In a striking turn of events, China may fall short of ever becoming the world’s largest economy, says Bloomberg Economics. The forecasters predict a brief moment of glory in the mid-2040s when China’s Gross Domestic Product (GDP) may momentarily outpace that of the United States, but the lead is expected to be by a slim margin and short-lived. This outlook, the result of China’s ongoing economic struggles, has emerged two-thirds into a tough 2023, marked by the country’s stringent zero-COVID lockdowns that have lasted nearly three years.
China’s economic turmoil is underscored by its second-quarter GDP growth of 2023, which significantly underperformed the forecasters’ projections, and a severe real estate crisis threatening to topple local property giants like Country Garden. As a result of this flurry of disheartening data, US President Joe Biden has labeled China’s economy a "ticking time bomb," with several strategists warning that the current downturn could trigger a slump that hampers global growth.
China May Not Outpace U.S. as the World’s Largest Economy
According to a recent forecast by Bloomberg Economics, China’s struggles to reignite growth and stabilize its crisis-stricken property sector indicate it may never permanently surpass the U.S. as the world’s largest economy.
A Brief Surpass But Not Permanent
Bloomberg Economics predicts that China’s Gross Domestic Product (GDP) will briefly outpace the U.S.’s in the mid-2040s, only by a small margin, before falling back behind. The economic forecast comes amidst a challenging 2023 for China, revealing the country’s economic struggles following almost three years of stringent zero-COVID lockdowns.
Economic Struggles Highlighted
In July, China’s second-quarter GDP growth fell significantly short of forecasters’ expectations. Simultaneously, Beijing is grappling with deflation and a severe real-estate crisis threatening to topple several local property giants, including Country Garden. This cascade of negative data has led to U.S. President Joe Biden labeling China’s economy a "ticking time bomb." Several strategists have also warned that the current downturn in China could spiral into a slump, impacting global growth.
Fading Confidence and Slower Growth
Bloomberg Economics noted, "The post-Covid rebound has run out of steam, reflecting a deepening property slump and fading confidence in Beijing’s management of the economy. Weak confidence risks becoming entrenched – resulting in an enduring drag on growth potential." Economists, who initially predicted China overtaking the U.S. in the 2030s, now believe GDP growth in the world’s most populous country will slow from its current level of over 6% to just 1% by 2050, revised down from an earlier prediction of 1.6%.
The forecast from Bloomberg Economics highlights the economic challenges China faces and its impact on the global economic landscape. Despite its current status as the world’s second-largest economy, the likelihood of China permanently surpassing the U.S. appears to be diminishing. These findings underscore the importance of economic stability and confidence in a country’s economic management. As China’s economic struggles continue, the global economy may feel the effects, emphasizing the interconnected nature of today’s global economies.