In a notable shift, China’s long-anticipated rise to surpass the United States as the world’s preeminent economic powerhouse has been cast into doubt. A recent analysis by Bloomberg Economics presents a sobering projection: China’s Gross Domestic Product (GDP) is now foreseen to outstrip that of the U.S. only in the mid-2040s, and even then, by the narrowest of margins, before potentially receding.
This adjustment in economic fortunes marks a stark departure from pre-pandemic expectations that China could attain and maintain global economic supremacy as early as the coming decade.
“The People’s Republic of China is navigating a course towards a decelerated growth trajectory sooner than initially anticipated,” remark Bloomberg Economists in their erudite research memorandum on Tuesday. “The post-Covid resurgence has ebbed, reflecting the resonance of a profound property market downturn and a waning trust in Beijing’s stewardship of the economic realm. This frailty in confidence threatens to become ingrained, posing a lasting drag on prospective growth.”
The economists now envisage China’s colossal economy, the world’s second-largest, tapering to a mere 3.5% growth rate in 2030, dwindling to approximately 1% by the distant horizon of 2050. These metrics pale in comparison to previous prognostications of 4.3% and 1.6%, respectively.
China’s economy saw modest expansion of 3% last year, registering one of its most lethargic growth phases in decades, buffeted by stringent pandemic control measures and a cavernous property market crisis. While the nation’s gradual reopening once held promise of economic rejuvenation this year, the recovery has faltered with plummeting exports and a deepening real estate slump. Bloomberg’s cadre of economists has further trimmed their growth forecasts for 2024, positioning them significantly below the 5% threshold.
This revised outlook unfolds against a backdrop of global recalibration concerning China’s potential peak in influence, if not outright decline.
The United States and the Group of Seven nations are increasingly scrutinizing deep-seated structural concerns within China, discerning opportunities that may fortify the West’s standing vis-a-vis a diminishing geopolitical adversary, all while pondering the far-reaching repercussions of this deceleration. The present perturbations have already sent shockwaves through commodities and equities markets.
China confronts profound, enduring challenges as well. Last year, it documented its first population decline since the 1960s, raising apprehensions about dwindling productivity. Regulatory crackdowns have sapped confidence, alongside simmering geopolitical frictions with the U.S. and other Western governments.
In stark contrast, the United States seems to be positioned more favorably than prognostications from just a few months ago had indicated. A robust labor market, resolute consumer spending, and moderating inflation have bolstered confidence in the economy’s ability to avert a recession, at least for the time being.
Bloomberg Economics appraises the prospective growth rate for the United States at 1.7% for the years 2022-2023, with extended forecasts painting a gradual descent to 1.5% by 2050.
Bloomberg’s economists assert that the optimism surrounding China’s medium-term growth trajectory remains tethered to the “prodigious scale of its economy, considerable room for convergence with global technology vanguards, and the unwavering development focus of the government.” Nevertheless, they underscore that these impetuses are “now functioning with diminished vigor.”