When Will China Overtake the U.S. Economically?

Its a lot easier to grow from a small base, then when you are already huge. The US will be the largest economic world power for the foreseeable future. Predicting that the BRIC countries will continue to grow this way forever is like predicting a dot com with 50MM in revenues will grow at 30% forever and be bigger than GE in 10 years

Also, the BRICs' economic success is highly dependent upon a stable domestic environment, which is far, far from guaranteed. Anyone who says that they know what China will look like in 20-30 years is a liar. stevenbn is right, it's folly to predict that an economy will grow 10%/yr forever.

I have lived in China and have spent several years of my short life there. It is a great place filled with good people. People talking about Chinese growth, however, usually forget to realize that China is riddled with problems. This country faces tremendous problems in every aspect of life and there are no easy solutions. I'm optimistic about China but not worried about them being the world economic superpower within the next couple of decades.

right. It's really ridiculous how the media will paint this picture of China passing the US. The fact that 40% think China is already the largest economy shows how badly the average citizen needs to check their facts and maybe brush up on their economics. China's got a long ways to go in terms of GDP/Capita and living standards to catch up with the US. In fact you could make an argument that they may NOT pass the US at all in the foreseeable future. I'd give it at the very least one or two generations.

http://www.youtube.com/watch?v=uJo7GG15kMU

I think China will likely surpass the US as the largest economy within the next 20-30 years. Given its population and all the problems and everything, I don't think it will ever surpass the US in terms of per capita GDP / per capita income.

Maybe not "never," but not anytime within our lives.

I see the world shifting from the US being the only superpower to 3 superpowers existing: Europe, the US and China. More than China surpassing the US, those 3 powers competing over dwindling resources will be the dominant story of the 21st century.

China does indeed have a lot of problems, but I think what's more concerning about it is that they're showing that economic freedom and complete lack of political freedom is actually a model that works - or at least has been working.

Other countries have noticed and are embracing this as well, which could threaten the democracies allied with the US.

Whether or not China gets a bigger GDP is not really the issue; it's impossible to argue that the balance of power is not shifting away from the US and more toward other countries, with China often in the center.

http://www.mergersandinquisitions.com/
Mergers & Inquisitions

What's concerning to me is that people perceive the situation this way.

There is very little domestic economic freedom. Their is international economic "freedom" in the sense that they have to compete internationally. And obviously, there is no political freedom.

The quality of life is abysmal. Unfortunately, authoritarian nations can be very competitive economically because of a greater ability to address long term issues of all sorts (where as capitalism tends to be much more efficient in the short term with many more short term incentives built into free market dynamics).

Right now, politically, China is very unstable - more unstable than most realize. They have a large landless, male, ex-military class who are angry because they were promised many things by the government. They also have nothing to lose. They are being dealt with with extreme, wanton violence.

In my opinion, dealing with these unstable groups will be China's downfall as a nation...regardless of their economy.

And yes, given that most large corporations there are largely government-owned, yeah, there isn't too much of a case for domestic economic freedom.

That's even scarier - could depriving people of any type of freedom be a model that actually works?

I certainly hope not, but who knows. I think there are a whole host of issues that could be China's downfall, ranging from the political instability to environmental problems to severe water shortages...

Still interested in going there eventually but probably won't stay too long. :)

I don't know whether either of you (dosk17 or theHam1) have spent much time in China, if any, or have studied China seriously. I have traveled to China 6-7 times, lived there for over 2 years, speak Mandarin fluently and have a degree with a China emphasis. I respect your opinions but I disagree with Ham's comment:

"There is very little domestic economic freedom. Their is international economic "freedom" in the sense that they have to compete internationally. And obviously, there is no political freedom."

Economically, the average individual is experiencing an expansion of freedoms that is unprecedented. 74% of the population is employed in private enterprise although 40% of business resources are allocated to SOE's (state owned enterprise). See "How China Grows" by James Riedel.

Politically, the the communist party still rules with an iron fist relative to what you and I are used to but if you have any concept of what the past 5 decades have been like for these people you might take another perspective. Political freedom still has a long way to come in China but things are getting better.

I don't believe that China has the capability to surpass the economic output of the US within the next twenty years. I do believe however, that within the next 40 years we might see a China that surpasses the US in terms of output. Their growth is projected to slow in the coming years and will.

UM...
Heard from my mom and dad's genaration, there to establish a company is called "Following Capitalism" 25-30 years ago, which is crime back then in China. But now, anyone can do.

Politically, The CP is still on the stage, yes, i don't deny this. But we can;t imagine that an individual can form a political party 5 or 3 years ago.

To the topic, I don;t think China can catch up with US in a dacade or two, how long? i don;t know. We don;t care about this. We only know that we have still the livelihood problems of the people; Many had lots of sacrifice in belief and property, we'll have to make it up them one day; Our country is still divided; The vacuum of belief becomes serious.

