MARC FABER : Look at China and US over the last 50-60 years. In the 1950s, the US was way ahead of China and the whole rest of the world in terms of economy, in terms of technology, in terms of innovation, and in terms of GDP per capita. That narrowed, particularly against Japan in the 60s and 70s because the Japanese economy was growing very rapidly. Do not forget that by 1989, the Japanese stock market had a larger market value than the US and so that gap has narrowed a lot.
Then, after the breakdown of the socialist communist ideology in countries like China, the socialism in India, and in the former Soviet Union, 3bn people joined the global economy and their GDP per capita increased a lot, albeit from a very low level. So the gap between the Western world and the US, and the emerging world has been narrowing. The US is basically still the military superpower and the largest economy, although not in all markets, and now you have China emerging over the last 20 years or so and growing very rapidly.
Now we have, in many sectors of the economy, China being larger than the USA. It should be clear that there are more mobile phones in China, with 1.3bn people than in the US. There are more TVs in China, more refrigerators in China, and so on. So the market has exploded and China has an increasingly important geopolitical role.
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Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.