Posted on 03/07/2007 6:03:29 AM PST by CarrotAndStick
THE rise of China and India could last for decades, creating continued demand for Australian resources and underpinning domestic growth, a Reserve Bank official says.
Based on the post-war experience of Japan and Korea, there is "a reasonable expectation of three decades of growth in the vicinity of 10 per cent per annum" for China and India, according to the RBA's assistant governor of economics, Malcolm Edey.
"But that may well understate the potential of China and India," he said. "China took off from a much lower base than either Japan or Korea … and on that basis, there is at least the potential for this process of catch-up growth in the two most heavily populated countries to continue for decades."
China's and India's combined share of world trade had more than doubled in 10 years, and they now absorbed about a sixth of Australia's exports.
The relevance of China's economy was highlighted last week when a sell-off on China's sharemarket sent shock waves around the world. The Australian market had its biggest one-day fall in more than five years.
"On almost any measure, the Chinese and Indian economies have advanced rapidly in their importance both to the world economy and to Australia," Dr Edey said in a speech to the AI Group in Sydney yesterday.
This would underpin demand for Australian resources, and thus domestic growth.
Speaking about prospects for Australia's economic growth this year, Dr Edey said the short-term outlook for the world economy was positive and was likely to result in further domestic growth.
He said Australia's growth rate compared favourably with most other advanced members of the Organisation for Economic Co-operation and Development, and inflation had become more stable.
The Australian economy was in its 16th year of expansion since the 1991 recession, growing at an average 3.25 per cent a year since 1990. Inflation had averaged 2.5 per cent a year since 1993, within the Reserve Bank's 2-3 per cent target range.
Dr Edey said Australia's sustained growth, and a 31-year-low unemployment rate of 4.5 per cent, had created new problems, with businesses commonly reporting labour shortages.
This meant "we should not expect the economy to grow as quickly as it did a few years ago, when there was still a lot of surplus labour and capital to be re-employed".
If the PRC and India can keep up ~10% GDP growth for several decades, both will probably become great global powers, and potential rivals of the United States not only in the economic, but also the military and cultural spheres.
On a side note, the BBC then refers to the United States as the world's largest polluter (the United States is supposed to emit the most greenhouse gases, but has fairly stringent limits on other pollutants being emitted into the atmosphere), when that might be more accurate as a description of the People's Republic of China.
On a side note, the BBC then refers to the United States as the world's largest polluter (the United States is supposed to emit the most greenhouse gases, but has fairly stringent limits on other pollutants being emitted into the atmosphere), when that might be more accurate as a description of the People's Republic of China.
(And on a side side note, the BBC seems to have personally blacklisted from posting on their Have Your Say s. None of the comments sent were particularly offensive, but early on, some were sent several times, and this is apparently spamming (they were sent several times, because on average it takes about four comments sent to get one posted), so that is why they could have blacklisted. They also have not gotten back (via email) whether they indeed have blacklisted the IP address or whether the average has moved to 5+ comments sent for 1 posted. In any case, their failure to respond is very rude. So there's a little rant).
I remeber in Rome three years ago when we were wearing black clothes and it started to sprinkle. Tiny spots of dirt/mud on our clothes.
I do not know about PRC...as far as India is concerned, India would never be a military or geopolitical competitor of United states...Here is some data..
http://futurist.typepad.com/my_weblog/2006/03/does_the_world_.html
India happens to be the country with the most positive perception of united States...Now the only reason for that to change would be hyperbole on our part....
Quotes from article...
http://futurist.typepad.com/my_weblog/2006/03/does_the_world_.html
Most Americans are entirely unaware that the most pro-US foreign country in the world is India. It is also one of the only countries where George W. Bush is more highly regarded than in the US.
The Rome "blood rain" thing is famous. You were lucky to experience it. Sand from the Sahara in North Africa is supposed to blow north to Italy, and then when water vapor condenses around typed sand, it rains, and the rain is supposed to be reddish.
Thanx.
PS: Is that a payback for Carthage?
The projection of 10% annually for three decades for China based on a "crude" review of SK and Japan's history is not remotely supported by even the most optimistic and complex projections of China's economic future or possible futures. It would be safe to say that most economists, even the most bullish, would perform a figurative spit-take upon reading such a claim.
Further, in reading the actual text of the speech, there is no mention of India attaining a growth rate of 10%, much less maintaining it for three decades. But this is just typical poor reporting on economic issues.
Regardless, if China _did_ maintain a 10% growth rate for 30 years the United States would be not only eclipsed by would be so in the same way we today eclipse Japan. (A conservative estimate at current exchange rates would put China at around 42 trillion in 30 years, vs anywhere from 22 to 32 trillion for the United States. Figure in the expected drop in the dollar vs the yuan and the ascent of the yuan to a global reserve currency (as it surely would if these projections were _remotely_ to come true) and you're looking at a Chinese economy worth roughly four times that of the United States' in the relatively short span of 30 years.
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