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C O U R S E L E C T U R E China: The Second Largest Economy in the World Notes taken on December 3, 2015 by Edward Tanguay |
why is China interesting
China's economy is already the second largest in the world
second largest economies in history
most number twos in the world run into economic and political trouble
Bismarck ran country successively but this led to WWI
Japan until 2011 before being taken over by China
China today is different
even though it is number two in the world, it is the largest in terms of population
20% of world's population
Germany accounts for 2%
relation between population and economy
today China is the largest automobile market in the world
China has 28% of car market
cars are almost the same
but GM did not go to court to sue Chery
because GM was trying to enter the Chinese market
GM may win the legal case but may not be able to get into China
size of market can change the rules of the game
Japan did not invent the VCR
then there was the VHS which was inferior, bigger, lower quality
today nobody remembers Beta
VHS became the popular model
it was because of size, the Japanese market was not big enough
format is a critical issue
GSM, continental Europe and USA
today the TD format is serving 500 million
China has the highest savings rates
50% of Chinese GDP is being saved, not spent
accumulate a lot of money
Chinese households put money in Chinese banks
Chinese central government today has four trillion US dollars in currency reserves
could buy every share of equity on the London Stock Exchange, or twice as much as all the shares listed on the Australian Stock Exchange
Chinese investors and families are buying houses abroad
they cannot go to a bank to get a loan
Chinese is not recognized as a democracy
German after first being establish in 1872 was arguably an emergent democracy
in the First Reich, the first incarnation of the German federal system
German election rate was higher than in Britain
members of the National People's Congress are not directly elected
indirectly elected by members of subsidiary People's Congress
China is run by a ruling party
preamble of Chinese constitution
"China is led by the Communist Party in correlation with many other parties"
but communist party is the ruling party
communist is a good word in China in the minds of many people
if China follows the path of economic growth of Latin America
in 25-30 years China will be 1.5 times the size of the U.S. economy
and this is not even the most optimistic future for China