
China surpasses US as world's largest trading nation - yapcguy
http://www.theguardian.com/business/2014/jan/10/china-surpasses-us-world-largest-trading-nation
======
DateK
I'm of an European descent and I'm not talking on behalf of Japanese nation.
Just my personal thoughts.

Japan (Tokyo) is my permanent home and I feel unease with all the economic
developments of our immediate neighbor.

I'm more than happy that they could lift themselves up from poverty and I'll
be happy if we could be good mutually respecting partners.

But I'm also quite concerned about my future in the next 10-15 years. Quick
economic success can lead a nation to feel they are better than others.
History tend to repeat itself.

Here is an outlook for the coming Great Siberian War:
[http://www.dod.gov/pubs/foi/International_security_affairs/c...](http://www.dod.gov/pubs/foi/International_security_affairs/china/09-F-0759theGreatSiberianWarOf2030.pdf)

~~~
_random_
Chinese don't have to start wars, they just need to keep (em)migrating. A
peaceful conquest. Also by 2030 Tokyo/Japan will be a one big retirement
centre, so you will have to enable more immigration (or finally come up with
really good robots/rejuvenation pills).

------
craftsman
NPR's Marketplace did a story on this recently and it turns out that there are
some tricks they play that, if properly accounted for, indicate that China is
not the world's largest trading nation.

[http://www.marketplace.org/topics/world/paper-chinas-
trade-s...](http://www.marketplace.org/topics/world/paper-chinas-trade-
surpasses-us-lets-get-real)

~~~
yapcguy
If you believe that China, or Chinese corporations, play accounting tricks,
would you accept that all countries and all corporations play tricks to boost
their figures too?

We know for a fact that Starbucks, Google, etc perform accounting tricks to
shift sales from the UK to Ireland.

In the end, doesn't this all trickery cancel each other out, meaning that the
rankings are a fair reflection?

~~~
skwirl
It's possible, but the argument that Starbucks/Google shifting sales from the
UK to Ireland implies that the United States is playing accounting tricks with
imports and exports is non sequitur. And the implicit assertion that if all
countries were playing tricks, they must be playing it equally enough to
cancel each other out is also not valid without providing additional
supporting evidence.

The article provides an estimate that 1/3rd of Chinese imports were from China
itself. I have never heard any kind of claim of that magnitude leveled against
the present United States.

~~~
iaw
This is a more articulate and well-thought out than I could have crafted, but
it expresses my sentiment perfectly.

The one point I'd like to add is that China incentivizes their companies to
export through tax rebates and then incentivizes imports from HK through the
absence of tariffs. The makes it profitable for companies to artificially
boost exports. I have not seen similar mechanisms available in the US.

~~~
monsterix
That's a very interesting observation.

It's important to note that China does have a dual system of Governance within
itself: Democracy (Hong Kong) + Communist control (Mainland). Thus it can, and
does, leverage best of both worlds to doing business efficiently.

This also means that Hong Kong, for a city, is in a very strong position to
grow up into a cutting edge city of future given the volumes it has to handle
for mainland China.

------
smoyer
With four times as many people as the US, isn't passing the trade per person a
more notable milestone? (If you have to define one).

I'm a bit leery of announcements like this since it's really hard to compare
economies to each other (like comparing apples to oranges), but as a US
citizen, I can tell you that I'm much more concerned about the state of our
political system than our economy.

~~~
raganwald
_With three times as many people as the US, isn 't passing the trade per
person a more notable milestone?_

That's certainly notable, but not interchangeable with this one. The total
size of your economy reflects certain opportunities for scale, regardless of
your population and/or productivity.

If we think about corporations, when you have certain purchasing power, you
can extract certain concessions from your vendors regardless of how many
employees you have. When you manufacture and ship a certain number of
products, you can profitably invest in infrastructure, again regardless of the
number of employees you have.

I feel that the same argument extends to trade on the scale of countries.
Which does not devalue the milestone you describe, just that they have
different consequences.

~~~
alexeisadeski3
But when I think of governments, the largest ones are almost always the most
corrupt and inefficient.

Compare US to UK. California to Washington (state). EU to formerly more
independent nations.

In each case the larger state delivers services less effectively, with more
waste, arguably more corruption, and more useless nanny state rules.

~~~
raganwald
I won't take _that_ bait, but I will say that wasteful or not, the US can lean
more heavily on its trading partners for concessions, just as whether wasteful
or not, giants like WalMart can lean on their trading partners.

Size is might, even if it's blundering, wasteful, and inefficient. (Although I
am not saying the US is any of those things).

~~~
alexeisadeski3
Totally agree that size is might.

The question is whether or not might is good! (As in, is it better for your
own government to be mighty or puny)

Many folks would rather live in puny Switzerland or Sweden than mighty Russia
and China.

~~~
kzrdude
On the other end of the spectrum Iceland is fascinating, because by their
independence a relatively small group of people has much power. (Iceland is
also an example of corruption in a small nation)

~~~
alexeisadeski3
I didn't know that Iceland was considered to have corruption in any meaningful
quantity!

I faintly recall a study (by an Icelandic economist, if memory serves) which
showed that Iceland had one of the lowest "corruption ratings" in the entire
world! Perhaps I or the study are mistaken. Wouldn't be the first time.

~~~
kzrdude
It's a so small country that family and friend ties in government and
administration are hard to avoid, for one thing.

