China's economy to overtake US in next four years, says OECD

China will overtake the US in the next four years to become the largest economy in the world, says a leading international thinktank.

The Paris-based Organisation for Economic Co-operation and Development (OECD) said China's economy will be larger than the combined economies of the eurozone countries by the end of this year, and will overtake the US by the end of 2016.

Global GDP will grow by 3% a year over the next 50 years, it says, but there will be large variations between countries and regions. By 2025, it says the combined GDP of China and India will be bigger than that of France, Germany, Italy, Japan, UK, US and Canada put together. Asa Johansson, senior economist at the OECD, said: "It is quite a shift in the balance of economic power we are going to see in the future."

http://www.guardian.co.uk/business/2012/nov/09/china-overtake-us-four-years-oecd

Latest predictions say the economy of China will be bigger than America in just 4 years. How are Americans going to feel to not be the top economic power in the world anymore? If as stated this happens and China will continue to grow its economy could be twice the size of the American one in another 10-15 years.

 

I believe that is on a PPP basis. But it creates a growing market for our goods and services.

However, I question whether China can continue to grow at that rate for 10-15 years, especially with the government it has.

 

Why? That government are the ones who have been in power and seen the growth of China for the last 30 years. I do not see your reasoning for such an opinion.

 

Image tomorrow the Chinese president will suicide, and in the next year, United States of America will launch a war against China. What will happen to the economy? This prediction is ridiculous, you can't predict something.. The OECD of France will have to wait until 2016.

 

Several reasons. One is just the relative increase. When your average per capita income is $1/day and you increase it to $2/day, you've had a 100% increase. An increase from $10,000 a year to $20,000 a year is the same percentage increase, but far more difficult to achieve. So as the per capita income increases, it will not increase at the same percentage even if it increases by the same amount.

Second, IMO, to have a truly competitive economy on the top level (ie were family incomes are in the $50,000 a year range, you need an economy and government that are relatively efficient, competitive, mobile, innovative. You need feedback loops between business and government and the ability to respond. History has shown that under good leadership, dictatorship can achieve a level of economic performance. Even the SU, for example, had periods of strong growth.

However, the problem with dictatorships is that while you can get a good leader once in a while, there is by the nature of the beast a certain level of intolerance for dissent and unwillingness to change and corruption. These characteristics eventually stifle the exchange and responsiveness needed to get to that next level.

 

Your whole post is contradicted by the evidence of Chinese growth of the past 30 years, now if that had not happened you might have had a point but as it happens you never.

 

Your baseless, conclusory assertion is false. My post is not contradicted by that fact at all, and in fact, my post is entirely consistent with it.

 

Do keep in mind that China still has five times our population. Their economy is growing by leaps and bounds but they still have quite a ways to go.

 

My assertions are correct and you are wrong. The Chinese economy has been growing for the last 30 years, it has passed all other economies apart from the USA and it is due to pass that in a few years time. The government of China have obviously done a very good job and I can see no reason why that will not continue in the future. Your whole post did not prove otherwise.

 

Repetitive. I stand by my post. What happened in the past 30 years is no indication of what will happen in the next 30 years.

See, for example, Japan circa 1990.

 

You can stand by your post but it is just an opinion backed up by nothing as my post is backed up by 30 years of Chinese growth, you know actual facts.

 

and you have no evidence to support it while he does have evidence to support his

 

China is struggling to keep up its growth due to the drop in exports.

 

What happened in the past 30 years is no indication of what will happen in the next 30 years.

See, for example, Japan circa 1990.

 

I don't know about these predictions, but the fact remains that the population of China is over four times larger than that of the United States. My initial response to how I would feel not to be the largest economy anymore is ask what took China so long? The answers aren't positive, which is I would not trade living in the USA for living in China.

EDIT: Incidentally, with Europe slipping into economic decline, growth in China will provide opportunities and markets for American businesses that are vanishing in Europe. This is a good thing for America...

 

I've alluded to evidence of my position.

The SU had strong growth in the 1960s and people were claiming that at its growth rates, it would surpass the US. "We will buy you" Kruschev famously predicted.

Japan in 1990 was on a growth rate that many proclaimed would surpass the US.

Various latin American countries had periods of strong growth that were squandered by bad policy. Argentina in the early part of the 20th century, for example, was in the top 10 in per capita income.

China has achieved stronger growth because it embraced a more responsive government and permitted greater freedom. It's people were dirt poor and were starting from nothing so you see impressive growth rates. As I pointed out, part of that is somewhat of an illusion of statistics. You can say that they've had 100% growth but if its from $1/day to $2/day its not that impressive.

But ultimately, you need freedom in the marketplace to innovate and remove inefficiencies. A regime that puts its primary objective on maintaining its control and not freedom is IMO eventually going to hit a ceiling.

 

The Chinese passing us, at the very least on a PPP basis, is guaranteed provided they remain capitalist (and they will). The reason is nothing more than math. They have 1.4 billion people. The vast majority still in poverty. As more people than we even have in our country come out of poverty their GDP (PPP) will surpass ours. They do not need 10% growth to do it. The issue with Japan is that they have 1/3 fewer people and the economy got fully modern, so they would have needed to be 3 times more productive to pass us. Not likely to happen. China only needs to be 1/4 as productive to pass us. It's a done deal. At least in total GDP. They will not pass us in per capita GDP any time soon.

 

Ahhh, we gotta have a war now. Nobody challenges American capitalism and gets away with it.

 

Japan circa 1990 is not China circa 2012 so again you fail with an argument based on your own un proven opinion where as I am going on the evidence of Chinese growth over 30 years and its continued growth this year as well and its predicted growth by all major economic forums of the world.

 

Go get 'em, sister...

 

I really would like to be "struggling" with 8% growth per year when most other states are not even getting to 2%.

 

China 2012 is not China 2032 either.

I disagree with your assertion. I've set forth examples and provided logical argument for my position.

Your entire argument is "look at the last 30 years." Every informed investor knows that the past is no guarantee of the future.

 

I haven't seen you rebut a single point Iriemon has made, Dawg. Why don't you take the opportunity to do so instead of just saying he is wrong.

 

Folks were saying the same about the SU in the 1960s and Japan in the 1980s. Who knows. I doubt doubt that China will continue growing. I do question whether it will continue growing at the same rate for an extended period, based on the reasons I've set forth above.

 

Who is talking about China in 2032? You brought that up,the original article is about 2016.You can disagree all you want but it is not going to make your position correct. My position is in line with all major economic forums in the world that China will surpass the USA and very soon.