1. Home >
  2. Export Import News >
  3. Economy News >
  4. China could outrun US next year or never: Expert >
  5. China could outrun US next year or never: Expert

Online Export Import Data Search

Recent Searches: No Recent Searches
Complete Training Video : Click Here

China could outrun US next year or never: Expert.

Date: 09-03-2019
Subject: China could outrun US next year or never: Expert
Remember when Japan was going to become the world’s biggest economy?

Don’t laugh. Herman Kahn, the Rand Corp. futurist who partly inspired the character of Dr. Strangelove, predicted as far back as 1970 that Japan’s gross domestic product would overtake the U.S. around the year 2000.

Decades later, his prediction still seemed on track. Thanks in part to the strength of the yen, Japan was just months away from matching the U.S. in GDP terms, one 1995 Los Angeles Times article predicted. Halfway through that country’s lost decade, it’s hard to believe that this wasn’t a fringe view – but it was nonetheless the subject of an essay in the august Foreign Policy magazine and a well-received accompanying book.

If you extrapolated early-1990s growth rates on a chart, indeed, the forecast seemed almost irrefutable – but that’s ultimately a lesson about the hazards of extrapolating lines on charts.

As my colleague Daniel Moss has argued, we should heed that mistake every time we predict that China is on the brink of a similar coup.

China’s official figures for the size of its economy are about 16 percent larger than they should be, and measures of real GDP growth were overstated by about 2 percentage points between 2008 and 2016, according to a study published by the Brookings Institution Thursday. Combined with the country’s own downgrade of its GDP growth for this year to a range of between 6 percent and 6.5 percent earlier in the week, that represents a sort of profit warning for the hchineconomy.

It’s worth reflecting that this particular stock has already had its share of analyst downgrades. Back in 2010, Standard Chartered Plc was predicting that China’s economy would overtake the U.S. by 2020, and would be nearly twice the size by 2030. Four years later, IHS Markit Economics forecast the tipping point would come the same 10 years into the future, in 2024.

Those forecasts seem fanciful in the light of the way China’s economy has slowed – and America’s has accelerated – during the era of President Xi Jinping. At market exchange rates and current prices, U.S. GDP was $20.54 trillion in 2018, about 60 percent larger than China’s $13.09 trillion.

That just shows how misleading extrapolations can be. If you had inflated China’s 2011 GDP at the 8 percent rate then considered the minimum politically tolerable, and grew America’s at its then-10 year average of 1.8 percent, you’d have put the tipping point around 2023. Do the same forecast now with China’s growth at the 6-percent end of the official forecast band, and the U.S. would still be seen falling behind in 2028, roughly in line with Goldman Sachs Group Inc.’s Jim O’Neill’s longtime forecast.

What happens, though, if we see the U.S. growing from here at its 20-year average rate of 2.2 percent, and apply Brookings’ adjustments to China’s current GDP and growth-rate forecasts? In that eventuality, China’s GDP continues to trail the U.S. all the way out to 2050.

By that time, demographic factors will be weighing heavily against catch-up growth. China’s workforce, nearly five times the size of America’s at present, will only be a bit more than three times as large, meaning total factor productivity will have to be growing still faster to close the gap – and all the evidence is that, to the contrary, it’s been contracting.

That’s not a reason to count China out. For one thing, as my colleague Noah Smith has written, it’s already the larger economy according to purchasing-power parity (a way of adjusting for the fact that the same income buys a higher standard of living in China).

For another, such measures are heavily influenced by exchange rates, one reason Japan seemed so mighty when the yen was nearing 80 cents in the mid-1990s. On top of that, as Bloomberg Intelligence economist Tom Orlik argued Friday, China’s official GDP numbers may be more robust these days than Brookings is giving them credit for.

Most importantly, though, it’s a lesson that numbers like these aren’t really a solid-enough foundation for building such grand strategic narratives, however tempting it is to do so. Even at its current scale, China is a scant 15 percent of the global economy, and it’s unlikely to crack more than 20 percent at market exchange rates in the foreseeable future.

Fretting over adjustments to long-run economic forecasts is really just a proxy for our deeper anxieties about the fracturing of democracy in Western countries and the growing confidence of authoritarian governments from Beijing and Brasilia to Moscow and Ankara. If we want to ensure the international liberal order survives another century, we’d do much better to focus on those real problems in the present, rather than fixate on the impending doom of an imagined future.

Source: financialexpress.com

Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Exim Help

What is New?

Date: 24-01-2020
Notification No. 01/2020-Customs (ADD)
seeks to amend notification No. 40/2017-Customs(ADD) dated 25-08-2017, to revise anti-dumping duty on imports of "Sodium Nitrite" originating in or exported from China PR, in pursuance of final findings of sunset review investigations issued by DGTR vide notification No. 15/06/2016-DGTR dated the 8th November 2019..

Date: 23-01-2020
A.P. (DIR Series) Circular No.20
Merchanting Trade Transactions (MTT) – Revised Guidelines

Date: 23-01-2020
A.P. (DIR Series) Circular No.19
‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt – relaxations

Date: 23-01-2020
A.P. (DIR Series) Circular No.18
Investment by Foreign Portfolio Investors (FPI) in Debt

Date: 21-01-2020
Circular No. 4/2020 – Customs
Clarification relating to import of gifts - Reg

Date: 20-01-2020
A.P. (DIR Series) Circular No.17
Introduction of Rupee derivatives at International Financial Services Centres (IFSC)

Date: 17-01-2020
TRADE NOTICE NO. 46/2019-20
Mis-classification goods under 'Others' category at the time of Import- reg.

Date: 16-01-2020
Notification No.05/2020 - Customs (N.T.)
Exchange Rates Notification No.05/2020-Custom (NT) dated 16.01.2020.

Date: 15-01-2020
Notification No. 03/2020- Customs (N.T.)
Notification of Ghasuapara LCS for imports also by amendment of Notification No. 63/1994-Customs dated 21st November 1994

Date: 15-01-2020
Notification No. 04/2020-CUSTOMS (N.T.)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver - reg.

Exim Guru Copyright © 1999-2020 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.


C/o Infodrive India
E-2, 3rd Floor, Kalkaji Main Road
New Delhi - 110019, India
Phone : 011 - 40703001