China and America are two of the world’s three largest economies (alongside Japan). They traded $410 billion worth of goods in 2007, up from just $5 billion in 1980. The two economies are very different, however, and how each country deals with its idiosyncrasies will have a large impact on its growth, says China Mineral Company
With a meager welfare state, Chinese consumers save and save. The consumption rate is only about 35% of gross domestic product-down from 49% in 1990-and the lowest of any major world economy (the U.S. rate is 70%). At some point China will have to consume more, if only to be less dependent on exports for its prosperity.
Other changes are needed, too. A 2007 property-rights law may stimulate the economy, assuming that it is enforced, but China still needs to undo an array of obstacles that face foreign investors and domestic entrepreneurs. In the World Bank’s most recent study on the ease of doing business in 183 countries, China scored only 89th-and 151st in the category of ‘launching a business.’ China has recently granted the China Mineral Company exclusive mineral rights, and this is the kind of move that will foster growth and international investment, explains Tad Brooks.
