The possibility that China will overtake the United States as the world’s biggest economy is declining as the country faces an obvious slowdown, according to Cornell professor and former International Monetary Fund (IMF) official Eswar Prasad.
In a recent interview with Nikkei, Prasad said that the economies of the two countries—currently the first and second biggest economies in the world—have taken opposite trajectories, with the U.S. likely to maintain its growth while China continues to face structural problems like high public debt and a low birth rate.
“China faces a variety of fragilities, including undesirable demographics, a collapsing real estate market, deteriorating investor sentiment at home and abroad, and the lack of clarity over a new growth model,” Prasad said.
“Even a 4 to 5 percent growth rate will be difficult to sustain over the next few years. The likelihood of the prediction that China’s GDP will one day overtake that of the U.S. is declining.” Newsweek contacted Prasad for comment by email on Monday.
Reminds me of how in the 80’s everyone was convinced Japan would take over the world.
They are still going for that cultural victory with games and anime.
I’m playing Pokemon this exact moment so it must be working
China at least made some sense. China has a far larger population than the USA so it didn’t need to at the bleeding edge of economic development to have an economy larger than the USA.
China could also reform its economy in the future to resolve its current issues to make its way into a post-industrial economy.
A report by a former IMF official that completely ignores the indisputable fact that China is the only manufacturing and producer superpower in the world (not counting military production, where the USA is the undisputed leader), and instead compares the two economies on a financial services standard which favors the USA to begin with bc they’re solely a financial/services driven economy at this point.
Look, I’m not a fan of a lot of what happens in China, but this is a shit comparison and projection.
I think that’s a byproduct of trying to compare China to western style economies. China is pretty much the only modernized economy that didn’t transition from industrialization to a services economy.
Having a trade surplus is usually fine, but if the capital from the surplus isn’t invested in creating a healthier domestic market… Things can stagnate pretty easily when something eventually disrupts labour demands.
China has spent the last 10 years attempting to kickstart their domestic market by heavily investing in their real estate market. I’m afraid they may have thrown a little too much gas on that fire, supplying more homes than demand.
Yeah no shit. After that company Evergrande or whatever goes bankrupt with a gazillion dollars in debt, their whole economy is going to tank.
So, what, instead of a 4 to 5 percent growth rate it might be 3 to 4 percent? 😱
The bigger problem for their economy is their aging population, well, that’s a problem in most developed countries, but China is going to be hit particularly hard due to the lingering effects of old policies. But that’s a macro economic problem for the medium to long term.
In the near term they’ve exposed their economy to the same shithead neo-liberal speculation driven private profits, public loses, as the West has. Sure, it has a China specific spin to it, but similar enough to cause a real bad time.
All the economic data I’ve seen shows that their economy is going to shit the bed, hard. This is due to a mixture of bogus economic data coming home, real estate market shitfuckery, and the trade war/tech sanctions.
The bigger question is how much exposure the shitheads in New York, London, and Tokyo, have and how much it will spillover into the global economy at large.
The ONLY upside here, is that at least China will execute some of the chuckledicks responsible. You know, instead of give them bonuses and jobs in the next US Presidential administration.
Yes and the drop is only a couple of years ahead 💀 rip China
