Friday, May 29, 2020

And the Winner IS: Vietnam? India? Bangladesh? China?






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)

1.     GDP

2.     GDP/Capita

3.     GDP/Capita at PPP (Purchasing Power Parity, how much your money will buy locally)

1.   Exports

Exports 2008 and 2018 (Current US$ BIllion)

Country

2008 Exports

2018 Exports

Difference $

Increase %

China

1498

2656

1158

77.3%

Vietnam

69.7

259.5

189.8

272.3%

India

288.9

536.6

247.7

85.7%

Bangladesh

16.1

40.6

24.5

152.2%

 

Clearly the $ Winner is China. But, in terms of Difference in $, and Increase %- The winner clearly is- VIETNAM

 

2.   GDP

GDP 2008 and 2018 (Current US$ Billion)

Country

2008 GDP

2018 GDP

Difference $

Increase %

China

4600

13600

9000

195.7%

Vietnam

99.1

245.2

146.1

147.4%

India

1200

2700

1500

125.0%

Bangladesh

91.6

274

182.4

199.1%

US

1471

2054

583

39.6%

 

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

3.   GDP/Capita

GDP/Capita 2008 and 2018 (Current US$ Billion)

Country

2008 GDP/Capita

2018 GDP/Capita

Difference $

Increase %

China

3468

9770

6302

181.7%

Vietnam

1149

2566

1417

123.3%

India

998

2009

1011

101.3%

Bangladesh

635

1698

1063

167.4%

US

48382

62886

14504

30.0%

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)

Country

2008 GDP/Capita @ PPP

2018 GDP/Capita @PPP

Difference $

Increase %

China

7574

15376

7802

103.0%

Vietnam

3758

7771

4013

106.8%

India

3650

6697

3047

83.5%

Bangladesh

2206

4549

2343

106.2%

US

48382

62886

14504

30.0%

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)

Country

2008 GDP/Capita

2018 GDP/Capita @PPP

Difference $

Increase %

China

9770

15376

5606

57.4%

Vietnam

2566

7771

5205

202.8%

India

2009

6697

4688

233.3%

Bangladesh

1698

4549

2851

167.9%

US

48382

62886

14504

30.0%

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)

Country

2008 GNI PPP

2018 GNI PPP

Difference $

Increase %

China

10001

21300

11299

113.0%

Vietnam

315

691

376

119.4%

India

4357

8966

4609

105.8%

Bangladesh

343

767

424

123.6%

US

14685

20837

6152

41.9%

 

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.

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