At the end of the year, China will become only the third nation ever to boast a $5 trillion economy. The nation is on track to have a 2010 economy worth some $5.36 trillion, behind the U.S. ($14.2 trillion) and slightly ahead of Japan ($5.06 trillion), which it will knock from the number two spot. China’s economic future will affect the whole planet, and every industry from autos to electronics.
Computers and electronics
China’s economy has grown at breakneck speed for the last 15 years, with the growth rate for the first two quarters of 2010 being downright supersonic. Electronics, computer and communications firms are well represented among China’s top 100 firms, about 30 of which have annual revenues over $1 billion. The largest, named Legend Holdings – the firm that bought IBM’s Lenovo laptop lines – had almost $18 billion in sales for 2006, the most recent year for figures.
The Haier Group, Midea Group, Hisense, Panda Electronics and Huawei Technologies are a few of the names you may already know. If you don’t, you soon will, as they make everything from components to consumer goods, and are already making waves. Huawei, for example, makes routers and networking equipment, and is one of Cisco’s main international rivals. Other Chinese firms are at the forefront of both R&D and production of touchscreen panels, the kind used in the new HP all-in-one computer than CRE now carries.
The new Japan?
From the 1950s through the 1980s, Japan was America’s chief economic rival in certain core industries like computers and semiconductors. A slew of books were published with various predictions of just how fast the Land of the Rising Sun would leave the U.S. in the dust. In 1987, Japan was selling American firms 1MB memory chips for about $400. (If you were to max out the RAM on one of CRE’s iMac rentals at that price, it would cost you $6.4 million for 16GB.) In the late 1980s, newspapers reported economic gloom and doom for the U.S. and proof of Japan’s ascendancy. A decade later and Japan’s economy was toast.
Japan squandered all the headway it made in the 1980s and 1990s by strangling its own economy over the last 15 years or so. As the Japanese started their long slide, China was still mainly an outsourcing destination, for getting your widgets mass produced at a good price. Since then, however, China has grown into a nation full of entrepreneurs, researchers and innovators, and everyone knows it: Apple, Oracle, IBM and every other forward-looking U.S. firm has one, three or half a dozen Chinese partners or vendors.
On the practical level, expect more and more digital gear to be manufactured (and designed) in China. Before long, Chinese firms will likely be supplying CRE with some of its LCD monitor rentals, and providing American consumers with the digital gear and gadgets needed for both work and play. Who says? In July of this year, the International Monetary Fund (IMF) estimated that total annual growth by the end of 2010 would be 3.3% for the U.S. and 2.4% for Japan. The same report predicts a 2010 growth of 10.5% for China.
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