Is China a developing country?
Kim Iskyan, 联合创始人兼出版商, 史丹斯伯里丘乔斯研究
As some have commented, China is still under development in many areas. But from a stock market perspective, it’s hard to call China a developing, or emerging, market anymore.
The total market capitalisation of the world’s stock markets is now worth more than double it was 13 years ago. And a lot of that growth is coming from Asia’s so-called emerging markets – like China and India.
The total value of the world’s stock markets rose 133 percent between 2003 and 2016. At the end of 2016, stock prices multiplied by the number of shares outstanding – that is, market capitalisation – for the whole world stood at about US$65.6 trillion, compared to US$28.1 trillion thirteen years ago. The U.S. – in absolute terms – accounted for much of that growth, though U.S. markets only grew 87 percent.
Other “developed” markets, like the U.K., France, Canada and Japan saw their total market cap grow over the same period, though by a lot less than the world as a whole.
The United Kingdom, with the fifth-largest market cap, was up only 36 percent since 2003. France (number 7) rose 46 percent. Slow economic growth, EU sclerosis, and endless unx and currency troubles have crippled European markets.
The real story here is China and, to a lesser degree, India.
China came from nowhere to take second place in the world ranking (it’s also home to the world’s second-largest economy). From a total market cap of US$418 billion in 2003 (or US$200 billion less than Apple’s total market cap), it grew an incredible 1,479 percent to US$6.6 trillion.
In just 13 years, China passed every country in Europe and Japan for total market cap. Today, China’s stock markets are worth more than those of France, Germany, and Switzerland – combined.
India has also been rocketing up the rankings. It’s still not in the same league as China as far as market size, but it’s gaining on the rest of the world. Since 2003, it’s total market cap has grew 639 percent – more than any other country in the top 10… except China.
European markets are losing their influence
This tremendous growth in market cap since 2003 also means that Asian markets now account for a much larger share of the world’s total stock market capitalisation.
The exception to this in Asia is Japan. Its share of global market cap dropped more than 3 percentage points between 2003 and 2016. Japan has some major fundamental problems with its economy that will keep its market from growing much for years to come (and that may be spreading to the rest of the world).
Despite the increase in its total market capitalisation, the relative size of American stock markets has fallen sharply. At the end of 2016, the U.S. accounted for 36 percent of the world’s stock market capitalisation, compared to 45 percent in 2003. The decline of Europe’s markets has been even sharper.
And it’s been the opposite for China, which had 1.5 percent of the world’s market cap in 2003. But it now has over 10 percent – that’s almost 10 times more in just 13 years. In 2003, even tiny Switzerland and sparsely populated Canada had larger stock markets than China.
And India is coming on strong. It’s now home to 2.6 percent of the world’s total stock market value. That’s up from just 0.8 percent 13 years ago. It’s now just behind Germany, France and Canada in the global rankings.
Charlie Armstrong, 就读于南艾尔德尔高中(2021)
Technically yes, but also no.
China is an interesting case when talking about developing, because it is technically classified as one.
Now everyone at this point knows China is a very advanced nation, with modern cities and high quality of life.
That isn’t true in all of China though. While China has many people living in modern cities with air conditioning, abundant food, and other technologies, many Chinese live in harsh conditions, working in factories for minimal wages, working in the fields harvesting food, or just generally living in a rural area without much technology or income. The reason China is able to be the number one producer of products in the world is because they are able to utilize their massive population, the ability to pay them low wages, and their many factories to produce those products.
The image above shows the spread of average GDP of each province in China. The darkest red provinces are the ones with the major economic cities in China. The provinces in Western China are almost completely void of major cities, which means just about all of the population there live in rural areas. This translates to the fact these people live without modern technology, being akin to a developing country.
While some would think China is a developed country, and in some ways it is, there is a divide between the people in China that live in the wealthy cities and the ones working in the factories and fields. China won’t be able to truly become a developed country until they can fix the wage gap between these two classes, which they are working towards.