantage of his new environment. Dirt cheap foot and body massages are nice for starters. Attractive women available for dates and more are accessible to many, right? And if all else fails, P4P can be had for pennies on the dollar when compared to prices back home.

[The_Adventurer]

I think Globetrotter has it right. Forget all these numbers. What's it like when you go and live there?

For me, South Korea wins hands down. Many things are almost as cheap, and in some cases cheaper, than the Philippines (on the outskirts of Seoul anyway) and you have the quality, safety and technology equal to or, in some cases, greater than Japan.

Quality of life matters to me, and I am not soft in the way mentioned above. The Philippines didn't cut it for me. Sure I could survive there on $500 a month, but I don't know if I would call it living. But not everything is even either. My apartment cost about $120 a month and was far better quality than the hellhole I paid $1000 a month for in LA. But the area I lived in in LA was awesome! It has Warner Bros. awesome restaurants, amazing bars etc. It didn't have chickens walking around, mangy looking street dogs everywhere, a water tank you had to fill every morning, noise beyond reason, a constant horrible smell outside, or an environment you didn't want to go out in at night.

Now, for comparison, I've tried living the high life in Philippines too. I had a high rise apartment in Cebu City that was awesome and had a view out to the sea with the boats. I took taxis everywhere, ate in the awesome malls and had kick-ass night life. Still had chickens (not in the building of course) and noise though. It was a lot cheaper than living in LA, but you know what? I could live higher quality and cheaper in Austin Texas. I could also live higher quality and cheaper in Korea, and have a place with real central air, electronic security and lights, 100 MB internet for $10 a month, those amazing city lights with awesome restaurants and nightlife everywhere.

I loved it in Shanghai, and back in 2002 it was also very cheap to live the high life. I hear that is not the case today. I will find out soon enough, as I am giving Shanghai another go. I will be happily surprised if I like it better than Korea. If I don't I'll make my next plan a return there or give Japan another whirl.

[momopi]

Global inflation should be taken into consideration when you put these numbers up. The GDP per capita in the U.S. in 1988 probably barely cracked $20,000. I am somewhat amazed that it was only $6,000 in Taiwan in 1988. I remember visiting Taiwan back then as a kid and thought Taipei looked pretty advanced and had lots of electronics and other odds and ends that were not in the U.S. yet. Standard of living also seemed pretty good.
Also the $10,000 benchmark now is relatively meaningless.

For the past few decades, the KMT dominate government spent lavishly to develop areas in northern Taiwan, where their political support is the strongest. The capital city of Taipei is the political center and has the highest GDP in Taiwan (2nd highest in Asia after Tokyo), high-tech industry was developed in Hsinchu, airport in Taoyuan, and so on. IMO it's really inappropriate to build the Chiang Kai-shek Memorial Hall taller than the Sun Yat-sen Memorial Hall, but who am I to suggest such things.

Taipei's GDP per capita today is about 3x the national average. For Taipei metro area it's $48400 per capita, but when combined with the northern Taiwan region, the figure drops to $25,000 per capita for the region. If we were to use the same 3x ratio as an estimate for 1988, we could say that the national average was $6,000 per capita, and Taipei was probably around $18,000 per capita.

I lived in Taipei for few years from late 1970s to 1982. Back then we still had some old "Japanese style houses" around NTU area, and even rice paddies in the outskirts of town. By 1990s it was all gone, and "open air" sewers had covers. I did not enjoy living in Taipei in my youth, because the city pollution was really bad at the time. Coming from a rural area, I didn't enjoy the city life. Fortunately, the city has gotten cleaner since.

As an opinion, I think Taiwan is a "developed" country, versus China is an "industrialized" developing country. There's another way to look at GDP per capita numbers. In Taiwan the highest GDP per capita is in the most economically developed cities (Taipei, Taichung, etc). In China the highest GDP per capita is found (excluding HK and Macao) in areas with rich natural resource extraction. Karamay and Dongying are both wealthy from oil, and Ordos is wealthy from vast coal reserves. Shanghai is considered China's financial center, but its GDP per capita is only 1/2 of Karamay or Dongying. IMO wealth from pumping oil out of the ground is not the same as wealth from developed human resources.

[globetrotter]

I think Globetrotter has it right. Forget all these numbers. What's it like when you go and live there?

