
China to Overtake U.S. Economy by 2032 - Jerry2
https://www.bloomberg.com/news/articles/2017-12-26/china-to-overtake-u-s-economy-by-2032-as-asian-might-builds
======
0xB31B1B
Also, if current growth rates hold, everyone on the planet will be employed by
Amazon in 2 years.

I am not sketical that China has a quickly growing economy, but models that
project 20 years into the future often fail to account for black swan events
(ex: 9/11, 2008 financial crises, famine/drought, decline in oil price since
2013, etc) that require total model changes. I expect at least 1 of these
events in the next 20 years and likely a few. I’m thinking: Environmental
crises, Demographics crises in China (too many men, not enough women) Debt
crises North Korean crises

~~~
fragsworth
Also, I wonder how much innovation will come out of China. As far as I can
tell, innovation has generally come from Western countries (mostly the U.S.)
and China develops internal clones after seeing what is successful. I don't
know if the models are taking into account that China will be technologically
lagging behind by several years. Maybe this doesn't have much impact, but I
think it might.

~~~
sixdimensional
I don't think we can underestimate the Chinese power to innovate either -
consider Shanzhai[1]. What comparable practice do western cultures have?

Sharing and mashing up IP without restriction and less regulation could be a
serious challenge to competition in the traditional sense.

[1]
[https://en.m.wikipedia.org/wiki/Shanzhai](https://en.m.wikipedia.org/wiki/Shanzhai)

~~~
hkmurakami
Imo Shenzen has shown some real supply chain innovation but... seriously
you're bringing up counterfeit goods offloading IP development costs onto
competitors as an example of innovation from China?

~~~
sixdimensional
You have to look deeper into the phenomenon. I'm not talking about the illegal
practices and poor quality, I'm talking about the fact that these practices
often lead to lower cost and accidental innovations due to disregarding IP
laws.

I think it's fascinating how certain types of products have been targeted for
counterfeiting and how far they have spread. When you look at the ever
downward pressure on price (and often, inadvertently quality) demanded by
customers, I think it might lead to the conditions supporting these practices.

It's definitely a think outside of the box type of exercise, but, look at open
source and compare for a minute. Of course there is a huge differences, but I
think the things the comparison highlights are of interest to question.

~~~
sixdimensional
For the record, my comments weren't mean to be disparaging in any way of the
multitude of Chinese innovations. Clearly the Chinese power to innovate has
existed for probably longer than many countries and many critical inventions
and ideas arose there. For example, gunpowder, paper, compasses, etc.

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omarforgotpwd
Okay, but where will GDP per capita be? If you think about it, it is really
sad that China has 1 billion MORE people than the US and yet the GDP of the US
is still 165% of China's. GDP per person is the figure that really tells you
what the standard of living is for average people, not just total output. The
growth of the Chinese economy is not bad for the US. It means more Chinese
entering the middle class, buying American goods, offering great products and
services to American buyers, etc. If the Chinese economy surpasses ours, it
will be a good thing for the US too.

~~~
Sephr
If the Great Firewall is anything to go by, I would expect Chinese people to
be spending _less_ on American services due to more services being blocked.

~~~
partiallypro
The Chinese government has grown slightly more protectionist as of late, imo
their current economic situation is very fragile, despite the western fear of
the rise of China. The U.S. economy is very diverse and robust, and has
undergone several shocks...China, has not in the modern boom really
experienced any sort of deep economic swoons. I fear what houses of cards have
been built, which normally don't reveal themselves until the chairs run out.
Their government is so hamfisted and wasteful, it's hard not to imagine an
economic earthquake on the horizon. The US and Europe are really the main
drivers of the world economy right now, China and many emerging economies have
been slowing down.

~~~
xref
I am fascinated by what may happen in China financially as well. The chairs
have run out on the US many times, and Iceland, and Ireland, and Venezuela,
and Argentina, and Greece...you get it.

------
mc32
It's interesting to see that while much of Europe's top economies slide down
the ladder, Japan is pretty steadfast in maintaining its position as world's
no 4 econ --despite all the naysayers and their demographics (which most
neoliberal economists insist must change, for them to remain healthy).

