China’s crushing debt levels, ageing population and an ongoing property crisis means it may never surpass the US to become the world’s largest economy, according to a leading investment bank.
Nathan Sheets, global chief economist at Citi and a former US Treasury official in the Obama administration, said it was no longer “inevitable” that the size of the Chinese economy would surpass the US after Beijing lost major ground over the past two years.
Mr Sheets pointed out that China had in fact shrunk in comparison to the US. China’s economy is now equivalent to 65pc of America’s GDP, down from 75pc in 2021.
The Wall Street economist said many of the factors that powered China’s rise to become a global economic superpower over the past two decades were now fading.
The benefits of urbanisation, where millions of workers moved from the countryside to the cities, is now largely “tapped”, for instance. The country also has an ageing population, with almost a third expected to be over 60 by 2040 according to the World Health Organisation.
A debt-fuelled construction boom that helped power the domestic economy has also ground to a halt. Earlier this week a Hong Kong judge ordered the liquidation of Chinese developer Evergrande, the world’s most indebted property company, in a symbolic embodiment of the unravelling.
China’s crushing debt levels, ageing population and an ongoing property crisis means it may never surpass the US to become the world’s largest economy, according to a leading investment bank.
Nathan Sheets, global chief economist at Citi and a former US Treasury official in the Obama administration, said it was no longer “inevitable” that the size of the Chinese economy would surpass the US after Beijing lost major ground over the past two years.
Mr Sheets pointed out that China had in fact shrunk in comparison to the US. China’s economy is now equivalent to 65pc of America’s GDP, down from 75pc in 2021.
The Wall Street economist said many of the factors that powered China’s rise to become a global economic superpower over the past two decades were now fading.
The benefits of urbanisation, where millions of workers moved from the countryside to the cities, is now largely “tapped”, for instance. The country also has an ageing population, with almost a third expected to be over 60 by 2040 according to the World Health Organisation.
A debt-fuelled construction boom that helped power the domestic economy has also ground to a halt. Earlier this week a Hong Kong judge ordered the liquidation of Chinese developer Evergrande, the world’s most indebted property company, in a symbolic embodiment of the unravelling.
Mr Sheets, who served as the under secretary for international affairs at the US Treasury under President Obama, forecast that China’s economy would average growth of 4pc over the medium term, down from 10pc before the financial crisis.
He said: “Challenges loom from high-debt levels, stresses in the property sector, ageing demographics, and geopolitical headwinds.
“The government has responded by seeking to foster advanced manufacturing, high-tech production, and green infrastructure. But whether this push will be sufficient is an open question.”
Setbacks over the past two years suggest the Chinese economy will now only overtake the US in the “early 2040s”, Citi said. Just a year ago, the bank believed it would become the world’s largest “in the mid-2030s”.
Mr Sheets said it was now “plausible” that China’s economy may not overtake the US “until 2080”. He added: “We now believe that Chinese overtaking is ‘likely’ but we no longer see it as ‘inevitable’.”
Analysts have predicted for years that China would surpass the US as the world’s biggest economy thanks to its rapid growth rates and slowing expansion in the West.
Goldman Sachs began speculating in 2003 that China could overtake the US by 2041.
At the time, China was just 15pc of the size of the US. However, its economy grew rapidly after joining the World Trade Organisation (WTO) at the start of the millennium. As a result, many observers began to predict that China could overtake the US this decade.
However, Beijing’s zero-Covid policies have driven a major slowdown in recent years. Attitudes towards Beijing have also hardened in Congress, with both Republicans and Democrats calling for economic and financial ties with China to be severed, including the removal of the low tariffs introduced on Chinese goods when it joined the WTO.
I mean, isn’t that basically the equivalent of, “We cannot accurately predict when or if it will ever happen, but we know our earlier predictions were wrong”?
