Quora Answer: What Do You Think of China’s Economic Prospects?

The following is my answer to a Quora question: “What do you think of China’s economic prospects?”

When we consider China’s economic prospects, there are several things to consider.  Firstly, the size of the population.  China’s population is almost 1.4 billion.  The population growth is about 0.6%.  China’s middle class is about 500 million and in 2012, spent 7% of the world’s private consumption.  That number is projected to increase substantially.

Secondly, the size of their manufacturing base.  China exports over US$2.3 trillion worth of goods.  Consider for example, that China makes 90% of all computers, 80% of all air conditioning equipment, and 70% of all mobile phones.  And now consider textiles, steel production, fashion, furniture, heavy equipment and so forth.

Eventually, going into the next century, growth will slow for varied reasons.  But China will still be making a lot of things and the Chinese population will still be buying a lot of things.  China is where Japan was in the 1950s, recovering from war, and making cheap and disposable products before moving on into high end, quality equipment.  China will eventually be where Japan is, with more than 10 times the population, and many times the manufacturing base.

By 2020, more than 50% of the population will be urban.  There will likely be some social upheaval due to the struggle to keep them all employed.  But industry and economic policy will adjust.  In summary, the economic prospects look quite good well into the next decade.