FX.co ★ China may never overtake US

The planned economy, driven by various decisions of the Chinese Communist Party, cannot achieve its goals. It turned out to be not enough just to order officials to push the economy to the leading position in the global arena. Analysts are sure that transparent market conditions are highly appreciated by investors. In these terms, China will always be behind the United States.

Having taken an excellent start with the help of Western investments, the Chinese economy is unable to keep up the pace and is increasingly facing graver and long-lasting problems, Bloomberg analysts say. The planned approach failed to meet expectations. In addition, the political pressure on the market has become a serious obstacle to further development. The Chinese authorities are tightly controlling most spheres, thus seriously denting investors' confidence. Sour relations with the United States and other Western countries are also adding fuel to the fire. What is more, last year, the country's population declined for the first time in 60 years. This caused a lot of concern about a drop in labor productivity. Against this backdrop, China will hardly become the first largest economy, and all these factors "could keep China indefinitely in second place."

In the best-case scenario, China's GDP could exceed that of the US by the middle of the 2040s, though for a short period of time. The US is expected to regain its leading position shortly after that. Notably, before the pandemic, Bloomberg Economics predicted that at the beginning of the next decade, China would be ranked first in the world. However, under the existing conditions, Chinese economic growth may slacken to 3.5% in 2030 and to almost 1% by 2050. The previous forecasts suggested 4.3% and 1.6%, respectively. Other economists polled by the agency cut their forecasts for 2024 to less than 5%.