China's Economic Power
November 11, 2003
China is likely to become an economic powerhouse in the 21st century, says economist Marc Faber. And its rise will be more rapid than the emergence of the United States in the mid-19th century. The result may be decades of low commodity prices and shifting world capital investment.
Speaking at the 30th New Orleans Investment Conference recently, Faber pointed out that the completion of the American rail and canal system in the 19th century was accompanied by decades of deflation -- declining prices wrought by our ability to move food, goods and materials at low cost from anywhere in the country.
The entry of China into the world market will have a similar impact on the price of goods -- years or decades of declining prices. The entry of India into the world market, he says, "will have the same impact on services."
More important, this is happening at incredible speed:
- It took Great Britain nearly 60 years to double per-capita income from 1780 to 1838, during its industrial revolution.
- It took Japan more than 30 years to accomplish the same thing from 1885 to 1919.
- But China is doubling its per-capita income every 10 years.
- Today the United States accounts for 53 percent of world equity values, and Asia (excluding Japan's 8.7 percent) accounts for only 3.4 percent.
- Faber sees the United States with 25 percent to 30 percent of the total in the future, and Asia with 30 percent or more.
Source: Scott Burns, "The smart money is on China," Dallas Morning News, November 11, 2003.
For Marc Faber's Web site
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