Should be interesting to see how China and India use their economic might to
influence global culture (i.e soft power).

~~~
tanilama
Japan's GDP per capita in 1995, is 60% more than that of US. Now their GDP per
capita is 60% of U.S...which says a lot.

The rank actually doesn't say too much. Japan's power is waning, while
European country, I know is controversial and hated by conservatives, has EU.
EU has a much bigger representation in world economy in terms of the effects
of policy and regularization.

~~~
mc32
The EU will continue to shape regulation and policy, but with rising China and
India, there may be some change in that.

I'd say it's good to have the EU and the US set some regulation minimums (EU
is stronger in some areas, the US is stronger in other areas) but China and
India will likely begin influencing policies --perhaps for the better. For
example, China regulating (banning) the importation of certain rubbish.

W/re GDPP[1], they have always had an issue with productivity vis a vis the
US. However, your figures exaggerate the extent, according to this:
[https://www.bls.gov/ilc/intl_gdp_capita_gdp_hour.htm#table02](https://www.bls.gov/ilc/intl_gdp_capita_gdp_hour.htm#table02)

[[1], to your point below]GDP per employed person at PPP which to me is more
reflective of an economy.

~~~
tanilama
Your referred number is PPP, not GDP.

My source is from World Bank:

[https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...](https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=JP-
US)

------
Kyragem
China invests in solar, renewables and R&D while the US cuts science funding
and tries to keep coal alive. With the current leadership Chine will overtake
the US much sooner than 2032 and rightfully so.

~~~
vixen99
'Rightfully'? In other words, on a moral basis, investing in solar power and
renewables (China still burns huge amounts of coal - it has to) trumps massive
political repression?

[https://www.nytimes.com/2015/11/04/world/asia/china-burns-
mu...](https://www.nytimes.com/2015/11/04/world/asia/china-burns-much-more-
coal-than-reported-complicating-climate-talks.html)

------
vinceguidry
Pure numbers is the worst way to try to make this comparison. Quantity is not
the same as quality, and quality really matters when you're analyzing national
economies.

What often gets lost in the equation, because it's difficult to put a number
to, is _robustness_. The Chinese economy can be looked at as a gaggle of one
trick ponies. For example, you can go to a Chinese factory, hand them a
blueprint, and get very good results, on maybe the third run, after you iron
out all the kinks.

American industry iterates on proven designs that have been iterated on
continuously since the Industrial Revolution. Our creative professionals can
get _very_ specialized. I met a young lady engineer once who could talk your
ear off about toilets. She was in charge of a very niche aspect of toilet
design and her one specialty likely numbered in the hundreds.

Now I'm not saying that Chinese engineers can't produce quality products. What
I'm saying is that as quality as these products are, they're still stone age
in many, many, many respects compared to American designs. Techies can't
really see or understand this because all of this collected industrial
knowledge isn't open source and is passed through institutions.

They can produce a toilet that works. We can produce a toilet design that
lasts 4 times longer, uses 30% less water, meets recyclability guidelines for
porcelain, does not compromise strength yet is 40% lighter, and can be packed
30 per pallet rather than 10. Sure it gets manufactured in China, and they
might rip off one of our designs, but they're going to be perennially playing
catch-up. Can they make that toilet in 10 different fashions to match both
upscale and low-end bathrooms? Rinse and repeat for _every single other
consumer and industrial product that modern society uses_.

We've been dominant in so many areas for so long that for China to even get on
our level would mean to first create a middle class that's the same size as
ours, so they can start iterating on a similar level as we have been doing for
over a hundred years. That's no mean feat. Just because they're moving similar
quantities of products around as we are doesn't mean that that wealth is
getting shared with the public enough to create a professional class.

