Winners and losers in the global economy

geordief

I was listening to CNN (it might have been Bloomberg) and the story was about the recent slowdown in the Chinese economy.

It was taken as a given (given as a taken ?) that this would be bad for the global economy as a whole.

Is this completely right as it seems to fly in the face of the idea that one mans loss is another mans gain.

Don't the Chinese have a slice of the pie like everyone else?

Doesn't the global economy have a life of its own as distinct from being the sum of its constituents ? Is that too deep?

TiGeR KiNgS

geordief wrote: »

I was listening to CNN (it might have been Bloomberg) and the story was about the recent slowdown in the Chinese economy.

It was taken as a given (given as a taken ?) that this would be bad for the global economy as a whole.

Is this completely right as it seems to fly in the face of the idea that one mans loss is another mans gain.

Don't the Chinese have a slice of the pie like everyone else?

Doesn't the global economy have a life of its own as distinct from being the sum of its constituents ? Is that too deep?

The Chinese economy slowing is an indication of declining global demand i.e Its correlated. China is a net producer of goods and has the capacity to expand production on the world stage.

Nothing to do with winning and losing.

Very simple economics.

Trade / economics isn't a zero sum game - there isn't a fixed pot out there that is divided up.

antoobrien

geordief wrote: »

It was taken as a given (given as a taken ?) that this would be bad for the global economy as a whole.

Take a look at what has happened over the past 20-30 years. Low cost & low margin manufacturing - clothes in particular - have gone east. China is the biggest beneficiary of this transfer of manufacturing base, so in theory a slowdown in China is indicative of a global slowdown.

geordief

Quote :Trade / economics isn't a zero sum game - there isn't a fixed pot out there that is divided up.


Are you quite sure?

Obviously I don't mean that it can be quantified but there are global parameters that are fixed (dynamically fixed-if that is not a contradiction in terms).

We do have an idea of the total world population at work.
We do have an idea of the total wealth (innacurate of course but it is out there to be guessed at)
We have an idea of the toal global mineral et al resources.
Etc etc......

Isn't that the trough we all have our noses in?

I apppreciate that a single (eg Chinese) performance can be a symptom of the global economic performance and that its rating can impact negatively on other economies (if it is negatve itself) but can't a negative Chinese economic performance also have positive impacts on the world (eg more jobs for Vietnam) ?

bbam

Yes if you can show that a majority of the loss in activity in China is being replaced by activity in other regions.

However it would seem that it is a slowdown in demand that is causing it.

Less demand from the developed countries is only due to a poorer economic position and outlook.

If times are good then the west spend, this equates into economic activity in the major manufacturing centres in Aisa.

The drop in activity in China is an indicator that things are still bad and the perceived outlook is generally poor

geordief

Would it be possible to find a chart that compared global economic growth (from year to year or even month to month) against growth in the individual economies ?

If there was would it be so incomplete as to just be misleading?

My understanding is that economics isn't a complete science on account of
a: the lack of precise information
b: speed of change .

Scofflaw

That global economics isn't a zero-sum game is extremely easy to demonstrate - the whole world has got a lot wealthier since, say, 1000AD, or even since 1950. If economics were a zero-sum game where "one man's loss is another's gain", then that would be impossible.

cordially,
Scofflaw

geordief

geordief wrote: »

Would it be possible to find a chart that compared global economic growth (from year to year or even month to month) against growth in the individual economies ?

If there was would it be so incomplete as to just be misleading?

My understanding is that economics isn't a complete science on account of
a: the lack of precise information
b: speed of change .

I don't think a chart of that nature would make much sense - it would need to capture all of this for example:
http://data.worldbank.org/indicator/NY.GDP.MKTP.CD
You would have problems with time lags in data, missing data, wrong data, revisions. As you say it isn't a science - it can't be treated as an accounting exercise. (for what it's worth I recently made a return to the Dutch central bank for their national accounts preparation - it is a sample only)

David Ricardo gave the classic example of how countries can benefit from trade.

antoobrien

geordief wrote: »

I apppreciate that a single (eg Chinese) performance can be a symptom of the global economic performance and that its rating can impact negatively on other economies (if it is negatve itself) but can't a negative Chinese economic performance also have positive impacts on the world (eg more jobs for Vietnam) ?

There are possibilities like that out there, however it before we can say something like "Vietnam will win because China are losing" we need to know why China are losing. Is it because (a) they are getting too expensive or (b) because the demand isn't there.

In the case of (a) there is an opportunity for countries that can produce the same quality for a lower price. If however it's (b) then there's little/no opportunity because the demand isn't there.

The consensus seems to be the problem is (b) - demand isn't there - so China is slowing. In that case there is no external opportunity, which means that it isn't competition that's taking the activity from china, but rather lack of activity elsewhere.