China’s Economy Will Catch US in 2034?

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Some Chinese economists believe their country will catch the United States in total gross domestic product (GDP) within 37 years. Their calculation is based on an annual growth rate of 6.6% for China’s GDP. That is an optimistic assumption.

The results of the research were posted in the government controlled People’s Daily Online, which described the methodology:

The survey was published on June 14 in the bi-monthly journal China Economist. The survey collected 131 questionnaires for analysis. It is conducted every quarter, administered to investment banks, research institutes and respected economists.

The People’s Daily added:

The survey also reflects Chinese economists’ optimistic attitude toward the country’s future competitiveness, which derives partly from their confidence in the government. A total of 35.2 percent of economists said China’s debt is more sustainable than that of the U.S., as China’s debt-to-GDP ratio is relatively low, while the country’s GDP growth rate is fairly high.

Forecasts that cover the period of decades are notoriously spectacular and hard to support. The China Economist makes the impossible to support assumption that it can not only forecast China’s GDP, but also that of the United States. The U.S. number has been as high as 4.7% in the past two decades, posting that rate in 1999. Recently, government and economist forecasts have been closer to 2.0% to 2.5%. However, the number of factors that go into the figure, primarily consumer spending, which is two-thirds of the number, can fluctuate well above or below most forecasts. Recent spending on autos have helped drive GDP higher. Rising real estate prices and an unemployment rate at 4.3% could swell consumer confidence.

A forecast of China GDP is equally hard. Among the reasons is that there is suspicion among a number of observers that China inflates its numbers. Another is that China’s exports are critical to its GDP and any slowing of the global economy can undermine that. Finally, consumer spending has become a growing part of China’s GDP, and it is impossible to predict whether this consumer confidence will continue to surge.

The China Economist is good reading, but that is about all.