And until they can create a professional class of their own, they will always
be playing second fiddle to our professional class.

~~~
mistermann
Perhaps(!) there is something inherently superior about Western nation's
ability to innovate, but who's to say we _must_ continue to innovate? At some
point, will we not reach a "good enough" point for toilet design after which
cost is the more likely determining factor? And can not the same thing be said
of many things, such as televisions, cell phones, etc? Is this a _possible_
direction the future could take? Keep in mind, the US wasn't always on top,
just because Japan didn't take over doesn't mean China can't, sometimes things
do change fundamentally.

~~~
vinceguidry
> who's to say we must continue to innovate?

It's inherent in human nature, the perception that things could be better and
the desire to improve them.

> Keep in mind, the US wasn't always on top,

You're right, but it's the Brits that preceded us as the major world power. We
inherited their legal system and commercial focus, it was a big reason why we
were able to take the lead.

The other is our scale. The reason we talk about China being a rival and not
Japan is that massive populations drive far far more progress, and as advanced
as Japan is in many things, they simply don't have the scale needed.

The colonial economics that made Great Britain great were an outgrowth of the
old agrarian empires, which subjugated local populations in order to derive a
competitive advantage from them.

Now that subjugation is becoming less and less politically acceptable over
time, if countries want to be powerful, they need to form large polities
themselves. Only the US and China have massive, similarly-oriented populations
that can work together long enough to create national wealth.

~~~
mistermann
> It's inherent in human nature

Indeed it is, but the most innovative product doesn't always win in the market
place. The never ending desire for the newest thing may have cost constraints,
maybe even ones that we haven't historically encountered before.

> We inherited their legal system and commercial focus, it was a big reason
> why we were able to take the lead.

Is there any reason to believe this is a pre-requisite of success though?

> The other is our scale.

China knows a thing or two about that.

I don't happen to believe there is only one path to success/dominance as it is
a combination of many factors, not to mention the fact that
luck/coincidence/timing is potentially far more important than people realize.
Going on recorded human history, we're also dealing with relatively small
sample sizes when it comes to making confident predictions of how things as
complex as human cultures and global economics will pan out.

~~~
vinceguidry
> Indeed it is, but the most innovative product doesn't always win in the
> market place

Well, if you go over my original comment again, I was more referring to
process innovations and not feature innovations. Things like reducing material
costs, logistics improvements, sustainability improvements. These are the
sorts of things that you can't really say no to and that you're always going
to be looking for more of.

> Is there any reason to believe this is a pre-requisite of success though?

China is an outlier in many, many ways. But when you look at Europe where much
of the industrial and commercial success was historically, you'll see that the
particular sorts of social innovations form the foundation on which market
economies thrive.

We saw how a command economy played out when a nation wanted to be a
superpower before. The USSR simply collapsed under its own weight. The
incentive to produce and innovate can't come from one place. Great Britain's
market focus and political innovations allowed a society to rise up that
created it's own incentives.

China can throw mountains of resources to solve one problem. But they're
limited to only solving one problem at a time. Because the incentives for
success can only come from the state.

------
igravious
I wish that people started focussing more on the Gini Index and rooting for
their country or region to top that list:
[https://www.cia.gov/library/publications/the-world-
factbook/...](https://www.cia.gov/library/publications/the-world-
factbook/rankorder/2172rank.html)

“Distribution of family income - Gini index measures the degree of inequality
in the distribution of family income in a country. The more nearly equal a
country's income distribution, the lower its Gini index, e.g., a Scandinavian
country with an index of 25. The more unequal a country's income distribution,
the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If
income were distributed with perfect equality the index would be zero; if
income were distributed with perfect inequality, the index would be 100”

In this table Finland is #1, USA, 40th from the bottom, China is 30th from the
bottom. This shows that the size of your economy and how fairly the wealth is
distributed is not correlated. It also says that the so-called "American
Dream" is a fantasy for much of the population. I also think that this is an
index that is important to track _over time_ and I don't know of anyone doing
that because then you could see if the country/society/region you're living in
is getting more or less unequal over time. I know that I'd prefer that my
daughter lived in a country where the wealth was more evenly distributed than
than when I was growing up.