No one in 1924 was predicting correctly where China’s economy was going to be by the end of the 20th Century. The science of economics has made some progress since then, but no one today really knows what’s going to happen to China between now and 2080. Or the United States, for that matter. The fundamentals of the US economy are going to remain so rigid 60 years from now that we can predict when China will rally and pass it? This is just analysts playing with their models like kids playing with action figures, making up their own stories as they go.
“Ageing population”
They meant to say population collapse. The impact of which could be devastating. 2080? We shall see about that.
*”China’s economy may or may not improve,*” said the economist.
**MARCH**
March 2080.
Any forecasting beyond 30 years is useless. In 30 years we don’t even know how technology, business, and trade would change. At best, we can make educated guesses about what tech is currently in laboratories to be in the field. That’s all.
I think US economy is actually way larger than what statistics like GDP or GNP etc shows.
Due to the supremacy of USD as the international currency for trading the USA can export huge part of domestic inflation and thus indirectly controls a lot of “hidden” wealth.
Moreover, those mega US MNCs controlling a large chunk of global economy are also part of their “hidden” economy.
You can’t really measure the US economy just by simple GDP stats.
N.B. : China also trying to do such things by their belt and road thing.
Did someone tell Ray Dalio?
China will – never – overtake the United States. They are a decadent country of IP thieves who stir trouble in the democrecies of the world, never creating their own things, oppressing their people and causing trouble. Unemployment and homelessness are skyrockeing to the point where China no longer even reports it’s statistics anymore. China will be a basketcase country within 10 years and India will overtake it within our lifetime.
It’s cute that there’s people confident enough to make that kind of long-term prediction. In 60 years maybe neither China nor the US will exist in their current forms.
predicting economy is like predicting the weather.
You can look outside and see that is raining, but if you tell someone that it will be a sunny day at April 9th, 2038, you gonna get laughed at
How is China *ever* going to overtake the US when their women are having about 1 baby on average, and hardly anyone wants to immigrate there due to their totalitarianism?
So, never then. Just a few years ago it was 2030. By 2050 China will be in steep demographic collapse
It’s very unlikely to happen while the current Chinese dictatorship is controlling China
2080? How about never? Those predictions are jokes
by 2080, China’s population will be halved.
But I thought China was taking over the world by like 2030.
Depends if they end up going to war against the US over Taiwan or some such thing.
If the PRC ended up fucking around and finding out I think their economy would probably shit the bed for years to come
Yeah, it’s too far out of a prediction.
But the tide seems to have turned cause it seemed like for most of my life I was told China was going to overtake us any day now.
Basically: No one really knows anything about economies until they happen.
They aren’t going to be the same country by 2080, their demographics will be drastically different and their population will be several tens of millions of people less (maybe even 100s). If they allow more immigration into the country, they will fare better, but that’s not likely to happen. Their window for being the most powerful country in the world will probably close within the next 10-15 years. After that, they can’t do a lot to change the direction of the country.
Pooh looks really old
If ever at this point. Covid and demographics are in play along with the heavier hand of Xi which doesn’t value growth over control.
By overtaking you mean 1.3b people producing more than 330m people? That’s going to be impressive.
I.e. Never
Sabre-rattling has a cost.
I remember when I was younger I watched these videos of charts measuring stats of countries over a period of time. There was always a bunch of videos comparing military strength or economic strength of different countries and some went into the future. They always had china out growing the US in all aspects by like 2025 or 2030. I thought it was funny remembering that reading this headline.
I hope that by 2080 our kids will realize how stupid and pointless fighting with each other is.
We’ll be dealing with the early stages of global climate destabilization (worldwide) …it’ll be a very crazy world by 2080. Full on resource wars are very likely to be a thing by then. Not resource wars for oil…but for clean drinking water and arable farm land. Many, many places on Earth where people live now… will be deadzones, void of animals and most forms of life. They’ll be
uninhabitable.
Today’s societal problems will seem miniscule and a cake walk compared to what those future humans are facing. I’ll be dead by then..so keep in mind I say this as more of a warning than anything else.
