Can China keep growing steadily in 10 years from now?


If you are interested in investments in stock markets, you may hear a lot of stories in China this year since it has been rising dramatically and its market capitalization hit 10 trillion USD for the first time. I am not an investment adviser for stocks. However, I am interested in sustainability of Chinese economy in the long run.  Because China is already the biggest economy in the world  in terms of GDP using purchasing power parity (PPP) according to the IMF.  It means that the growth of Chinese economy affects a lot of the other countries’ economies such as Asean countries.

One of the easy way to understand what is going on in China is to compare with Japan.  There is no need for complex economic theories here.  Just compare to find out what are similar and different between them.  I would like to compare Japanese economy in the 1970s, 1980s and the current situation in China.  First, I would like to compare the GDP per capita between Japan and China in order to understand the path of economic growth.


1.  China is similar to Japan in 1970s in terms of GDP per capita

In this article by the BBC, it is pointed out that GDP per capita of China based on PPP is 11,868USD.  This number is similar to the number of Japan in 1968 (11,292USD) according to FRED.

GDP per capita J&C

In the 1970s and 1980s, Japanese economy managed several crises such as oil crises and Yen appreciations. In these two decades, GDP per capita (PPP based) was getting more than two times bigger.  It means that China has opportunities to grow more in the long run if it can manage obstacles effectively in the future.


2. Data technologies play a key role to develop Chinese economy.

One of the biggest differences between Japan in 1980s and Current China is “Data technology”.   Cloud, Mobile devices, Internet, IOT and Big data are available in major countries all over the world now.  There was nothing like that in Japan 1980s. It means that every industry can be developed rapidly, effectively and with less impact to the environment if they can introduce data technologies effectively. China has already suffered from air pollutions in cities such as Beijing. So developments, with less impact against the environment are desperately needed to make economic growth sustainable.


3. Capitalism vs Communism

Another big difference is that Japan introduces capitalism and China introduces communism.  Yes, it is a big difference. But China learned and will learn a lot from capitalism and improve its social system. Especially China can learn Japanese failure since 1990, which is called “lost decades“.  As the result of that, entrepreneurs are more active  in China than Japan now. Alibaba, Tencent and Xiaomi are good examples of that while most of Japanese young guys want to work in traditional big companies, rather than create their startups. So I am sometimes confused which country has which system in reality.


No one knows exactly what happens in China in 10 years.  I would like to keep watching what is going on there. Are you an optimist or a pessimist of China?


Note: Toshi’s opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or solicitation to buy, sell or hold any security or to adopt any investment strategy.  The information in this article is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding any country, region market or investment.

Data from third party sources may have been used in the preparation of this material and I, Autor of the article  has not independently verified, validated such data. I accept no liability whatsoever for any loss arising from the use of this information and relies upon the comments, opinions and analyses in the material is at the sole discretion of the user. 

Let us go surfing the sea of big data !

In the morning, I check my smart phone and i pad mini to see what happened during the night.  Every time I touch them, data is generated automatically.  How many devices such as smart phones and tablets are there in the world?  I am sure a lot of data is generated at this moment.

It is also noted that FRB, World Bank, IMF and other public institutions make their data available to public through their web sites. In addition, a lot of public data is getting easier to access thanks to the data gathering services. Data is the first key thing to consider when we start data analytics. Therefore, it is very important to know what kind of data is available at your disposal in analyzing data.

I have been using a data gathering service called “Quandl”. Quandl is a “data platform“, which enable us to collect numerical data published by hundreds of different sources, and host them on a single easy-to-use website.  Currently it can be used for free. Once I obtain the data, I visualize it in order to understand what it means and what the mechanism is  behind the data.  I use ” DataHero” to visualize the data I obtain.  It is easy to produce many kinds of charts and graphs. By “DataHero”, I can produce a lot of graphs by following its instructions, then choose the best one to present what I want to say.  It can be used for basic functionality without any fee. If you pay fees, you can get more functionality such as a tool to combine multiple datasets.  


According to the sun newspaper on May 20 2014, Mr Najib Abdul Razak, prime minister of Malaysia, said that the 6.2% of GDP growth in the first quarter of this year as extremely outstanding.  This is the highest among the list he presented in his Facebook site.  Let us see what is going on from the past to the present in terms of economic growth of Malaysia. I pick up the data of Real GDP growth rate,  Unemployment rate and Consumer price index (CPI) since 1990 in Malaysia by using  Quandl and visualize these data by using DataHero. It is very easy and takes less than 5 minutes if you are getting familiar with these systems.    Source : Open Data for Africa (IMF)

DataHero Malaysia economic growth

This graph tells us economic growth in Malaysia since 1990.  The growth rate is over 5%, except two economic crisis in 1998, 2009 and 2001.  The unemployment rate has been around 3%, which is good for the economy.  CPI is also around 3% and stable. I can say economic growth without inflation currently is achieved in Malaysia.

I would like to compare it to the situation in Japan since 1980.  Let us see the graph below.

DataHero Japan economic growth

GDP growth peaked out in the late of the 1980s, when the bubble economy was peaked.   Since 1990, when the bubble burst,  Japan has experienced the low economic growth.  CPI has been very low and sometimes went to negative as Japan has been in deflation.  The unemployment rate has been gradually increasing and  peaked over 5%. This period is called “the lost two decades” as Japan has poor economic performances. It is not easy to explain why it happened in Japan.  Some economists blamed monetary policy was not so effective enough to recover its economy.  Others criticized the fiscal stimulate was too late, too small and too short. I would like to analyze the mechanism of ” lost two decades” going forward in this blog.