China Surpass USA in 20 Years?

Looks like China will be the only major country with positive GDP growth this year. 
Now we have skyrocketing debt, a gridlock congress and covid likely to last many years in our country. 
Do you think China will be the world's biggest economic power in 10 years?

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (33)

Most Helpful
  • Associate 1 in IB - ECM
Nov 21, 2020 - 3:00pm

 Very likely. China just joined the world's largest free trade zone. After US cut ties with our allies, China become their new economic partners. We lost too much in past 4 years. Now it's going to be hard to catch up.

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Nov 22, 2020 - 8:05am

 Very likely. China just joined the world's largest free trade zone. After US cut ties with our allies, China become their new economic partners. We lost too much in past 4 years. Now it's going to be hard to catch up.

Reality vs your explanation:

lol libz

Never discuss with idiots, first they drag you at their level, then they beat you with experience.

  • Associate 1 in IB - ECM
Nov 21, 2020 - 3:02pm

In past two weeks, Chinese ADR share price skyrocket. RMB keeps its appreciation momentum. Looks like more capital is flow into China.

Nov 21, 2020 - 3:06pm

Most likely within the next 10, not 20. Last 4 years with our war on trade and war against science, has demolished our standing on the global stage. We can rejoin some of those programs like Paris Trade agreement Iran nuclear deal and others but it's too little, and we'd be operating out of a position of weakness where the terms we set would rather be had with other countries who don't have the US premium.

Nov 22, 2020 - 8:05am

economistsBillion with a B

It's inevitable. Economists have always viewed population size as a major determining factor for economic power/size. Their's is 3x larger than the US, so it's only a matter of time as long as they continue to grow.

Economists have to explain how China, which had 30% of the world GDP in 1800 ended up being partitioned in economic sphere by Western powers, which altogether didn't have half of the Chinese GDP and population size. 

Btw, China's economic partitioning has the ominous name of Open Door Policy. 

Never discuss with idiots, first they drag you at their level, then they beat you with experience.

  • Assist. VP in IB - PubFin
Nov 21, 2020 - 6:22pm

I will say even after China become the largest economy in the world, the US economy will still be strong. 
UK was the world's economy superpower a century ago. But now even after UK no longer the world leader, it's economy is resilient.

It is China's century now. But who knows what will come after? India or Southeast Asia?

Nov 22, 2020 - 12:28am

You've highlighted some of the challenges that the US will face going forward, but what about China's problems? Debt/GDP is 300% and household and corporate debt levels are concerning - and this is in the face of pre-pandemic growth already slowing. Also, on growth and economic performance - there have always been questions about the accuracy of their economic reporting. See: UK Hedge Fund Nevsky Capital's 2016 closing newsletter citing unreliable macro data from emerging markets (specifically from India and China) as one of the reasons for their closure. Last year, Brookings also published research ("A forensic examination of China's national accounts") that corroborated that their growth has been slower over the past decade than they have reported. 

I also don't think we can fully appreciate the trade implications of the pandemic at this point, but I don't think companies mulling and opting for supply chain shifts bodes well for China with regard to FDI flows. There was already a decoupling of sorts that was taking place because of Trump's hawkish stance and overall de globalization trends, so shifting supply chains further compounds these problems for export-reliant China. China clearly sees the writing is on the wall which is why they recently signaled that they are pivoting to a "dual circulation" strategy where they will look more inward, but it remains to be seen how effective this policy will be.

I also don't think China is without political problems either. Xi's power struggles and purges are well documented. 

Not saying that they won't surpass USA but China has its own set of problems and I'm also not fully sure if they will successfully change a sticky global financial system architected by America, so agree with the poster that says America will still definitely be a presence economically.  Would love to hear someone chime in on the reserve currency under threat sentiment that has been floating around for some time too?

Array

  • 1
  • Exec VP in IB - Gen
Nov 22, 2020 - 8:04am

How do you think Kyle Bass's bet on shorting RMB/HKD? Do you think this trade will make him the next legendary big short?

Nov 22, 2020 - 8:05am

Honestly had no clue who Kyle Bass was until you mentioned, so I searched him and found a couple Youtube videos of him. I have to say that that the Real Vision interview he did with Michael Pettis was one of the most informative things I've seen all year. It pretty much highlights most of the issues I mentioned + more and goes into detail much better than I ever could! As for the trade, I have no clue how it's going to pan out but I'll be paying attention. 

Array

  • Exec VP in IB - Gen
Nov 22, 2020 - 8:05am

Why is it surprising? Go look world's largest capital market deals in recent years and many of them are Chinese companies 

Nov 22, 2020 - 8:05am

Millions of Chinese families rush to settle in the likes of Australia, Canada and the US, but not vice versa. No one leaves home to attend Chinese universities, no one is watching Chinese movies, reading Chinese books or listening to Chinese music, outside of a handful of names in tech China has zero respected brands and no widely recognised thought leaders. China might end up with the largest GDP but the West will still have all the soft power.

Nov 22, 2020 - 8:05am

China will become the biggest economy in the world in 10-15 years if Xi keeps the economy going; the per capita number still makes it an emerging country, but as a whole, it is almost a sure thing that it will surpass the US's economy. The transition from a manufacturing-oriented economy to a consumption economy will make it happen.

Many people on the forum and western media in general just doesn't have a clue about China's, or any other countries for that matter, development cuz they might not even have a passport for international travel...

Having said that, I do agree that China will not have the same soft power as the US, but the domestic market is so big that it doesn't really need to convince people in other countries to consumer their movies, music, etc.

US dollar will still probably be the reserve currency for a long, long time though. 

Nov 22, 2020 - 8:05am
Have compassion as well as ambition and you’ll go far in life
Start Discussion

Total Avg Compensation

July 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (36) $363
  • Associates (209) $232
  • 2nd Year Analyst (120) $152
  • 3rd+ Year Analyst (28) $146
  • Intern/Summer Associate (100) $145
  • 1st Year Analyst (439) $132
  • Intern/Summer Analyst (356) $82