28 comments
***The Telegraph reports:***
China’s crushing debt levels, ageing population and an ongoing property crisis means it may never surpass the US to become the world’s largest economy, according to a leading investment bank.
Nathan Sheets, global chief economist at Citi and a former US Treasury official in the Obama administration, said it was no longer “inevitable” that the size of the Chinese economy would surpass the US after Beijing lost major ground over the past two years.
Mr Sheets pointed out that China had in fact shrunk in comparison to the US. China’s economy is now equivalent to 65pc of America’s GDP, down from 75pc in 2021.
The Wall Street economist said many of the factors that powered China’s rise to become a global economic superpower over the past two decades were now fading.
The benefits of urbanisation, where millions of workers moved from the countryside to the cities, is now largely “tapped”, for instance. The country also has an ageing population, with almost a third expected to be over 60 by 2040 according to the World Health Organisation.
A debt-fuelled construction boom that helped power the domestic economy has also ground to a halt. Earlier this week a Hong Kong judge ordered the liquidation of Chinese developer Evergrande, the world’s most indebted property company, in a symbolic embodiment of the unravelling.
China’s crushing debt levels, ageing population and an ongoing property crisis means it may never surpass the US to become the world’s largest economy, according to a leading investment bank.
Nathan Sheets, global chief economist at Citi and a former US Treasury official in the Obama administration, said it was no longer “inevitable” that the size of the Chinese economy would surpass the US after Beijing lost major ground over the past two years.
Mr Sheets pointed out that China had in fact shrunk in comparison to the US. China’s economy is now equivalent to 65pc of America’s GDP, down from 75pc in 2021.
The Wall Street economist said many of the factors that powered China’s rise to become a global economic superpower over the past two decades were now fading.
The benefits of urbanisation, where millions of workers moved from the countryside to the cities, is now largely “tapped”, for instance. The country also has an ageing population, with almost a third expected to be over 60 by 2040 according to the World Health Organisation.
A debt-fuelled construction boom that helped power the domestic economy has also ground to a halt. Earlier this week a Hong Kong judge ordered the liquidation of Chinese developer Evergrande, the world’s most indebted property company, in a symbolic embodiment of the unravelling.
Mr Sheets, who served as the under secretary for international affairs at the US Treasury under President Obama, forecast that China’s economy would average growth of 4pc over the medium term, down from 10pc before the financial crisis.
He said: “Challenges loom from high-debt levels, stresses in the property sector, ageing demographics, and geopolitical headwinds.
“The government has responded by seeking to foster advanced manufacturing, high-tech production, and green infrastructure. But whether this push will be sufficient is an open question.”
Setbacks over the past two years suggest the Chinese economy will now only overtake the US in the “early 2040s”, Citi said. Just a year ago, the bank believed it would become the world’s largest “in the mid-2030s”.
Mr Sheets said it was now “plausible” that China’s economy may not overtake the US “until 2080”. He added: “We now believe that Chinese overtaking is ‘likely’ but we no longer see it as ‘inevitable’.”
Analysts have predicted for years that China would surpass the US as the world’s biggest economy thanks to its rapid growth rates and slowing expansion in the West.
Goldman Sachs began speculating in 2003 that China could overtake the US by 2041.
At the time, China was just 15pc of the size of the US. However, its economy grew rapidly after joining the World Trade Organisation (WTO) at the start of the millennium. As a result, many observers began to predict that China could overtake the US this decade.
However, Beijing’s zero-Covid policies have driven a major slowdown in recent years. Attitudes towards Beijing have also hardened in Congress, with both Republicans and Democrats calling for economic and financial ties with China to be severed, including the removal of the low tariffs introduced on Chinese goods when it joined the WTO.
**Read more: https://www.telegraph.co.uk/business/2024/01/31/china-never-overtake-usa-worlds-biggest-economy-citi/**
I mean, isn’t that basically the equivalent of, “We cannot accurately predict when or if it will ever happen, but we know our earlier predictions were wrong”?
