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Kiplinger Letter addresses China
On many occasions, Furniture/Today has spoken with industry sources about the challenges associated with importing from China. Issues ranging from rising labor and transportation costs, not to mention labor shortages that cause disruptions for factories, are some of the frustrations importers have dealt with regarding Chinese-made product.
But a recent issue of the Kiplinger Letter continues to assert China's rising importance in the global economy regardless of the issues faced by the furniture industry. In fact, the bulletin devotes an entire four pages of its December newsletter to China as a growing economic force to reckon with.
"Dear Client," it starts out. "About half of Americans believe that China is the world's largest economy. It's not. The U.S.' gross domestic product is more than double China's. But it won't be for long.... China is rapidly becoming an economic colossus."
Below are some of Kiplinger's key findings and predictions regarding China.
• Today, China is No. 1 on several scores, including being the largest foreign creditor and contributor to global economic growth. It also notes that China is the largest producer of ships, steel and automobiles as well as the largest exporter of goods and services.
• China's GDP will top that of the U.S. by 2026 and sooner if growth exceeds an average of 7% to 7.5% a year. The only reason it could take longer, it states, is if the U.S. economy performs much better than expected, which Kiplinger thinks is unlikely.
• Politically speaking, there will continue to be testy relations between China and the U.S. This is fueled by both politicians and labor unions, some of whom want punitive trade measures to offset Chinese subsidies and governmental currency manipulation. Over time, it states, as China's economy matures, the odds are that these tensions will decrease.
• More Chinese investment in the U.S. will help trim trade imbalances. It cites Chinese acquisitions of oil and gas firms, medical device companies, communications equipment and machinery and equipment makers as some of the key areas where China has already begun to invest. The furniture industry has seen this too, as major Chinese manufacturers have acquired brand names such as Universal, Schnadig and Guildcraft.
• Kiplinger also predicts that China will continue to invest heavily in Africa, South America and Asia to help guarantee supplies of natural resources such as oil, natural gas and iron ore. This will undoubtedly mean a growing influence in energy related affairs that ultimately will affect the U.S. and other countries that remain dependent on foreign energy sources.
The letter also addresses issues such as China's growing military strength and its shift away from low-priced consumer goods toward more technology-based industries such as high-end software and solar panels.
The report says that none of this will replace America's unique assets, such as an open, stable government, top-notch higher education and innovative financial systems. China, it says, also has challenges, such as debt-laden cities and towns, growing social unrest and a rapidly aging population to name a few.
But it states America's success will depend on how it addresses issues such as crumbling infrastructure, burgeoning federal deficits and needed improvements in secondary education.
"History tells us not to underestimate China," the Kiplinger editors write. "The awakening giant always exceeds expectations, achieving more in less time than believed possible."
Whether you source furniture from China or not, it's clear that China remains an economic force to watch.