China may allow the yuan to appreciate at 7.5% per year which would be faster than the 5.5% rate allowed since September, 2006 The yuan has moved from 8.27 to 7.6 since it was floated in July 2005.
Color coded view of the current economy of China’s provinces. richer provinces are darker green, poorer are lighter green and transition to yellow.
Projected China’s economy with a 7.5% annual strengthening of the yuan. With the current 11% growth rate easing to 8%.
|Year||GDP(yuan)||Yuan per USD||GDP trillionUSD|
Guangdong, a southern chinese province near Hong Kong, is projected to have a 4 trillion yuan economy in 2011 This would be USD722 billion at the projected exchange rate of 5.5. This is in the range of the current size of the Australian or Mexican economies.
The Energy Information Adminstration (EIA) has to project economic growth in order to project future energy usage. They have scenarios which project China to grow as follows (PPP is in trillions of USD) The World Bank has the PPP equivalent of 1.8 Yuan equal to one USD in 2003. The 7.5% appreciation rate would have the Yuan converge to that PPP rate in 2027-2029. According to the EIA projection China will have a larger economy (PPP) than North America (USA, Canada and Mexico) in 2015. A slight extrapolation of the EIA numbers shows China’s economy exceeding the USA + OECD Europe in 2035. China would be larger than India and the USA combined in 2030.
|Year||Low PPP China||Low US||High PPP China||High US||High World|
Current GDP per capita of China’s provinces. The darker the red the higher the GDP per capita.
China would be moving up to 22,000 to 30,000 per capita PPP by 2030. The US would be at 50,000 to 60,000 per capita PPP. The Japanese yen appreciated from 360 yen to the USD in 1971 up to 83 yen to the USD in 1995. More than a 400% increase and an almost solid appreciation before floating between 90 and 140 yen to the USD.
China will be the largest trading nation and will move up to 25% of the world economy in 2030. The Yuan will be on par with the Euro and the USD as reserve currencies.
I think Taiwan will cut an economically prudent deal within 8 years with China. I think it is in both of their best interests. A slightly tighter coupling than the European Union arrangement makes sense.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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