Shenzhen, China/California, US – Trump thought that the missile launch wasn’t enough to make an impression. He wanted to impress both his foes and friends. And he succeeded. The American technological flagship Apple was told to pack its things in the form of an ultimatum. It’s going to move from Shenzhen back to California.
However, experts doubt that such a move will boost the troubled American economy. Many still perceive China as a cheap labor market, and that might have been true 20 years ago. But nowadays, the Chinese economy is much different. Chinese cultural emphasis (virtually to the point of obsession, and a rather useful one) on education has started to bear fruit.
The once low-paying, quite modest and relatively unskilled workforce gave way to the rise of a numerous, decent-income, self-confident and highly skilled workforce. Another point is the measurement of the economic output of countries. While the Western-dominated IMF and the Word Bank still insist on nominal GDP measurements, GDP (PPP – purchasing power party) gives a more realistic picture of a country’s economic performance.
Nominal GDP in millions of US dollars (as per IMF, 2018):
- U.S. – 20,494,050
- China – 13,407,398
- Japan – 4,971,929
Now the much more realistic GDP (PPP) in millions of US dollars (as per IMF, 2018):
- China – 25,270.066
- U.S. – 20,494.050
- India – 10,505.288
As it is obvious, the disparity is mindblowing. When changed from nominal to PPP, it shows us that the Chinese economy has nearly doubled. GDP (PPP) gives a much more realistic data due to the fact that the nominal GDP is measured in one currency only – the US dollar. The method takes into account the exchange rates from dollars to the national currencies of other countries. However, the price of a haircut in New Delhi is significantly lower than in New York. The same goes for most other services. That’s why the nominal GDP gives a very unrealistic picture.
Knowing this quite well, it would be a massive problem for, let’s say, Apple if it was forced to relocate its massive production from China to the US. The sheer number of highly skilled Chinese specialists gives China a massive, both qualitative and quantitative, advantages over not just the US, but virtually everyone else on the planet.