‘Will China really become the world’s leading economic power?’

The tipping point in history is set, the curves are due to cross, and China will outpace the US to become the world’s leading economic power once again. But when? There was 2014, when China’s gross domestic product (GDP) expressed in purchasing power parity (PPP) overtook that of the US – the measure compares a selection of common goods and services from each economy to establish what it can buy, eliminating the impact of exchange rates. But in a world of trade, it is nominal GDP, converted into dollars, that measures the real weight of an economy in relation to others.

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The drop in growth during the Covid-19 pandemic, followed by the real estate market crisis, have left China in a tough situation: high youth unemployment, low consumption by households worried about the future, and deflation. The fragility does not prevent major breakthroughs, such as electric vehicles. According to official statistics, the economy grew by 5.2% in 2023. According to the International Monetary Fund, GDP should reach $18,560 billion (around €17,026 billion) by the end of the year.

Meanwhile, the US economy which is coming out of inflation is still at the cutting edge of technology and benefits from low-cost energy as the world’s leading oil and gas producer. It has recorded a growth of 2.5% in 2023, with a GDP of $27,970 billion. This is a far cry from the years around 2010, when China recorded 8% to 10% growth, while the United States was in recession.

Aging population

So, some dare ask: Will China really become the world’s leading economic power? They point to the Japanese example that stagnated after its meteoric rise in the 1980s. For a long time, the consensus was that the curves would cross in the 2020s and 2030s. However, at the end of 2022, economists at Citibank estimated that the date would be in the mid-2030s. Those at the Japan Centre for Economic Research, for their part, believe that China will never pass this mark, as did economist Mohamed El-Erian, President of Queens’ College, Cambridge (UK), in the Financial Times, in September 2023. London’s Centre for Economics and Business Research calculated that China would indeed become the world’s largest economy for 21 years, before the US reclaims the lead in 2057, itself to be overtaken by India around 2081. Pessimists point to China’s difficulty in making the transition to a true consumer society, and the burden of an aging population that has already reached its peak.

But do these questions have any significance for the daily lives of the Chinese? GDP per capita certainly does. It currently stands at $83,000 in the US and $13,000 in China ($24,000 PPP). If “rank” is important, it is first and foremost because the Chinese Communist Party (CCP) has made a pact with its population, reiterated by Xi Jinping at the beginning of his term: By 2049, the 100th anniversary of the People’s Republic, he will have built a “great modern socialist country,” a “strong” power. The prospect of the top of the podium is implicit.

(Source: Lemonde)