> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?
If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.
Growth is trivial to achieve when you are starting from zero. My footnote very much alludes to this. This is incidentally what the US did to powers like Britain a century and a half ago.
I just find it amusing that in this theory of trade China has found a way to do all the work while the US does nothing and takes all the value. Perhaps all that extra money is not as easy to claim as the OP suggests.
Maybe economies are changing and purely physical goods are becoming less valuable...
That's kind of goes against the conventional wisdom, which largely feels true in my experience, that "the rich get richer". Countries are a bit different, but China looks poised to avoid the middle income trap up to a point, and even if they don't, their "middle income" is a lot more likely to fall somewhere near the Japanese levels, which would make the Chinese economy massively bigger than the US one, by 2050.
China's GDP is the second largest in the world, and is around two thirds of US's. China's economy is growing continuously over 5% whereas the US already discussed facing a recession.
In some metrics, such as PPP GDP, China already towers over the US.
I think you're trying ver hard to diminish the second largest economy of the world at a moment where it's expected to be a few years until it's the single largest.
China’s GDP growth is great but they will face a huge pain now that they face an unsustainable population decline. They have more people aged over 52 than younger. I empathize with their youth.
You are claiming that the median age in China is 52 or did I read this wrong? That would be beyond fake news level of statement (for my reading of the meaning)
The current median age of China is about 40, which is not great for their context, but a world apart from 52.
China is automating at an impressive rate. Isn’t automation easier to face with population decline than with population increase? I’d imagine young people mind getting replaced by machines more than old people.
I mean, of course they are. If you have a population increase you have plenty of young people who will complain that automation is taking their jobs. But with a population decrease you eventually end up with just old people and not enough working people to sweep the streets or wash cars or whatever - so automation is welcome because it doesn't "steal" jobs.
I do not think that labor sentiment has a strong impact on whether or not jobs are automated away. Go watch an old movie from the 40’s or 50’s that features a hotel. The number of small, niche jobs that existed are surprisingly numerous by modern standards: porters, elevator operators, switchboard attendants, and so on. Busy places employing a lot of people. This was undoubtably true across industries, and we have automated away almost all those jobs one way or another without much fanfare. Sure - someone might have complained in the moment, but it’s death by a thousand cuts.
This sort of automation along with consolidation has been the death of small cities and towns in the US.
It's basically what's mostly killed my own small town.
My hometown, with a fairly consistent population of about 300 people, used to have a restaurant, bowling alley, full-service station, hardware store, bar, and grocery store. In my childhood, the restaurant, grocery store, and hardware store were still around. They died. And they died partially because gas got cheap and partly because goods producers increasingly jacked up their prices to small suppliers because they didn't want to deal with them. It was simply more lucrative and easier to see 1000 units to walmart than 10 to "Small town USA grocer". Near the EOL of the grocer, they'd literally buy their good from walmart because they couldn't get them anywhere else. The cheap gas led to people from my town traveling to nearby larger towns and cities to find cheaper goods.
The restaurant went out of business because it depended heavily on the prices of the local grocer. Towards the end, you'd literally call ahead the owner so they could open the doors and start cooking for you.
I can't say what the solution to all this is. The market is simply busted for small time business owners who want to move any sort of physical good. That has had knock on effects nationwide that haven't been positive, particularly for rural america.
I come from (and still leave near) a similar-sized town, and it went through the same process. And my dad remembers when it had even more businesses than I can remember, with movie theaters and the like.
It's actually gotten a little better in the last decade, I think because people got some hope again that jobs might come back, and because remote work meant fewer people were driving to the bigger town down the road every day, so there became more of a market in the small town for things like a grocery store or Dollar General-type store again. There are also more home-based businesses, started by people who work full- or part-time remotely and put their spare time into starting a local business.
But in the 90s/2000s, it was nothing more than a bedroom community for the town 20 miles away, which was sad. It's still nothing like it once was, but at least there are some signs of life now.
By population decline we mean a depopulation scenario, when the birth rate falls, the number of young people decreases, while the proportion of elderly people increases?
Automation can create a dynamically changing labor market. Today you had a job, tomorrow it is automated, you need to find another job, learn new skills required for it, and all of this.
Not a problem for the young (especially since automation increases the general standard of living, so young people will often find that their new job pays better).
But older people find it more difficult to adapt, learn new skills and find their place in a changed world.
And then there is career growth. Imagine an elderly gentleman who has spent 30 years building a career, accumulating valuable experience, and is USED to receiving a huge salary for his qualifications... And he is told that he has been replaced by a video card, his skills are now worth nothing on the market, and in the job available to him he will now be paid the same as a snotty 20-year-old yesterday's schoolboy. Do you think this won't become a point of social tension in a situation where there aren't many young workers?
There is also a solidarity pension system, which creates a greater burden on workers the smaller the proportion of young people and the greater the proportion of old people.
And in the scenario of a population decline with a simultaneous increase in living standards - this will create enormous social tension, when the shrinking working class will ask itself: why should we give more and more of the money we earned with our sweat and blood to old people who were unable to save for their old age when were younger?
Even if no one voices this as an official slogan, it will still be implied in political decisions and will boil down to at least the fact that old people will be denied an increase in their standard of living ("because we are already giving them more and more, but look at what a terrible world they left us, and now they want to live in luxury at the expense of our sweat and blood?").
But with the aging of the population, the proportion of old people will increase very much, and, if we are talking about democratic regimes, their political influence will be increased.
And the situation, when we have a confrontation between a shrinking productive minority and people who do not produce anything, but have power over them and live at their expense - can end badly. It will definitely end badly. Like, really badly
The good thing about being authoritarian is that you can easily solve the births issue. The same way there was one child policy, there could be 3 or 4 with penalties for non compliance.
Highly unlikely CCP would pursue coercive birth policy, or even could do it if it wanted. CCP is extremely powerful but it still has to rely on the consent of the governed. It has to frequently roll back policies due to public outcry.
Current birth rate increase policies in China are based mostly on rewarding for births and subsidizing parenting costs.
PPP on its own is a relatively poor metric and only covers a subset of the economy.
Then when you have semi closed economy like Russia with unclear currency rates (due to external capital inflow/outflow barriers) and convert the figures to USD you can end up with all sorts of wacky numbers
If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.