No one in 1924 was predicting correctly where China’s economy was going to be by the end of the 20th Century. The science of economics has made some progress since then, but no one today really knows what’s going to happen to China between now and 2080. Or the United States, for that matter. The fundamentals of the US economy are going to remain so rigid 60 years from now that we can predict when China will rally and pass it? This is just analysts playing with their models like kids playing with action figures, making up their own stories as they go.
“Ageing population”
They meant to say population collapse. The impact of which could be devastating. 2080? We shall see about that.
*”China’s economy may or may not improve,*” said the economist.
**MARCH**
March 2080.
Any forecasting beyond 30 years is useless. In 30 years we don’t even know how technology, business, and trade would change. At best, we can make educated guesses about what tech is currently in laboratories to be in the field. That’s all.
I think US economy is actually way larger than what statistics like GDP or GNP etc shows.
Due to the supremacy of USD as the international currency for trading the USA can export huge part of domestic inflation and thus indirectly controls a lot of “hidden” wealth.
Moreover, those mega US MNCs controlling a large chunk of global economy are also part of their “hidden” economy.
You can’t really measure the US economy just by simple GDP stats.
N.B. : China also trying to do such things by their belt and road thing.
Did someone tell Ray Dalio?
China will – never – overtake the United States. They are a decadent country of IP thieves who stir trouble in the democrecies of the world, never creating their own things, oppressing their people and causing trouble. Unemployment and homelessness are skyrockeing to the point where China no longer even reports it’s statistics anymore. China will be a basketcase country within 10 years and India will overtake it within our lifetime.
It’s cute that there’s people confident enough to make that kind of long-term prediction. In 60 years maybe neither China nor the US will exist in their current forms.
predicting economy is like predicting the weather.
You can look outside and see that is raining, but if you tell someone that it will be a sunny day at April 9th, 2038, you gonna get laughed at
How is China *ever* going to overtake the US when their women are having about 1 baby on average, and hardly anyone wants to immigrate there due to their totalitarianism?
So, never then. Just a few years ago it was 2030. By 2050 China will be in steep demographic collapse
It’s very unlikely to happen while the current Chinese dictatorship is controlling China
2080? How about never? Those predictions are jokes
by 2080, China’s population will be halved.
But I thought China was taking over the world by like 2030.
Depends if they end up going to war against the US over Taiwan or some such thing.
If the PRC ended up fucking around and finding out I think their economy would probably shit the bed for years to come
Yeah, it’s too far out of a prediction.
But the tide seems to have turned cause it seemed like for most of my life I was told China was going to overtake us any day now.
Basically: No one really knows anything about economies until they happen.
They aren’t going to be the same country by 2080, their demographics will be drastically different and their population will be several tens of millions of people less (maybe even 100s). If they allow more immigration into the country, they will fare better, but that’s not likely to happen. Their window for being the most powerful country in the world will probably close within the next 10-15 years. After that, they can’t do a lot to change the direction of the country.
Pooh looks really old
If ever at this point. Covid and demographics are in play along with the heavier hand of Xi which doesn’t value growth over control.
By overtaking you mean 1.3b people producing more than 330m people? That’s going to be impressive.
I.e. Never
Sabre-rattling has a cost.
I remember when I was younger I watched these videos of charts measuring stats of countries over a period of time. There was always a bunch of videos comparing military strength or economic strength of different countries and some went into the future. They always had china out growing the US in all aspects by like 2025 or 2030. I thought it was funny remembering that reading this headline.
I hope that by 2080 our kids will realize how stupid and pointless fighting with each other is.
We’ll be dealing with the early stages of global climate destabilization (worldwide) …it’ll be a very crazy world by 2080. Full on resource wars are very likely to be a thing by then. Not resource wars for oil…but for clean drinking water and arable farm land. Many, many places on Earth where people live now… will be deadzones, void of animals and most forms of life. They’ll be
uninhabitable.
Today’s societal problems will seem miniscule and a cake walk compared to what those future humans are facing. I’ll be dead by then..so keep in mind I say this as more of a warning than anything else.