China’s gross domestic product (GDP) has been closing in on that of the United States for some time. There are predictions that China will become the number one economy in the world within a decade or two. By some measures, that already has happened.
As China announced its 2017 GDP growth, the closing of the gap became evident again. China does not, however, have a completely trouble-free path to get there.
The National Bureau of Statistics of China reported:
According to the preliminary estimation, the gross domestic product (GDP) of China was 82,712.2 billion yuan in 2017, an increase of 6.9 percent at constant price compared with last year. Specifically, the year-on-year growth of GDP for the first quarter was 6.9 percent, 6.9 percent for the second quarter, 6.8 percent for the third quarter, and 6.8 percent for the fourth quarter.
The figures also showed a rotation from China’s long-term strength of manufacturing to a more service-based economy. Manufacturing activity rose 6.6%. That was up from 6.0% in 2016. However, the service sector grew by 8.2%, up from 8.1% growth last year
By contrast, the U.S. economy has grown by 3.0% recently, more rapidly than many economists expected. However, that growth is expected to slow to 2.5% in 2018.
China’s GDP on a nominal basis was $11.2 trillion in 2016, compared to the United States at $18.6 trillion. The Centre for Economics and Business Research recently speculated that the Chinese economy will pass the United States in 2032. It is a guess, but perhaps as good as any.
Most analysis of China’s GDP future growth does not take into account some factors that could derail it. Among those is pollution, both air and water, which is responsible for more and more deaths each year. China may have to slow the expansion of some companies in its manufacturing sector to cut the growth of this problem. There is speculation that trouble with the balance sheets at banks and the debt that many of China’s companies carry may cause a buckling of the economy. And while the political system in China is stable today, that may not be true a decade from now.
China’s GDP may well catch that of the United States at its current rate of growth. It will have to clear some high hurdles to get there.