China will become the "factory of the world", according to international economics guru, Professor of Economics at Columbia University New York and Nobel Lareate Robert Mundell. According to Mundell he images that in 20 years time, most automobiles in the world will be produced in China, and most South East Asian countries will "try to forge some sort of free trade area" with China.

Mundell sees as key the rush of Japanese investment into China from large Japanese companies and carmakers, alluded to in our recent piece on Toyota's late drive into China

China's gross domestic product is only US$1.1 trillion, a quarter of Japan's, noted Mundell, but China's GDP would grow to more than 4 trillion by 2020.