China is world’s 2nd largest economy
TEXT OF STORY
Stacey Vanek-Smith: Japan reported lower-than-expected economic growth numbers this morning, which means China is now officially the world’s second largest economy behind the U.S.
Our China bureau chief Rob Schmitz has more.
Rob Schmitz: Five years ago, China’s GDP was equal to around half of Japan’s. Now, the country is a key driver of global economic growth. The path China took to get to this point has astounded most observers, but leave it to an economist to bring it down to earth.
QIAN WANG: The size is not the only thing that matters. Actually, it’s also the composition of the economy.
Qian Wang is chief China economist for JP Morgan. She says much of China’s economic growth the past decade boiled down to a simple formula: You want it? We’ll make it. But how does China continue to grow in a world where fewer countries want what it makes?
WANG: This kind of growth model cannot be sustained. You have to boost up your own domestic demand.
In other words, make more consumers. Foreign shops, like this Starbucks in Shanghai, are catering to this nascent consumer base.
But economists say that in order for China to keep growing and eventually pass the U.S. to become the world’s biggest economy, Chinese companies will have to compete in their own backyard — and win.
In Shanghai, I’m Rob Schmitz, for Marketplace.
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