In Rawls' Theory of Justice he gets you to imagine that by a "veil of
ignorance" you don't know where your position in society is. Given that, he
says, you'd prefer a more fairly balanced society and world because you don't
know which segment of society you'd be born into and which part of the world.
Going by Rawls you'd prefer to be born in Finland (or most places in Europe)
rather than China or the USA.

------
apatheticonion
I'm no economist, but according to this super accurate spreadsheet I made -
looks like China will overtake the US 2019.

I make some bad calculations based on bad assumptions. Like GDP = GDP per cap
* pop (though it worked out roughly). I took the average yearly growth of US
from 2000 - 2016 and the average yearly growth of China from 2000 - 2016,
plotted them and compared them.

There is an intersect (China leading) on total GDP in 2019 and an intersect
(China leading) of GDP per capita in 2030.

Anyway, here's an image of it:
[https://imgur.com/vKjJCpN](https://imgur.com/vKjJCpN)

~~~
votepaunchy
You have China’s GDP growth at 16%. Even the Communist party only claims 7%,
though that and the reported consistency is doubted by many economists.

~~~
apatheticonion
Honestly, I had no idea what I was doing. I just plugged in the numbers I got
from Google and hoped they'd paint a picture.

------
sytelus
This is not correct as per most of the other leading institutions. By
virtually every measure China's economy is either already bigger than US or is
going to overtake US within 1-2 years (i..e before 2019). The reason there is
bit of uncertainty is because China had devalued Yuan which effectively
reduces its GDP even if net purchasing power had been increased. Also, no one
truly knows China's GDP except their government.

Here's better data: [https://www.weforum.org/agenda/2016/12/the-world-s-top-
econo...](https://www.weforum.org/agenda/2016/12/the-world-s-top-economy-the-
us-vs-china-in-five-charts/)

Quote from above:

 _Both the IMF and the World Bank now rate China as the world’s largest
economy based on Purchasing Power Parity (PPP), a measure that adjusts
countries’ GDPs for differences in prices._

You don't have to be economist to understand this either. You can go to
virtually any corner of the Earth, walk in to a shop and find that roughly
50%-80% things in there are made in China. Think about that for a second.
There are over 200+ countries in the world, 85% of people are outside China
and still half of the stuff is made by just one country. There is often a
someone in China making money when a person anywhere on the planet walks in to
a shop and buys something. Think about the scale of that GDP now.

~~~
igravious
That's by PPP[0]. The CEBR report is stating that China's economy will be
bigger than the U.S. in _absolute_ terms (PPP is a relative measure, look it
up) by 2032. That means that population size notwithstanding China could
choose to outspend the U.S. dollar-for-dollar on its military or space budget
or infrastructure or whatever. You get the idea – the implication is that over
times economic might should shift the balance of global power.

[0]
[https://en.wikipedia.org/wiki/Purchasing_power_parity](https://en.wikipedia.org/wiki/Purchasing_power_parity)

------
fastball
Everyone and their mother has been predicting the eventual economic dominance
of China the for literally decades.

Truly groundbreaking work.

~~~
xenopath
Exactly, just yesterday a China central Bank official just gave hints of
bankruptcy [https://www.bloomberg.com/news/articles/2017-12-25/pboc-
offi...](https://www.bloomberg.com/news/articles/2017-12-25/pboc-official-
says-local-government-bankruptcies-are-needed)

and a few months back, the China central bank chief warned about the rapid
growth of debt [https://www.cnbc.com/2017/10/23/china-central-bank-chief-
new...](https://www.cnbc.com/2017/10/23/china-central-bank-chief-new-worry-
household-debt.html)

~~~
seanmcdirmid
The dominos will have to fall sometime. A lot of china’s private sector debt
is actually believed by the debtees to be implicitly public sector. With SOEs,
the lines are always blurred anyways.

------
bsder
Japan was supposed to overtake the US economy by 1995, I believe ...

China has many of the same problems with country supported banks, bad loans to
prop up the economy, etc.

~~~
tanilama
They did overtake U.S in terms of GDP per capita by 1995, with a margin of
60%. China doesn't have to do this, they only need the GDP per capita to be
1/3 of that of US, they can surpass US in terms of nominal GDP.

