The Get-Out-Of-China Movement is not new. 10 years ago, as the RMB was increasing in value, buyers panicked and started to scramble for other places to make their goods, the main objective being cheaper prices.
So now, in 2020, who is the winner of this race? A lot of talk and press about moving imports, “nearshoring” etc. I got to wondering, what is the actual result, not the implied result of the talk and politics?
Let’s analyze according to the numbers, globally (All numbers per World Bank)
3. GDP/Capita at PPP (Purchasing Power Parity, how much your money will buy locally)
Exports 2008 and 2018 (Current US$ BIllion)
Clearly the $ Winner is China. But, in terms of Difference in $, and Increase %- The winner clearly is- VIETNAM
GDP 2008 and 2018 (Current US$ Billion)
Here included the US for comparison. China still the winner in numbers, with an impressive 16.3% annual growth. Bangladesh was first in % with 16.7% annually. But China’s increase in $ and % was impressive- more than all the others combined. And the winner is- CHINA
GDP/Capita 2008 and 2018 (Current US$ Billion)
Impressive gains in peoples’ welfare all around, but, again, the difference in China standard of living and wealth is more than all the others combined AND the highest %. And the winner is- CHINA
4. GDP/Capita at PPP
GDP/Capita at PPP 2008 and 2018 (Current US$ Billion)
2008 GDP/Capita @ PPP
2018 GDP/Capita @PPP
This, of course, is what the increased wealth will buy, and is the best indicator of the welfare of the people. So here we need to look at the difference, in $ and % of the Nominal GDP/Capita and at PPP. So here it is:
5. GDP/Capita vs. GDP/Capita at PPP
GDP/Capita, GDP/Capita at PPP 2018 Comparison(Current US$ Billion)
2018 GDP/Capita @PPP
Here, despite the much higher base in China, both Vietnam and India had US$ gains almost equaling the gain in China. And the Winner Is- INDIA and VIETNAM.
6. GNI at PPP
GNI, PPP 2008 and 2018 Comparison(Current US$ Billion)
2008 GNI PPP
2018 GNI PPP
But, a nation’s wealth (which may or may not translate to peoples’ pockets) is really measured by GNI (Gross National Income, which is the wealth gathered from both domestic production (GDP) and international sources. And, measured at PPP, it tells what that income will buy within the country. The nominal numbers do NOT tell the tale that PPP does.
So here’s something you may not have known: AT PPP, China was a wealthier nation than the US in 2018. This is impressive, because it shows that the business China has done since the 1990s has brought it from “People are Starving in China” (when I was a kid, that is what my mother told me when I wouldn’t eat), to one of the world’s wealthiest nations and healthiest economies. And the People benefit by that. So, while all the countries examined here have done a great job of building wealth for their people, the clear winner is-CHINA
For all out there with a touch of Ethnocentrism, get over the story that China built their wealth by taking money out of our pockets, as it is just BS; we hungrily paid for the merchandise and service that we got- nobody forced us. What is more, China responded by building one of the best rail, road and air infrastructures in the world and improving living conditions for its people. If you don’t believe me, go to China and see for yourself; IF you have, you know.
So, by the numbers and by the efforts to achieve them, CHINA is the big winner. As the man said, they earned it.
But what about the Future? IF ideology doesn’t get in the way (this is a definite possibility), China will continue to develop and upgrade its productive base. IF it does, all those who beat their chests about “nearshoring” and “Get out of China” will face the same fate as the looter politicians in Atlas Shrugged: no place to make enough goods/not enough supply to meet demand/higher prices and the American people are screwed again by the politicians.
It can’t replace China- ever, but clearly the second winner here is VIETNAM. Driven by a savvy government and ambitious, capable people, Vietnam will overtake India as the second largest producer in Asia within 2-3 years at the outside. This is amazing or disappointing (depending on your point of view), considering Vietnam population of around 100 million and India’s of 1.4 billion. VIETNAM without a doubt is the future WINNER.
We in the US can meet our needs if we don’t listen to the politicians. They are ill-informed and have nobody’s welfare but their own in mind. Then the winner will be nobody and the losers will be us. Final word: BUSINESS IS BUSINESS.