The examples of corruption I'm thinking of are all related to the financial
crash and Icesave scandal in Iceland.

~~~
alexeisadeski3
Hmmm. Just read over the Icesave Scandal wiki. Doesn't looks os much like
corruption as it does the Icelandic government trying to mitigate/avoid the
large deposit insurance payments they'd otherwise be required to pay.

Normally most people consider corruption to be some kind of private-public
intermingling. But this was all about the public side trying to protect itself
(I think?).

~~~
kzrdude
Former PM Geir Haarde was on trial for his involvement. The powerful pretty
much went in lockstep, with the smoking hot icelandic economy after a growing
banking sector, it looked like every icelander benefitted, being able to take
loans and buying multiple cars. With the "success", the people in charge let
themselves be instruments of a run away modern high-risk banking sector, not
their doing their job as regulators.

[http://www.voxeu.org/article/government-failures-iceland-
ent...](http://www.voxeu.org/article/government-failures-iceland-entranced-
banking)

------
11thEarlOfMar
Even if we discount the accuracy of the published numbers, are the trends
correct? What I'd want to understand is: Is China's economic activity growing
faster than their population?

Wouldn't that indicate rising wages and improving standard of living? Perhaps
we'd need to adjust for inflation, but the trade they report is largely with
countries where the published inflation rates are more trusted. And I think
the experience of US manufacturers, who report rising costs in Chinese
manufacturing,

[http://online.wsj.com/news/articles/SB1000142412788732476700...](http://online.wsj.com/news/articles/SB10001424127887324767004578488233119290670)
,

bears that out.

Another consideration, and different topic entirely that I think will play
into the trends over the next decade, is what is the ecological cost of this
growth, regardless of whether it is 5, 10 or 15%.

What I expect over the next 10 years, is a slowing and reversal of 'going to
China' for contract manufacturing. That reversal will be accelerated by
increasing reports of this same manufacturing decimating China's ecology, and
the pollutants seeping across international borders.

------
redwood
Indeed a major milestone, though more interesting will be when they surpass
the EU and US in imports.

To some extent being the world's chief importer proffers the most power:
because suddenly everyone is dependent on _you_ for what they sell. You become
the customer.

Once China becomes the "world's customer" the US's power will be severely
eroded.

------
alexeisadeski3
Rumor is that if you include the grey markets in China, their GDP already
surpasses that of the US as well.

------
pjg
This is incorrect (not the first time Guardian has published misleading
articles )

The headline says "world's largest trading nation" Total trade is the sum of
trade in goods and services. China may have become the largest trader in goods
but it is sixth largest in services. US is still the largest in trade in
services by far and if the sum of trade in goods and services is counted,
looks like China will still take few years to pass America.

Year 2012: US total trade in services = $1.02T China total trade in services =
$0.471T

Source: WTO
[http://www.wto.org/english/news_e/pres13_e/pr688_e.htm](http://www.wto.org/english/news_e/pres13_e/pr688_e.htm)
(look at Appendix 2 at the end of the article )

------
beachstartup
the same quote and facts are repeated no less than 3 times in the first few
paragraphs of the article.

why do journalists do this? it's incredibly annoying to read because i'm just
reading the same thing over and over, restated. it makes me feel like i'm a 6
year old with a big-print book.

do certain paragraphs get chopped off in syndication? are they going for a
threshold word count by repeating things? i can think of no other reasons why
this style of writing would be popular.

------
powertry
Interesting, quite a few no.1 positions being taken over by China recently!
Looking stronger than ever, in-spite of the various territorial issues.

~~~
alexeisadeski3
Well it is the most populous country in the world and all.

~~~
refurb
Good point.

The most impressive point won't be when Chinese GDP surpasses the US, but when
Chinese GDP surpasses 4.2*US GDP.

~~~
craftsman
Or just: when China's per capita GDP surpasses that of the US (since the 4.2
probably won't remain constant).

~~~
w1ntermute
From what I've read, with current Chinese growth trends, that won't happen for
another 100 years. Unlike other, smaller East Asian countries (Japan, Taiwan,
South Korea) that have grown on the back of export-based manufacturing, China
is far too large to base its growth on exports alone.

~~~
alexeisadeski3
It may take much longer than that. China's birthrate is low, so the nation may
experience severe greying related problems.

India, however...

------
_random_
Empires rise and fall at ever-faster rate.

------
notastartup
China doesn't exactly have a good track record of integrity and transparency
so this article really does not portray the intended shock. People still
remember the Air Defense Zone China expanded but how nobody really gave a
crap, because as the old Chinese proverb goes, "Empty Wheelbarrow Is Always
Loudest"

~~~
iaw
I agree with your sentiment, but Obama flying a couple B-2's through that zone
is the opposite of not giving a crap. There's a lot of concern about their
efforts to expand territory and naval dominance in that region.

~~~
notastartup
> Obama flying a couple B-2's through that zone is the opposite of not giving
> a crap.

It wasn't just America, it was South Korea, Japan which largely ignored it and
South Korea ended up expanding their own territory.

I would have to agree with the rising naval tension in the region, but the new
lines drawn by China is not at all being respected nor will they be expected
to unless China is willing to challenge the United States in a direct
confrontation.

~~~
iaw
Agreed. Ultimately it's all bluster unless someone is willing to pose a direct
military challenge.