This is it in one sentence.

Everything you see and hear; the YouTube videos, the MSM reports, the blogs - none of it conveys what standing in a country is like. It only gives you a thin veneer, filtered through the writers experiences and education and biases. You don't get the vibe, the body language, you never pick up on the smells, the pheromones, the hormones, the relaxed atmosphere. You cannot tell if you are more relaxed or more tense unless you go to a place.

Every time you take a photo or shoot a video you bring Heisenberg into the equation and what you see is false or at best Art.

Even if you think that you need ABCDE, chances are high that you can go someplace and your values instantaneously change.

If you (DCX or Rock) are so soft that you need an Upper Middle Class, TV Sitcom, Manhattan, L.A. Westside, Chicago North Shore lifestyle, then you should not even be reading this blog. You already know where you should go:

NY, London, Tokyo, Paris, Berlin, Moscow, Bangkok (maybe..), Bermuda, Caymans, Bora Bora, etc. If those are your values, then just go where young American Women think it is romantic, and a perfect place to retire for rich American bankers who are looting the nation. You already know where to go, as the MSM is barraging you with this information every second.

If that's the case, why are you even here? You just want to retire to America, but you want it to be cheaper and in another country, and that does not exist.

Any information I can give you is pointless and useless; you will just use it as an excuse to justify staying where you are, because any place I write about is unsuitable to your soft sensibilities.

============

Also that Nightlife that you young guys are addicted to and you feel that you have died if you cannot go out to a bar, or eat at an absurdly priced restaurant for 50X what it would cost to cook for yourself at home; that gets old when you crest 36. In addition to being outside the demographic of the average club goer and becoming background noise to all the young ladies who simply do not see you anymore, it just isn't fun.

I have better things to do with my time and my life than stand in a crowded, dark room with 130dB music blaring so loudly that I cannot have a conversation, spending $10 on a drink, going to bed at 4 am and waking up hungover the next day. I would rather be hiking at altitude, playing the guitar, learning a language, or building websites for fun.

There are other things to do in life, and while you don't know it, millions of people your age DO NOT enjoy doing that. Mostly the very attractive, very hip, wealthy, successful and super high-self-esteem cohort attends clubs in most nations. Millions don't.

Keep in mind that I used to be one of those people, and it still wore out for me.

[Rock]

Even if you think that you need ABCDE, chances are high that you can go someplace and your values instantaneously change.

If you (DCX or Rock) are so soft that you need an Upper Middle Class, TV Sitcom, Manhattan, L.A. Westside, Chicago North Shore lifestyle, then you should not even be reading this blog. You already know where you should go:

NY, London, Tokyo, Paris, Berlin, Moscow, Bangkok (maybe..), Bermuda, Caymans, Bora Bora, etc. If those are your values, then just go where young American Women think it is romantic, and a perfect place to retire for rich American bankers who are looting the nation. You already know where to go, as the MSM is barraging you with this information every second.

If that's the case, why are you even here? You just want to retire to America, but you want it to be cheaper and in another country, and that does not exist.

Any information I can give you is pointless and useless; you will just use it as an excuse to justify staying where you are, because any place I write about is unsuitable to your soft sensibilities.

============

Also that Nightlife that you young guys are addicted to and you feel that you have died if you cannot go out to a bar, or eat at an absurdly priced restaurant for 50X what it would cost to cook for yourself at home; that gets old when you crest 36. In addition to being outside the demographic of the average club goer and becoming background noise to all the young ladies who simply do not see you anymore, it just isn't fun.

I have better things to do with my time and my life than stand in a crowded, dark room with 130dB music blaring so loudly that I cannot have a conversation, spending $10 on a drink, going to bed at 4 am and waking up hungover the next day. I would rather be hiking at altitude, playing the guitar, learning a language, or building websites for fun.

There are other things to do in life, and while you don't know it, millions of people your age DO NOT enjoy doing that. Mostly the very attractive, very hip, wealthy, successful and super high-self-esteem cohort attends clubs in most nations. Millions don't.

Keep in mind that I used to be one of those people, and it still wore out for me.

Why am I here? Ummm...could it be to escape my home country's feminism, PC tentacles and government over-control? Could it be to date young and attractive women or find a sincere girlfriend? Could it be to learn about new cultures, meet interesting people from diverse backgrounds, and have a richer life? I mean, isn't that what this happier abroad movement is about???

