12/15/2022, 12.19
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No primacy for China's economy: It's overtake of the US vanishes

This is the annual forecast of the Japan Center for Economic Research. Last year the overtaking was estimated in 2033. Between 2030 and 2040 China's GDP could grow by only 1% a year. Xi's new term in power, the effects of the "zero-covid" policy and the technology war with the US are all factors. Meanwhile, consumption continues to fall.

Beijing (AsiaNews) - China will not become the world's leading economy, overtaking the United States: at least not until 2035. This is the forecast of the Japan Center for Economic Research (Jcer) in Tokyo, contained in a study on the economic future of the Asia-Pacific region published today.

Until last year, Japanese researchers feared an overtaking of China's nominal GDP in 2033, four years later than estimated in 2020. The dream of Beijing's world economic supremacy, seen by the communist regime as a milestone in its geopolitical confrontation with Washington, vanishes for the time being.

According to Jcer, Xi Jinping's new five-year term in power, which could extend for another five years until 2032, will contribute to the failure. With Xi still at the helm, the Jcer expects negative effects on the labour and capital markets, and on the country's economic efficiency. These factors could be affected by new technological restrictions on domestic (private) industries, the continuation of a moderate Covid-19 policy and a possible crisis with Taiwan.

China's economic decline will also be greatly affected by 'decoupling' from the US, which will prevent Chinese industries from gaining access to the most advanced US technologies, especially in the microchip sector.

The baseline scenario for the Jcer sees China's real GDP growth dropping to 2% between 2030 and 2040: in a risk scenario, marked by the escalation of the technology war with Washington, the figure drops to 1%. Due to a shrinking workforce, overtaking Washington is also unlikely after 2036. 

The current numbers seem to be going in the direction indicated by the Japanese research. The mix of increasing contagions and continuing lockdowns to counter Covid-19 led to a slowdown in industrial production in November and a further drop in consumption, which fell by 5.9% year-on-year. Youth unemployment also remains high at over 17%.

China's difficult economic moment is also weighed down by the real estate crisis, falling foreign demand, and geopolitical uncertainties due to the Russian invasion of Ukraine. Experts do not expect any immediate positive fallout from the easing of anti-Covid restrictions, accelerated by the popular protests at the end of November. Following a well-established pattern, new government stimuli are expected to revive economic activity and consumption.


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