Yahoo: China's economy to become world's biggest in 2035

[Toe Jam]

http://news.yahoo.com/s/afp/20080709/ts_afp/useconomysurveychina

WASHINGTON (AFP) - China's economy will overtake that of the United States by 2035 and be twice its size by midcentury, a study released Tuesday by a US research organization concluded.

The report by economist Albert Keidel of the Carnegie Endowment for International Peace said China's rapid growth is driven by domestic demand more than exports, which will be sustainable over the coming decades. "China's economic performance clearly is no flash in the pan," Keidel writes.

"Its growth this decade has averaged more than 10 percent a year and is still going strong in the first half of 2008. Because its success in recent decades has not been export-led but driven by domestic demand, its rapid growth can continue well into the 21st century, unfettered by world market limitation."

Keidel, who has worked as a World Bank economist and US Treasury official, said the rise of China to the world's biggest economy will happen regardless of the method of calculation.

Under current market-based estimates, China's gross domestic product is about three trillion dollars compared to 14 trillion for the United States.

Based on a more controversial purchasing power parity (PPP) measure used by the World Bank and others to correct low labor-cost distortions, he said China's GDP is roughly half of that of the United States.

"Despite this low starting point, if China's expansion is anywhere near as fast as the earlier expansion of other East Asian modernizers at a comparable stage of development, the power of compound growth rates means that China's economy will be larger than America's by midcentury -- no matter how it is converted to dollars," Keidel wrote.

"Indeed, PPP valuation distinctions will diminish and eventually disappear."

Keidel's calculations suggest that using the PPP method, China will catch up with the United States as an economic power by 2020, with an equivalent GDP of 18 trillion dollars.

Based on the more commonly accepted market method, the turning point will come by 2035. By 2050, he estimated Chinese GDP at some 82 trillion dollars compared with 44 trillion for the United States.

The dramatic economic change will make help China become a more important power in other areas including military and diplomatic affairs, according to Keidel.

"China's financial clout will spill into every conceivable dimension of international relations," he writes.

"Leadership of international institutions will gravitate toward China. This movement could include the equivalents at that time of the United Nations, the World Bank, the International Monetary Fund, regional international development banks, and more specialized bodies. Various headquarters could shift to Beijing and Shanghai."

He said the United States "will have an important secondary influence, like Europe, but it will need to compromise, and its sphere for unilateral action will be increasingly curtailed."

However, the Chinese standard of living will remain lower -- with per capita GDP in China between half and two-thirds the level of that in the United States in 2050, according to the report.

Keidel said poverty will remain a significant problem in China for decades despite considerable progress.

"It is hard to overemphasize how poor China was 30 years ago," he said.

But amid the economic boom, he noted: "Measures of inequality in China have increased dramatically since 1978, raising the possibility that dissatisfied groups left behind by its booming economy will eventually pose problems serious enough to derail its longterm growth."

Another significant hurdle for China will be handling the social problems accompanying its economic rise.

"For a country with China's rapid pace of change, social unrest seems inevitable," he said.

He also said that Communist Party rule poses possibly "its greatest barrier to sustained rapid economic expansion" but that China "has a real chance of continuing its introduction of participatory governing mechanisms, including an eventually more broad-based system of elections."

[FanboyOf91]

The Chinese leadership will have to make some sort of democratic accommodation with its new middle class, who will want more of a say in the government, and have the numbers and economic clout to back it up. It doesn't help that the current economic expansion is ****ing up their environment, which will come back to bite them in the rear.

[MDRedskinsFan]

I don't see their economy outgrowing ours in the long run, unless they give up the Communist government. Sure, it has worked for them to be Communist and yet have a mainly capitalistic economy, but when much of the country begins to see the potential with a truly capitalistic economy and the opportunity to add a democracy to that, there will be a problem in China's future. Or, the Chinese government can try to stunt their growth in order to maintain their control on the population. It's either one or the other...