We have a long way to go, we do not mean to compare with US, Japan, or anyother economic gourp. We are now focus on our rebuilding our country after more than 100 years of warfare and Mao's destroying. This, is that chinese people are doing.

By the way, Look at my hair style, if time goes back for 30 years, i should be in the jail. LOL

Why the hell are we polling random Americans about facts that are already established or could be established by intelligent, well-informed economists. The average american is an idiot. And yes, I am in fact American.
Here's a fact for you: between 2001 and 2006 the United States added the equivalent of another China to its economy. China surpass America? Not this century.

lol, china is great. it will surpass the us in 20 years. i am confident of it.

China will surely pass the US as in terms of GDP or "total output". In economics terms, the total output is determined mainly by the following items: population, entrepreneurship, technology, and free trade. And let's look at these items one by one.

Population-wise, it's the world's most populated country. Enough said there. This is also why Japan could never compete with the US. Bigger population means bigger labor force and bigger market, along with the economy of scale.

Entrepreneurship: It still can't compete with the US in this area but comparing to 30 years ago it improved dramatically. And the speed of change is ever greater.

Technology: this is China's weakest link, mostly caused by 40 years of closed-door policy under the communist rule. But this is also changing fast, as we have witnessed for the last 20 years. Technology in economics is about the average worker's education and the use of technology in production. Eastern Asian countries have the highest average national IQ. As described in "National IQ and the Wealth of Nations", this factor is very important of the technology outcome in a given economy. Just look at how many Chinese people are in the US doing the research in universities and companies,
you will get the idea.

Free trade: this factor is kind of mixed. In some senses the national owned corporations restricted competition. But in some other cases China is a very open market. For example, cellphone users in China can buy phones everywhere without locked contract, unlike in the US. This made China a very advanced cellphone market, with new gadgets and services coming out much faster.

So if you put all those terms together then the answer is: It's only a matter of time before China surpasses US in terms of TOTAL production.

But as for per capita, it will probably never get close to the US. Resource is scarce, therefore a smaller population will have more averagely per person. This is also the reason why lots of small European countries have the highest GDP per capita.

I forgot that quotation about how dumb it is to make predictions about the future...but it applies (how dumb is it to refer to quotations you can't remember and then not follow their advice?).

Nonetheless, I still say "not any time soon." It seems obvious that China will become big dawg if you think of it in terms of historical trends involving the wealth of individual nations. However, if you think of it in terms of global wealth its a lot less obvious. "Resources are scarce[sic]" is a constraint that applies to the entire world. I expect this scarcity of resources to be a much bigger break on China's growth than it was on the United States and Western Europe.

Why?

When these nations gained economic dominance they had the world to rape. Even now they have massively disproportionate economic influence due to political realities established through force of arms. Also, the strain on raw resources was much smaller. In fact, it is the growht of western nations that has resulted in the incredible strain on the world's natural resources that we now see. China will not have the opportunity to rape the world with impunity (it will be limited to raping just its own backyard).

China will also have to endure 'fair' competition with not just developed countries, but newly developing ones. Economic growth need not be a zero-sum game, but only as long as world wide productivity growth endures so more can be done with our finite resources. Will it? Tough call.

The big question is how long China can sustain current break-neck rates of economic growth, a lot of which is achieved by tactfully ignoring related issues (environmental, quality of life, political).

For the economy to continue to grow, the people must be educated. As they become more educated and as they become wealthier, they'll begin to want more rights. I can't see a nation existing with restricted political rights and a large, strong economy. If you have a strong economy, the people will eventually clamor for more rights.

As people get richer, they will start to ask for more rights. That's how Taiwan and South Korea turned democratic. And then their new system would in turn help economic development, forming a positive cycle. Taiwan and South Korea were both bloody dictatorships in the past, and both were set up by the US government to counter the communist influence in Asia. But eventually they were overthrown peacefully as people's economic situations improved and people got more educated. Today they are the technological forerunners of the world, dominating the electronics business. In fact, the more educated people are, the less likely the "overthrowing process" would be violent.

The bigger worry for me now is actually the good old USA. This country has drastically changed during recent decades. It used to be one of the most open and educated society. Yet today it's one of the most anti-intellectual and ignorant countries in the developed world. It seems that the younger generation in this country today have no idea about life or the world. Comparing to the boomer generation and the prewar generation they seem to have no insight nor vision what so ever. But sooner or later this generation is going to become the main foundation of this country, and i don't see how a nation composed of this kind of people can still sustain the leadership its far-sighted forefathers have created.

Let's face it, now a days everyone wants to be a banker. That's the reason why this site exists and is getting popular. Nobody wants to make things. Is everyone just gonna live off by making loans to each other in the future and everything would be fine? I doubt so.