China economy overtaking U.S. is increasingly unlikely: ex-IMF official (2024)

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China economy overtaking U.S. is increasingly unlikely: ex-IMF official? ›

"The likelihood of the prediction that China's GDP will one day overtake that of the U.S. is declining," Eswar Prasad, a professor at Cornell University and a former International Monetary Fund official in charge of China, told Nikkei

Assuming a 5 percent annual growth rate, China might not overtake the United States until 2035. Some analysts even argue that China's economy may never surpass that of the United States.

China has shown remarkable leadership in helping forge the agreement to increase the IMF's permanent resources by 50 percent. We also recognize China's important role in addressing debt distress in emerging and developing economies.

The counterintelligence and economic espionage efforts emanating from the government of China and the Chinese Communist Party are a grave threat to the economic well-being and democratic values of the United States. Confronting this threat is the FBI's top counterintelligence priority.

For example, many U.S. companies source products from China. During the height of the COVID-19 pandemic, this created supply chain constraints as portions of China's economy were virtually shut down. That had a negative impact on business activity for some U.S. companies dependent on Chinese suppliers.

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.

US Is Still World's Biggest Economy as It Extends Lead Over China - Bloomberg.

Overall, China appears to operate as a real, but limited, alternative to the IMF. The effects of its emergency lending are substantial in certain countries desperate to avoid another IMF program, but probably not enough to pressure the Fund to reform.

China has little overseas debt, and a high national savings rate. In addition, most of the debt is state owned – state-controlled banks loaned funds to state-controlled firms – giving the government the ability to manage the situation.

No country owes the Fund more money than Argentina, Egypt and Ukraine. The total global outstanding debt owed to the IMF stood at $149bn on April 2 2024, or 112.9bn special drawing rights (SDRs), as its loan portfolio has expanded following a number of recently agreed bailouts for ailing developing economies.

How much is the U.S. dependent on China? ›

China's Share in U.S. – World Trade

China has the third largest share in U.S.–World Trade following Mexico and Canada. In 2021, 8.6% of total U.S. exports of $1.8 trillion to the World were exported to China and 17.9% of total U.S. Imports of $2.8 trillion were imported from China.

In recent years, tensions between the United States and China have introduced new challenges—especially related to economic and defense issues. China is a major trading partner for the United States but it is also developing its military capabilities, which poses challenges to the U.S. military.

Third, along the middle case path, Chinese GDP surpasses US GDP in the mid-2030s, a little more than a decade hence.

It's very likely that goods prices in the US will go high. China is still an important trade partner for the United States. In the first five months of the year, China exported goods worth over 1.3 trillion yuan, over 182 billion dollars and China's imports from the US were more than 500 billion yuan.

China is one of the United States's largest creditors, owning about $859.4 billion in U.S. debt. 1 However, it does not own the most U.S. debt of any foreign country. Nations borrowing from each other may be as old as the concept of money.

According to the report, China will overtake the US as the world's top economy in about 2035 with a high probability, if it maintains GDP growth of about 5 percent annually in the next few years, and at least 4 percent growth until 2035.

Over the next five years China and its major cities face the prospect of a significant downshift in economic growth. We forecast GDP to grow on average by 4.1% per year across 15 major cities in the years to 2028, down from 7.3% between 2015-2019.

India is currently the fastest-growing major economy in the world and it is expected to become the world's third-largest economy by 2032. It has the potential to eventually surpass China and the United States to become the “world's largest economic superpower” by the end of this century.

Based on conservative assumptions, the Lowy study concludes that the most likely outcome is a deceleration to 2%-3% average annual growth in real Chinese GDP through 2050, but doesn't rule out rates of up to 5%. These averages include higher early growth rates and declining ones later.