Sino File | If China thinks it’s overtaking the US any time soon, here’s a wake-up call
- There’s no guarantee that China’s economy will surpass America’s – and even if there was, it wouldn’t mean much
The warning by the former commerce minister Chen Deming that China should not assume it will overtake the United States to become the world’s top superpower should serve as a wake-up call to those harbouring illusions about China’s place in the world while ignoring the challenges ahead.
“Do not take it for granted that China is No 2, and do not make the assumption that we will be No 1 sooner or later,” Chen told a forum organised by the Centre for China and Globalisation, a Beijing-based think tank, last Sunday.
The perception that China is the No 2 global power and on the path to become No 1 is based on two questionable assumptions – that China’s stellar growth levels, which outpace those of its main competitors, will continue on the same path, and that gross domestic product or the size of the economy equates to national power.
Let’s examine these perceptions in turn, firstly the assumption about China’s growth. Last year, China’s official GDP was about 90 trillion yuan, or US$13 trillion, using the official exchange rate at the end of 2018 that was 6.88 yuan to one dollar. That would make China’s GDP about two-thirds of America’s US$20.89 trillion. Based on the differences in the two countries’ growth rates over the past two decades, some economists forecast China’s GDP will overtake that of the US somewhere around 2030. Based on an exchange rate of six yuan to one dollar, China might be in front as soon as 2025, or if it is 7.8 yuan to one greenback, China might have to wait until 2031 before it is top dog.
This is because the annual growth rate for the US economy over the past decade has hovered around three per cent, compared to a rate two to three times higher in China.