Projections that go out 15 years may not mean much. That is when China may pass the US in total GDP according to forecasts by The World Bank and other analysts.
What is true, now, today, is that China has blown by Japan as the No. 2 economy in the world. “China, in fact, is now already the world’s second-largest economy,” he said in an interview with China Reform magazine posted on the website of his agency, the State Administration of Foreign Exchange,” according to CNBC. No one appears to be disputing the claim.
China came close to passing Japan last year by most measures.
China still has a number of hurdles that could keep it from advancing toward parity with the US. One is that 11% growth could fuel tremendous inflation, if the government cannot properly monitor and control monetary policy. China also has begin to face labor unrest as workers moving from rural areas push for better wages. That could cause margin problems in China’s manufacturing sector.
China is also faced with what is likely to be pitched battle over the value of the yuan which the US and other trade partners of the People’s Republic give it an unfair trade advantage. Member of Congress are already agitating for trade sanctions.
And, China’s consumer class is expected to lift GDP by becoming a voracious group of consumers. The Chinese often lack retirement benefits, so savings have a premium over spending among much of the nation’s population.
Japan was to be the next US and early in the 1990s many experts forecast that. The markets there fell apart and plunged into deflation. Forecast that go 15 year out are often not true.
Douglas A. McIntyre
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