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May 2024

Why most Americans don’t feel the recession is over?

During the past five years, I have seen many similar charts.  But this one really stands out as the best story-teller.

us income growth by income group 90 vs. 10

(source: vox.com)

Great leap backward

How the Great Recession and European debt crisis have turned back the growth “clock” of most advanced economies, sometimes more than ten years.  Looks like Ken Rogoff was right:  this is not Great Recession; it’s Great Contraction.

[singlepic id=43 w=600 h=450 float=]

Source: Economist Mag.

Can China keep on going?

Do you feel everything is progressing in China?  Or rather China is like a fast car without a reverse gear, destined to crash?

Watch this interesting video analysis, featuring Michael Pettis.

(video courtesy of Journeymanpictures)

The next convergence

Nobelist Michael Spence discusses with Charlie Rose on the next convergence, where China and India and other emerging economies potentially catch up with the industrialized world.

The convergence is in reference to the Great Divergence that sent Great Britain, France and other Western European countries into the leading world economies.

This transition, most likely, will not be smooth. I am writing a paper on what could stall fast developing economies, like China, into a middle-income trap, where income growth becomes stagnant and gets stuck in around $12-15K range.

Will China surpass the US?

An interesting question ask, and a nice debate to watch.

My 2 seconds on this: China’s TOTAL GDP, now about 1/3 of the US, will catch up with the US in around 2020-2025 – for this I have no doubt. China is not another Soviet Union – China’s political party is still called Communist Party, but if you ever travel to China, and talk to the average people there, you will immediately know China is the most capitalist country in the world – travel makes you smarter 🙂

The much more difficult task is to lift the living standards of average Chinese citizen to the US level – China’s GDP per capita is only 1/10 of the US – and build up stronger and better institutions, especially political and legal ones, to sustain the long-term growth. For this, China has a lot to learn from the US.