[Henry]

If anyone wants to know why gas is $4 a gallon, read this article. China is quickly moving out of third-world country status and it's demand for all manner of raw materials is rapidly increasing. As the Chinese demand for resources continues to grow, those prices will continue to rise.

[JMS]

China claimed to have replaced Japan as the worlds second largest economy before it joined the WTO in 2001. A totally unbelievable claim at the time. China was projected to have the largest economy in the world by 2040, or 2050 by western economists.

China's economy will be the second largest economy in the world by 2030..

http://english.people.com.cn/200202/03/eng20020203_89852.shtml

China may become 2nd largest economy in a decade.

http://www.chinadaily.com.cn/bizchina/2007-07/30/content_6003723.htm

China is now the second largest economy overtaking Japan

http://www.nowpublic.com/world/china-now-second-largest-economy-overtaking-japan

I wouldn't believe outragous statements about China. Because China holds their economic cards close to there vest and there is a lot of mis information out there on their progress.

What will ultimately determine if China achieves their potential is whether or not they can survive their economic adolecense. When Japan's economy matured and moved from 10-12-14% growth down to 3-4% grouth to be expected of a mature econmy their backwards banking system and corruption snuffed out their potential... China is decades away from their economy maturing and even today they have literally thousands of labor demonstrations daily. It's not at all clear they will be able to reform their support institutuions while still remaining communist in order to achieve their full potential.

[Henry]

What will ultimately determine if China achieves their potential is whether or not they can survive their economic adolecense. When Japan's economy matured and moved from 10-12-14% growth down to 3-4% grouth to be expected of a mature econmy their backwards banking system and corruption snuffed out their potential... China is decades away from their economy maturing and even today they have literally thousands of labor demonstrations daily. It's not at all clear they will be able to reform their support institutuions while still remaining communist in order to achieve their full potential.

Good point. It's not unreasonable to expect a leveling off, and it's very likely that as their economy matures, their system of government will become a increasingly troublesome issue for them. And there's no way to know how that will effect things.

[JMS]

Good point. It's not unreasonable to expect a leveling off, and it's very likely that as their economy matures, their system of government will become a increasingly troublesome issue for them. And there's no way to know how that will effect things.

In the United States we bent under the force of labor movements and reform movements which curbed the effects of the industrial revolution in order to allow all of the people to benifit from the increases in productivity...

It's not at all clear the communist government in china has the ability to share power with an impowered educated middle class. What's worse is all the communist bosses are now million and billionaires based on their "friendly" business dealings. It's not at all clear they're willing to put up with competition from a free'er more open market if it means curbing their taste for economic wealth and power.

China has a dense forest of obsticals to navigate in the next 20-30 years they eclipse us. If they sucessfully do eclipse us, and if they do navigate through their obsticals; then it's likely they will have fundimentally addressed what the west finds objectionable about Marxism.

The more likely and much worse case is Marxism and Oligarchical tendancies of their government holds them back, and they become our peers economically, but just as repressive and hostile as the old Soviet Union.

[GibbsFactor]

Yeah, Russia was supposed to be pretty bad ass too.

I think I've seen this movie.

[Johnny Punani]

The thing the author of this article forgot was China's population is projected to start decreasing by 2030. At the time (2050) China's economy is projected to be twice the size of the US the avg age of China's population is dramatically older and becomes severely unbalanced in relation to its younger workforce. Hundreds of millions who are too old to work and depending on a goverment who does not have enough workers to create the revenue to support them. India faces a similar but less severe problem.

The United States currently has the highest population growth in the world and is projected over the next 50 yrs to continue growing at the fastest percentage.

[JMS]

The United States currently has the highest population growth in the world and is projected over the next 50 yrs to continue growing at the fastest percentage.

The US population is shrinking just like the rest of the industrial world. The only reason our growth curb is up is because of record immigration, record legal. record illegal.