Peter Brown
PAYdata Blog, 16 February 2011
 

A couple of weeks ago we welcomed the Chinese New Year by noting a few stark differences between the employment and pay environment in the UK and in China.
 
No sooner was the Year of the Rabbit up and running before China reached another momentous milestone by becoming the world’s second largest economy at $5.8 trillion.  This was achieved by overtaking Japan, down at a lowly $5.47 trillion.

Some analysts have predicted that at its current rate of growth China will surpass the United States as the world’s largest economy in about 10 years from now.  Maybe that should have been the Decade of the Rabbit.

But, as is often said, size isn’t everything.  On other measures, China’s position looks a little different.  The split between rural and urban economies is much more pronounced that in most developed economies.  The International Monetary Fund (IMF) has calculated that the Gross Domestic Product (GDP) per person in China is a little over $7,500.  That figure leaves it languishing in 93rd position, whilst Japan is 24th.  The UK is even higher at 20th position with a GPD per person of over $35,000.

It is also worth noting that China is far from immune from the ravages of inflation.  Whilst this week saw UK Consumer Prices Index (CPI) annual inflation rate rise to 4%, in China consumer prices rose by 4.9% in January from a year earlier.  At a time when our Monetary Policy Committee deliberates whether to move off the 0.5% interest rate that has survived for almost 2 years, the central bank in China last week raised its main interest rate to 6.06% from 5.81% in an attempt to reign in inflation.

I cannot see a replay of the story about the Hare and the Tortoise.  But every now and again it’s worth reflecting that even a Rabbit can be slowed down a little.

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