Economists have long expected China’s gross domestic product to exceed that of the U.S. by the end of the decade, but the projection has become dubious with a continued slowdown in China’s growth due to harsh COVID-19 restrictions and attempts to tamp down real estate speculation.
China’s long-term prospects, with high debt levels, are prompting economists to take another look at their estimates. The U.K.-based Centre for Economics and Business Research, for instance, had predicted that China would overtake the U.S. in GDP by 2028; it has revised its timeline for 2030.
Though pushed to a later date, the projection that China will, in fact, surpass the U.S. in GDP is still viable. The country’s ascent just isn’t going to be as quick as once thought, economists say.
The Japan Center for Economic Research expects that China will overtake the U.S. in 2033, four years later than its original forecast.
Also, former Treasury Secretary and current Harvard University Professor Lawrence Summers said he believes China’s growth will continue to slow, due to an aging population and Beijing’s interference in corporate issues, according to the Bangkok Post. He cited previous economic projections that would have Japan and Russia running past the U.S., which never transpired.
Even if China’s GDP eclipses that of the U.S., the significance of it may not amount to much, some economists say. The U.S. economy, because of its depth and openness, would likely retain its influence, and the dollar would remain the world’s reserve currency.
Quality of growth is not determined by size alone, according to Leland Miller, Chief Executive Officer of the research firm China Beige Book. U.S. living standards are five times greater per capita than those in China, he told the Bangkok Post, and are unlikely to drop off soon.
Of course, if China does pass the United States, it would use the designation to claim that a state-run government is superior to Western democracy.
“If China slows down substantially in its growth, it impacts China’s capacity to project power,” said Summers.