FILE PHOTO: The Chinese government organizes a visit for journalists to a factory producing electronic products in Beijing. (May 13, 2020)
Despite being the site of an outbreak of the New Guinea virus, China’s economy recorded positive growth of 2.3% in 2020 and its gross domestic product (GDP) surpassed the 100 trillion yuan level for the first Time, reaching 101.6 trillion yuan (about $14.7 trillion).
Compared to last year’s global output decline of 4.2% and the U.S. GDP recession of 2.3%, China’s bright performance in “overtaking” the global economy has led some economists to predict that the size of China’s economy is likely to overtake the U.S. and become the world’s largest economy in the next 5-7 years ahead of schedule.
In this regard, a number of economists interviewed by the Voice of America said that the force of China’s economy driven by domestic demand is still limited, and whether the future growth can continue to depend on the demand of other export trading countries, including the United States, which is gradually appearing anti-China route.
According to preliminary data released by the U.S. government on Jan. 28, the U.S. GDP declined by 2.3% last year, reaching only $20.93 trillion, but its retail sales, representing domestic consumption, still increased slightly by 0.6% annually.
In contrast, China’s GDP share last year showed a 4% annual increase in exports, a 0.7% annual decrease in imports, and a 3.9% annual decrease in retail sales, representing a lack of willingness on the part of Chinese consumers to spend money with confidence.
China’s GDP per capita lags far behind that of the United States
Scholars say that China’s population is four times larger than that of the United States, so comparing the size of the U.S. and Chinese economies alone is inaccurate. A more meaningful comparison would be GDP per capita, which reached $11,000 last year, still only nearly one-sixth of the U.S. GDP per capita ($63,200), which means China is still far behind the U.S. in terms of industrialization and development.
In addition, experts say, in terms of industrial structure, China’s technology manufacturing industry is also still in the relatively downstream or low-level process of the value chain of international trade.
Dasheng Qiu, a researcher at the Taiwan Institute for Economic Research in Taipei (Photo courtesy: Dasheng Qiu)
In an interview with the Voice of America, Dasheng Chiu, a researcher at the Taiwan Institute of Economic Research in Taipei, said the most important area of long-term competition between the U.S. and China will be: who is the future leader of high technology? Because the high-tech leader will have a higher value added.
He said that China’s current huge foreign trade surplus may be greatly discounted if value added is taken into account.
For example, he said, taking the high-tech 5G technology competition as an example, the outside world once thought that China invested in 5G infrastructure early, and supported by state subsidies, should have a leading position. But last year, the United States launched a technology war, restricting the export of high-grade chips using U.S. technology, China immediately fell into the technical level is not in place, the dilemma of being strangled.
The company’s export orders from the high-tech industry would not have been completed if it had not relied on Taiwan to supply electronic components last year, Qiu said.
Chip exports by the U.S. neck
Qiu Dasheng said: “China’s imports of electronic components from Taiwan in 2020 compared to 2019 is an increase of about 25%, the main reason is that, once the United States launched a technology war, a pair of China to control, it immediately technology is stretched to the limit, must quickly stock, otherwise, it has no way to ship. Then you know, it is really doing a relatively low-level (process), because the key technology (in the hands of the United States), it is controlled, it (China) can not move the whole.”
Like China, Taiwan has benefited from the success of The prevention of epidemics and booming exports of electronic products, last year’s GDP also achieved a positive growth of 2.98%, the first time in 30 years to surpass China, but also one of the world’s strongest GDP performance of the economy.
Although Taiwan’s population is only 23 million, its GDP per capita is about $30,000, which is also much higher than China’s.
Chiu pointed out that Taiwan’s strong economic performance last year was due to the country’s unrivaled position in the high-tech value supply chain, including the semiconductor industry, IC design, high-end processes in wafer fabrication, and packaging and testing, all of which are in the upper middle class. Therefore, he said, when the capacity is saturated, Taiwan still has room to move some of the low-end processes to China, similar to the concept of the United States, which holds the key technology to move low-end processes out to China for manufacturing, but also fully reveals that the United States, Taiwan and China in the high-tech industry belong to the value chain of the high and low.
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