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by Greg Cruey on August 31, 2009
INn light of what I said yesterday about consumptionin China, I thought I would revisit another Seeling Alpha post from earlier this month - this one by David Hunkar.
So, if China's not a comsumer-oriented economy, what is it? The answer lies in its ratio of investment-to-GDP. China has the highest investment-to-GDP ratio in the developed world: over 40%. That's almost three times the rate of countries like the US, the UK and Germany. It's twice the rate of Japan.
China's problem is that its export-driven economy is too dependant on the whims of others. When Consumer demand becomes a more powerful force in China, their economy's growth will become more consistent and stable.
© dawvon
So, if China's not a comsumer-oriented economy, what is it? The answer lies in its ratio of investment-to-GDP. China has the highest investment-to-GDP ratio in the developed world: over 40%. That's almost three times the rate of countries like the US, the UK and Germany. It's twice the rate of Japan.
China's problem is that its export-driven economy is too dependant on the whims of others. When Consumer demand becomes a more powerful force in China, their economy's growth will become more consistent and stable.
© dawvon
Permalink: China's Investment-to-GDP Ratio
Trackback: http://publish.creative-weblogging.com/publish/mt-tb.pl/160616
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Vote for China's Investment-to-GDP Ratio:
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Rating: 8.75 out of 4 vote(s) cast.
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Response from:
Bill Rich
(09/01/09 10:50am)
Did anyone figure out the government directed investment as a percentage of GDP for various countries ? Government directed investment is typically not market based, and can be done with one single person making that decision in some countries.
Response from:
hotaruSTAR16
(09/08/09 9:43pm)
China's growth has a huge impact on the rest of the world. They may be dependent, but if the demand for their products is there, then their economy will inevitably grow. You ought to check out Asia Chronicle News, asiachroniclenews.com - they provide good thought-provoking analyses about the various issues surrounding China.
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