At the Australian Lowy Institute Roland Rajah and Alyssa Leng dig into the trends, analyzing the likely development of the Chinese economy. Their conclusions are
- China’s economy is likely to become the largest in the world (if it isn’t already)
- Its growth rate is likely to slow below 5% and below 3% within 20 years
- That means it is unlikely to “enjoy a meaningful lead” over the United States
which comports pretty well with what I’ve been saying here over the period of the last 20 years. Here’s a snippet:
Our projections imply a vastly different future compared to the dominant narrative of China’s ongoing global rise. Expectations regarding the rise of China should be substantially revised down compared to most existing economic studies and especially the expectations of those assessing the broader implications of China’s rise for global politics. If China were on track to grow at 4–5% a year to 2050, as many seem to hold, it follows that China would be on course to become the world’s most dominant economy by far. With 2–3% growth, China’s future looks very different. China would still likely become the world’s largest economy. But it would never establish a meaningful lead over the United States and would remain far less prosperous and productive per person than America, even by mid-century.
and especially this point:
China has achieved significant productivity gains over the past four decades since reform began, with productivity growth averaging 3.9% a year over the entire period by our estimate. However, placed in proper context, China’s performance looks less impressive. China is not really a “miracle†economy when it comes to productivity. Instead, China’s historically strong productivity performance appears more a reflection of its incredibly low starting point, the deep inefficiencies plaguing the planned economy of Maoist China, and the large catch-up dividends unleashed by gradual market-oriented reforms over the ensuing decades.
The most important reason for the slowing? Demographics.
Don’t confuse this with the sort of reflex boosterism so common in American analyses.
The post is full of great charts and graphs. They make a convincing argument.
More insightful would be an equivalent study on the US economy / demographics.
Then the conclusion would have meaning.
Long range studies of U. S. demographics are meaningless. If you were to have done such a study 50 years ago, you would predict a flat or declining population which was 5-8% Hispanic. A study today could find a sharply growing population that’s 20% or more Hispanic.
That’s not analogous to China. I feel confident in predicting no surge of Korean or Pakistani immigrants into China to compensate for a declining population of Han Chinese.
“Long range studies of U. S. demographics are meaningless”.
But then how can one make a confident conclusion that the Chinese economy will be only slightly bigger the US in 30 years.
If the US significantly underperforms projections from 2019 (which is actually plausible); then even Chinese underperformance compared to 2019 projections won’t change the relative results.
Good grief! On a PPP basis the Chinese economy is already one-third larger than the US’. Its manufacturing sector is over 50% larger, more modern/automated, and very much more diverse. The economic competition is over, and China won it.
As to demographics, every country in the world outside sub-Saharan Africa has a birth rate BELOW replacement. In much of western Europe, the birth rate is only half replacement. That projects out as a population reduction of 50% each generation. Japan’s population is already declining, although its GDP is still rising.
A declining world population is an objectively good thing. A declining world GDP would also be a good thing if the per caput GDP did not decline. Both would reduce the stress on the world’s ecosystems.
While market reforms were necessary, the primary driver of the rapid increase in GDP was the process of industrialization. That is, workers moved from low productivity agriculture to much higher productivity factories. Many other nations also experienced explosive growth during industrialization, including in Europe and the U.S. Once most of the economy has been so industrialized, then further growth tends to slow, as productivity gains are harder to acquire.
bob sykes: The economic competition is over, and China won it.
Not quite. While the Chinese people certainly deserve a fair share in the economic benefits of modernity, the U.S. is competitively well-positioned. The U.S. has a highly motivated and educated workforce, a huge lead in science and technology, vast natural resources, relatively low corruption, relative political stability, and has an established culture of openness and entrepreneurship.
OT- Largest, prospective study of Ivermectin done. Reported in WSJ. No positive effect.
https://www.wsj.com/articles/ivermectin-didnt-reduce-covid-19-hospitalizations-in-largest-trial-to-date-11647601200?page=1
Steve