China’s economy to overtake that of the US by 2030 (despite the Ukrainian crisis)
Justin Lin Yifu, a former World Bank vice president, makes the prediction. The effects of the war in Ukraine will impact China as well as the US. For Lin, the Chinese economy still has strong untapped potential; however, foreign investors just sold Chinese bonds worth US$ 10.6 billion.
Beijing (AsiaNews) – The Russian invasion of Ukraine will not prevent China from becoming the world's leading economy by 2030, overtaking the United States, this according to Justin Lin Yifu, a former vice president of the World Bank.
Now a professor at Peking University and economic adviser to the government, Lin spoke at a meeting with Chinese lawmakers, currently involved in the “two sessions" (Lianghui), the annual plenary sessions of the National People’s Congress and the Chinese People’s Political Consultative Conference. The two bodies confirm decisions already taken by President Xi Jinping and the leaders of the Communist Party of China.
According to Lin, the war in Ukraine will have an impact on the Chinese economy, but also on that of the United States. Inflation will be the biggest problem as the price of raw materials steadily rises after the West imposed major sanctions on Russia.
The Development Research Centre, an agency of the State Council, estimates that China will overtake the United States around 2032. Lin’s forecast expects it to do so earlier than that.
According to a recent study by the Japan Center for Economic Research in Tokyo, China will become the largest economy in the world in 2033.
Lin's optimistic assessment is based on China’s still unfulfilled economic potential, with about 2-3 percentage points of growth more than the United States in the coming years.
The scholar has long argued that the China could grow by 8 per cent a year until 2035; however, the target set by the government for 2022 is 5.5 per cent, higher than the 4.8 per cent of the International Monetary Fund.
In addition to the recessionary effects of COVID-19, the anti-monopoly legislation imposed by Xi on the country’s hi-tech giants and other large private groups is harming China's growth potential, and putting a squeeze on the growth of labour productivity.
The efforts to meet the decarbonisation objectives in the fight against climate change will also weigh on GDP growth.
All this is compounded by the danger of bankruptcy for real estate giants like Evergrande and the financial restrictions introduced by the government to contain investment in construction, a sector that has hitherto been the driving force of the country’s economy.
China’s bond market is also a source of concern as foreign investors reduced their holdings by US$ 10.6 billion last month just as the Russian-Ukrainian conflict broke out.
Some experts suggest that this may be due to Russian banks seeking liquidity after the US and the EU froze a large part of the foreign exchange reserves of the Russian central bank in the wake of Russia’s aggression of Ukraine.
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09/10/2007
