China Will Never Catch America

China faces a constellation of overwhelming troubles

 

In my post of April 29, 2018, I wrote the following – an incredibly bold prediction that defied all conventional wisdom. Read that post on my website: www.mllg.us.

“China is not nearly as formidable economically as the chattering classes and the mainstream media would have you believe. Its GDP will never catch the US.”

In 2018 it was universally accepted China would pass the US; the only question was how soon. This post revisits that question 5 years later with updated data.

At the end of 2023 US GDP will be $26 trillion; China’s will be $19 trillion. If China’s economy grows at 3% and the US grows at 2%, China would not surpass the US until sometime after 2050. If the US grows at only 1.5% (half China’s rate), China would not pass the US until circa 2045. However, long before 2045 China’s economy will falter for all the reasons listed infra. I am more confident now than I was 5 years ago that the Chinese economy never will surpass that of the United States.

Moreover, the true measure of an economy is not nominal GDP, but per capita GDP. The GDP per capita for the US is $70,000; China’s is $13,000, approximately equal to the world average of 200+ countries. The US is greater by a factor of 5.4 times. China cannot even dream of parity with the US. In world rankings of GDP per capita, the US leads all major nations; China is 64th in the world – behind the likes of Panama, Uruguay and Costa Rica – and barely ahead of Equatorial Guinea. Given enough cavemen, their GDP could pass the US – but they still would be living in caves.

Sources of China’s Economic Woes

China faces a constellation of overwhelming economic and political headwinds.

• Population: Working age population peaked in 2011. It will decrease 25% more by 2050. China will lose 600 million people by the end of this century. China’s fertility rate of 1.15 is the lowest in the world.
• Demographics: The effects of the one-child policy are coming home to roost. The number of elderly will increase by 300 million prior to 2050. Gender selection has led to 140 million more men than women – another ticking timebomb.
• Debt: China is burdened with large and rising debt. Local governments no longer can fund infrastructure. There is a debt bubble on real estate waiting to burst.
• Youth Unemployment: This metric is over 20% and is so bad China quit reporting the data; some estimates are for youth unemployment to hit 50% within one year. The government is telling college graduates to settle for blue-collar jobs. Xi Jinping said young people should work hard jobs and learn to “eat bitterness”.
• Trade: Exports are down 15% and the US and Europe are reconfiguring their supply chains to exclude China. The US placed bans on technology exports.
• Ideology: Abandonment of markets and free enterprise in favor of communist ideals is creating serious economic dysfunctions and resource misallocations.
• Empire: All empires in history have broken up. China is an empire including Tibet, Manchuria, Inner Mongolia and the Uighurs; there is a growing Muslim population in its western provinces. Eventually, China will break apart.

China’s troubles, however serious, do not mean it will be less of a future geopolitical threat. In fact, it may be more of a threat as its manifest weaknesses may lead to more aggressive foreign adventurism. Nonetheless, it is increasingly unlikely China ever will catch the US economy in nominal terms. Regarding GDP per capita, the US is 540% of China and Xi Jinping can’t even dream of catching the USA. China will have all it can handle to remain ahead of Equatorial Guinea.

Horn Tooting

A man I once knew was fond of saying: “He who tooteth not his own horn, his horn goeth untooteth.” Pardon me while I toot my own horn. That I was nearly alone in 2018 in my predictions about China was not a lucky guess. My posts have been prescient about many other things including, inter alia, climate change, the spending crisis, elections, school choice, progressivism, school shootings, transgender issues, organic food and GMOs, environmentalism and population collapse.

I attribute my record to being a trained financial analyst, following the facts, being logical and thinking outside the box. Please consider forwarding my posts, or better yet adding a free subscription, to family members and friends. In the meantime, I will continue to follow the facts and logic wherever they may lead.

Thank you again for reading my blog and for all your support over the years.

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com