Why won´t CHINA OVERTAKE the U.S. as planned? 2022-23
In 2021, the united states was still the world’s largest economy, six trillion dollars ahead of china, measured in terms of nominal GDP. For some years now, Chinese communist party leaders have been doing their best to portray the country as the next great power. CHINA OVERTAKE the U.S.
They promote this idea as inevitable. According to the narrative of the Chinese leadership, the east rises and the west falls. However, there are several reasons to think that it is difficult for china’s economy to surpass that of the united states, mainly because it is unlikely to continue to grow at the pace of the last decades, and this, in turn, has several reasons. CHINA OVERTAKE the U.S.
So the questions are. Why is china not likely to be the largest economy as predicted? Why is china moving away from the path that lifted it out of poverty, and why is much of the rest of the world now so distrustful of china? Three decades ago, japan was also seen as a potential candidate to overtake the united states and become the dominant economic power in the 1960s. CHINA OVERTAKE the U.S.
The Japanese economy grew at rates of up to 12 percent, but after a stock market bubble burst, followed by a crisis in the real estate sector expectations that japan would overtake us faded completely. There are reasons to believe that china could follow japan’s path first because china’s growth had slowed since the 1990s.
China had economic growth rates as high as 14 percent, while the u.s did not exceed 4.7 percent. However, that wide disparity in growth narrowed in the 1990s. China’s growth was as high as four times that of the u.s, but since 2012, that gap has been narrowing. Secondly, because the real estate sector has been key to maintaining high economic growth in china, but in 2021, the
world learned that this sector was highly indebted thanks to the news of the default on financial obligations by overground, the largest developer of real estate projects in that country this was a severe blow to china because local government revenues depend largely on the sale of land which they previously expropriate and which is leased or sold to real estate developers for the construction of projects by the end of 2021. CHINA OVERTAKE the U.S.
As a consequence of this real estate crisis, land sales fell by more than 30 percent, putting the finances of many provinces, cities, and cantons at risk, in addition, 10 to 15 percent of localities, revenues come from taxes related to the construction of such projects. So the decline of one of the sectors with great weight in economic growth is another reason to consider that china does not have such a promising future as it did a few years ago. CHINA OVERTAKE the U.S.
A third reason is the aging of its population. According to the London-based, consulting firm capital economics, china’s labor force is expected to shrink by more than 0.5 percent by 2030, while the u.s labor force will increase over the next 30 years, thanks mainly to immigration. china overtake the us
On the one hand, in china, the fertility rate began to decline in 1965. In that year there was a rate of 6.3 births per woman in 1982 it was 2.5, and today that rate is even lower. This large drop was due to population control measures such as the one-child policy, which imposed fines on most couples, who had more than one child. CHINA OVERTAKE the U.S.
On the other hand, according to u.n criteria, an aging society occurs when the population over 65 years of age represents more than seven percent of the total population, and china has already reached that figure of seven percent since 2000. CHINA OVERTAKE the U.S.
Thus, as fewer births are taking place, the proportion of the elderly population is increasing, and this aging of the population translates into a smaller labor force precisely one of the factors behind the Asian country’s high economic growth rates was its abundant labor force and, even though Chinese leaders already recognized the problem and eliminated in 2015 the one child per couple policy, it seems that it is already too late to raise the birth rate as the country needs. CHINA OVERTAKE the U.S.
It is even expected that by 2030 china’s population will start to decline. One might think that this is not only china’s problem but also that of many other countries, which is true. The difference is that China will have to cope financially with this phenomenon at an early stage of economic development, for example. CHINA OVERTAKE the U.S.
Germany also has an aging population problem, but the average wealth of an elderly person in Germany is very different from that of an elderly person in china. In Asian countries, this population group is more vulnerable and therefore more dependent on the state. CHINA OVERTAKE the U.S.
Therefore, the lower economic growth, the high indebtedness of a key sector such as construction, and the aging of its population, are some of the reasons why china’s economy could not surpass that of the united states. There is another, broader reason that also supports this idea, and that is that china is moving further and further away from the path that brought it out of poverty, which was the path of accepting the private sector as a source of progress and economic growth. china overtake the us
As mentioned in this, another video of the channel china began to move out of poverty when Deng Xiaoping was dismantled. The collective agricultural communes removed prohibitions on private enterprise and experimented with the creation of special economic zones which allowed the birth of individual initiatives by Chinese farmers and micro-entrepreneurs.
In contrast, mao ze tung’s ideas in the 1960s focused on achieving an egalitarian society where the state controlled everything and planned the economy and people’s lives. It was the time when tens of millions of people starved to death and these ideals are the ones that Xi Jinping? The current president of china is seeking to recover again, who is imposing an increasingly ideological and totalitarian style of government in which he is further deepening the dominant position of the communist party and the state, both in the economy and in the behavior of citizens. CHINA OVERTAKE the U.S.
In its aim to reassert the dominance of the Chinese communist party, it has already gone against technology giants such as Alibaba, which was not allowed to go public because its owner jack ma criticized Chinese banks. It also removed the ride-hailing app dd global from the new york stock exchange. It is also weakening the social media influence of Chinese celebrities for going against the ideals of the communist party. CHINA OVERTAKE the U.S.
The government is channeling credit to state-owned enterprises while ignoring private industry introducing state agents into enterprises and as if that were not enough banning part of the private education sector from making a profit. CHINA OVERTAKE the U.S.
In other words, xi. Jinping only tolerates the private sector as long as it serves the interests of the state. This ideology, which prefers control and stability over economic growth and entrepreneurial freedom, means moving away from the pragmatism applied in the past by Deng Xiaoping,
who still had a socialist ideology but allowed capitalism to flourish and open china’s doors to the world today, everything seems to be going against these developments, because china is increasingly closing itself off from part of the rest of the world and at the same time, the international environment has become much more restrictive for china. CHINA OVERTAKE the U.S.
China’s reputation has deteriorated even though, a few years ago, almost everyone saw china as a major player in world trade and the world economy. However, the lack of transparency about the origin of the virus and the imposition of the security law in hong kong began to fuel international distrust.
And in this context, the united states has imposed sanctions on key sectors such as advanced semiconductors, which has diminished Huawei’s ability to manufacture its own 5g phones, contrary to what is happening in 2019, when this company dominated the world’s 5g networks. CHINA OVERTAKE the U.S.
Today, according to its president, the company’s goal is to survive. In conclusion, the forecast that China will overtake the united states as the world’s largest economy is losing credibility, not only for the reasons mentioned above but also because there are doubts about the reliability of the official figures provided by china on its economic growth. CHINA OVERTAKE the U.S.
A study by economists from the Chinese university of hong kong and the university of Chicago suggests that between 2010 and 2016, china’s true GDP growth was about 1.8 percentage points below what the official figure said. So if this is true, overtaking the united states will be even more difficult.