------
yuhong
I am disliking the current US debt-based economy already. It is pretty
frustrating that they keep delaying the gov shutdown by only weeks.

------
almostApatriot1
> India’s advance won’t stop there, according to the CEBR, which sees it
> taking the top place in the second half of the century.

what's the reasoning behind this claim? Purely population growth?

Also surprised Brazil is supposed to have a top 6 economy by 2032. Isn't their
economy in the gutter and based on soybean and oil production?

~~~
sanxiyn
What's wrong with soybean and oil? Economy of Australia is beef and coal.
Brazil also produces and exports aircrafts.

------
SubiculumCode
Maybe. True that the U.S.wastes many opportunities, but then again, the
problems get harder as a country grows. It seems that economies often find it
hard to continue the pace of growth past the manufacturing boom, or so I've
heard and seen.

------
diminish
So soon, out of top 10 economies - half will be from Asia: China, India, South
Korea, Japan, Indonesia. Two from Americas - US, Brazil. Two from Europe:
Germany, France and One from the Atlantic Ocean - UK.

~~~
frede
Some British may not like it but the UK is a European country by geography,
too.

------
tzahola
Projections say that in 500 years I’ll be 526 years old.

------
pishpash
Wasn't it supposed to be by 2025?

------
NamTaf
Disclaimer: I'm completely uneducated in this, so please point out my glaring
flaws of logic.

I have no doubt that China will be a major economic player in the coming
decades. Having said that, they have major hurdles to clear, perhaps most of
which is transitioning from a manufacturing to a service economy that exists
outside of China.

China's services-based companies that you all think of (Tencent, Baidu,
Alibaba, etc.) all ape on foreign services and succeed under the protection of
government (via. the GFW). Meanwhile, the massive uplift of median wage and
living conditions has increased the labour costs in China. I've seen it in my
own work, where our 'manufacture in China' approach isn't nearly as beneficial
as it was 5+ years ago, since it now costs more due to underlying wages (i.e.
controlling for forex). This sort of puts a time limit on their growth at the
current rate, because as it becomes more expensive, manufacturing will move
(and already is) to other cheaper areas (such as Bangladesh, India and further
to Africa).

In other countries, that uplift has broadly aligned with a transition out of
manufacturing to services due to the higher education capacities, with
subsequent offshoring of said manufacturing. The problem is, those services-
based companies compete on a global scale and utilise that global market size
to support higher profits (since duplicating knowledge is easier than
duplicating phyiscal things). I can't think of on example off my head of a
Chinese services-based company that's competed on a global level yet.

I think until that can happen (and I don't see how that happens, particularly
but not limited to in tech, when the playing field is so distorted by
government policy such as the GFW - it just encourages companies to focus
domestically only), China will struggle to make that next step and continue to
fuel their economic growth as manufacturing becomes too expensive with the
growth of wages. The foreign influx of money from manufacturing will slowly
dry up as it goes elsewhere. In turn, I think that'll lead to a stagnation
unless they can transition, and I suspect that transitioning (to a level that
the West operates) probably requires a ratio of market size to median wage
that isn't possible by simply remaining domestic (in the most part, that is
you need at least a minimum quantity of global companies to bring in overseas
wealth and support the rest).

Interestingly, I've seen a little example of this attempted, where China is
trying to build the infrastructure for future manufacturing places, but that's
sort of a one-trick operation. For example, they've invested a heap of money
into building infrastructure (rail, for example) through Africa. However, it's
only a subset of a truly global economy and probably has a finite life as a
stop-gap.

So yes, their growth is almost undoubtably going to be relentless and ongoing,
but my uneducated opninion is that the pace will taper off sooner than most
people expect as they struggle to convert high domestic manufacturing output
to domestic knowledge and services output.

~~~
mistermann
Do they not have the ability to construct an entirely new economic, once-again
low cost manufacturing zone staffed by some of the hundreds of millions of
peasant farmers still working the land? Do they not have the population, know
how, and political leverage to serve multiple pricing tiers of manufacturing?

