brooklynmonk

China, Canada, Britain, and the US as Economic Powers

In Uncategorized on March 30, 2012 at 9:59 am

By Antonio Graceffo

A few years ago, a representative of the UAE told CNN that he believed UAE was a more important market than China or India, because the total buying power of UAE was greater. The average family income in UAE is over 18,000 USD per month! Making it one of the highest in the world. On the surface, it made sense that the country with the highest per capita income would be the most important market. So, he had a point. But, with a population of only 7.5 no matter how wealthy they are, they will only buy so many widgets per person.

Most economists and business people continue to focus on China and India as the emerging gold-mine markets, because of the huge populations of those countries. Parallel to predictions about the rice of China and India is the decline of the US as the world’s number one economic power.

Believe it or not, with all of the unemployment and general slippage in the US since the beginning of the world economic crisis, the IMF, the World Bank and CIA World Fact all still rate the US as the world’s number one economic power, with China number two and Canada as number 14. Nearly all of the rating agencies and companies which produce economic data, however, generally have an entry with an asterisk next to it, and note stating that the EU is actually a larger economic power than the US alone, but they don’t seem to feel that the EU is a unified enough entity to remove Germany, Netherlands, and UK from the comparisons and replace them with a single entry for EU.

If we look at the buying power of a nation, we can see the average disposable income of people in that country, plus look at the size of the population, and you will see that the US is still way ahead.

The population of Canada is less than 35 Million, with an average income of $68,000 per family. It was impressive to see that the average income in Canada is now quite a bit higher than the US, and that the Canadian dollar is now worth slightly more than the US dollar.

US population is over 311 Million with an average income of $46,300 USD.

The UK has a population of 62,2 Million with an average income of $63,000 USD.

The population of china is 1.333 Billion with an average income of $4,260 USD per year.

Making sense of these numbers:

Canada’s population is about 1/9 the size of US. So the average Canadian would have to earn 10 times the average American, for Canada to be a larger economic power. But, the average Canadian earns about 50% more than the average American, meaning, America is still the larger, more important market for export countries, such as China. But more on that later.

The UK has a population of 1/5 the size of US. To make UK richer, they would have to have an average income of 5 times the US, but they only have an average of 50% more than US.

China’s population is a bit more than 4 times the US population. So, the average Chinese would only have to earn about a quarter as much as the average American for China to be richer. But, the average Chinese earns about 1/10 as much as the average American, making China much poorer.

If we use total trade with China as an indicator of a country as an economic power, we can see that US is still the largest trading partner of China.

The fifteen largest Chinese partners with their total trade (sum of imports and exports) in billions of US Dollars for 2009 are as follows:

Region  Exports Imports                Total Trade[2]

 United States   220.80   77.46     298.26

 Japan   97.87     130.91   228.78

 Hong Kong         166.23   8.70        174.93

 South Korea      53.67     102.55   156.21

 Taiwan 20.50     85.72     106.22

 Germany            49.92     55.72     105.64

 Australia             20.64     39.49     60.13

 Malaysia             19.63     32.34     51.97

 Singapore           30.05     17.80     47.86

 India     29.66     13.73     43.38

 Brazil    14.12     28.28     42.40

 Netherlands      36.68     5.12        41.81

 United Kingdom              31.28     7.88        39.16

 Russia  17.52     21.23     38.75

 Thailand              13.29     24.91     38.19

*This list does not include the European Union (EU), which include Germany, Netherlands, and United Kingdom. As a single economy, the EU traded €327 billion worth of goods and services with China as of 2009.[3] As of 2011 EU – Chinese trade makes the EU and China each other’s largest trading partners.[

What you will notice is that the US has a negative trade balance with China, which means, US busy much more from China than US sells to China. When the US economy tanks, the US stops buying from China and China looses income. It is the continued importance of the US market which causes a hiccup in the US economy to spread to the whole world.

Canada is a primary example of a country which is able to provide a high quality of life for its citizens but because of its lack of size does not become an economic super power. You will notice that even Thailand, which is the world’s 90th  economy trades more with China than Canada does.

For the time being, the US still seems to be the economic power. In addition to Canada, Netherlands deserves great respect for the incredible economic power that they have achieved with such a small population.

As for China, the strength of the Chinese economy has been in manufacturing products and selling them to more developed countries. To keep China as the number one destination for the export of jobs and manufacturing, the Chinese government has kept wages very low, while refusing too develop China’s internal economy. Most experts maintain that China will eventually have to raise wages and standards of living, when that happens, the cost of manufacturing in China will go up and China may lose some of its edge.

Antonio Graceffo is self-funded and needs donation to continue his writing and video work. To support the project you can donate through the paypal link on his website, www.speakingadventure.com 

Brooklyn Monk, Antonio Graceffo is a martial arts and adventure author living inAsia. He is the author of the books, “Warrior Odyssey’ and “The Monk fromBrooklyn.” He is also the host of the web TV show, “Martial Arts Odyssey,” which traces his ongoing journey through Asia, learning martial arts in various countries.

Warrior Odyssey, the book chronicling Antonio Graceffo’s first six years in Asia is available at amazon.com. The book contains stories about the war in Burma and the Shan State Army. The book is available at http://www.blackbeltmag.com/warrior_odyssey

See Antonio’s Destinations video series and find out about his column on  http://www.blackbeltmag.com

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