If requiring much more than $3 a day to live makes one soft, then I bet almost all expats from the developed world fall into this category, no matter where they have re-located too. I would need more just to survive in a Thai prison.

This ain't about living some upper middle class American sitcom lifestyle. The scenario I offered-up in my last post was nothing like that. Nor was Terrance's example. And anyway, I would not be able to tolerate a village lifestyle for more than a few weeks. But that doesn't mean I wanna live the so-called 'American Dream' either. Asia offers many diverse lifestyle alternatives at affordable (depending on your definition) prices. I believe there's something here for most of those western males who've been disillusioned back home. It won't be perfect. But it will be a big improvement.

[Repatriate]

For the past few decades, the KMT dominate government spent lavishly to develop areas in northern Taiwan, where their political support is the strongest. The capital city of Taipei is the political center and has the highest GDP in Taiwan (2nd highest in Asia after Tokyo), high-tech industry was developed in Hsinchu, airport in Taoyuan, and so on

I remember going to the smaller cities (Kaoshuing) and seeing the old style neighborhoods. I heard most of them have been torn down with condos built. I'm glad I still remember old school Taiwan. I still don't think the smaller more rural areas were that poor though. I remember stopping by in random arcades and game shops there and seeing tons of stuff that was not in the U.S. It was pretty wild. I also recall the malls with amusement park rides on top which is something that didn't come to the U.S. until well into the 90's.

Taipei's GDP per capita today is about 3x the national average. For Taipei metro area it's $48400 per capita, but when combined with the northern Taiwan region, the figure drops to $25,000 per capita for the region. If we were to use the same 3x ratio as an estimate for 1988, we could say that the national average was $6,000 per capita, and Taipei was probably around $18,000 per capita.

That makes a lot of sense. The relatives I had living there were earning at least U.S. wages and owned a couple stories of an apartment block. They certainly weren't wealthy but they lived very well from what I recall.

[momopi]

That makes a lot of sense. The relatives I had living there were earning at least U.S. wages and owned a couple stories of an apartment block. They certainly weren't wealthy but they lived very well from what I recall.

If they're land owners, or owned single-story Japanese style home with large yard, it's possible that they had the developer built the condo/apartment buildings and split the ownership. Land is valuable in Taipei, and back in 1970s-1980s, construction and labor costs were low in comparison.

In 1970s, my grandfather owned an old house with yard near NTU area. He contracted a builder to tear down the house and put up a 5 floor apartment building with 10 units. This is old style with basement level and no elevator, the units were smallish 3 bed 1 bath condos. He split the units 50-50 with the developers. To give you an idea on the huge price difference from rural to city, our house w/yard and small fish pond in Changhua was valued at NT 500,000, versus the small 3 bed condos in Taipei that my grandfather built were valued at NT 2,000,000.

In my generation, Taipei has always been more expensive to buy than rent. From investor's perspective it's poor cashflow investment, so they depend on rapid appreciation ("stir-frying land"). For some people, they simply did not trust the stock market or other investments, and put their money in over-priced RE in the city.

Once you go outside the city, you'll find over 1 million vacant homes across Taiwan, as young people leave rural towns and move into the cities. Although Taiwan has a very high home ownership rate (~87%), I think a lot of the housing built in the cities are catered to the two extremes of expensive luxury and low-priced studio apartments. It's very difficult for a young couple to afford a 3/2 condo in Taipei, Taichung, or Kaoshiung. Sometimes I wonder if Taiwan's chaotic RE market would've served its people better, if they followed Singapore's planned development model.

Here's a collection of photos on Japanese colonial era buildings in TW:
http://www.skyscrapercity.com/showthread.php?t=686864

It's estimated that the Japanese colonial administration and colonists built approx, 2,000 Japanese style buildings in Taipei during their 50-year occupation period. Most of the old style wooden houses in TPE are long-gone and re-developed. My grandfather (on father's side) is from Manchuria and he went to Kyoto Imperial to study medicine prior to the second Sino-Japanese war. He had a taste for Japanese style homes and decor, but it had became politically incorrect in post-WW2 era. By the 2000's, it had became fashionable in Taiwan to have a small "Japanese room" with tatami and tea set at the house. @_@;;