There are a few questions worth considering, whether it’s for officials wondering where long-term profits will come from, investors considering the dollar’s status as a global substitute currency, or generals strategizing beyond geopolitical flashpoints.
In Beijing, the Chinese Communist Party are celebrating their 100th anniversary. Their leaders are trying to do their best to present the change as expected and necessary. Last week, President Xi Jinping said that he is marching towards a comprehensive renewal at an unstoppable speed.
At the beginning of the Covid-19 crisis, China managed to control the virus. The U.S. meanwhile, suffered from many deaths and a recession. Recently, the fast recovery of the U.S. illustrated just the idea of uncertainty around the transition time.
Suppose president Xi delivers new reforms, while President Joe Biden cannot push through his proposals for expanding the workforce and renewing infrastructure. In that case, forecasts suggest China might grab the top place by 2031.
However, that outcome is not guaranteed. China’s improvement plan is already failing. Taxes and other business curbs obstruct access to advanced technologies and global markets, while Covid stimulus lifted debt to show levels.
The nightmare plot for Xi is that China might follow the same path as Japan. The fear is for also being promoted as a possible challenger to U.S. before it was hit three decades ago. A combination of change failure, global isolation, and financial crisis might stop China before it arrives at the top.
Another possibility is that if China’s official GDP data expands, the gap between the world’s biggest and second-biggest economies might be more important than it seems and closing at a slower speed.
Bringing all these plans together, Bloomberg Economics constructed scenarios for the result of the China-U.S. economic run.
If everything from domestic changes to global relations goes right for China, it might start the next decade side by side with the U.S.
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