Postponements of China’s date with economic destiny have cast some doubt on whether it will ever happen. The country’s productivity growth has slowed, and its demographics have turned. China’s workforce is already shrinking, a decline that will probably accelerate in future decades. The UN projects that China’s population aged 15-64 will decline by more than 100m in the 2030s. If China’s GDP does not overtake America’s by the middle of that decade, it may never do so, according to Capital Economics, a research firm. The OECD, the Lowy Institute, and the Centre for Economics and Business Research, project that China’s GDP will overtake America’s at some point in the 2030s. The Economist Intelligence Unit thinks it will happen in 2039. That prediction is strikingly close to Goldman Sachs’s original date [of 2041], set 20 years ago.
- Date Posted:
- June 8, 2023
During the past two quarters rising GDP has been more than offset by falling GDI. As the measures stand now (there are many revisions to come), the US economy appears to have contracted in four of the last five quarters. Meanwhile, payroll employment has grown and grown. Last spring, three of the five indicators were dropping but employment and industrial production were quite strong. Late last year, industrial production fell sharply, but other indicators were mixed. Payroll employment has continued to rise throughout, joined in recent months by the other “most reliable” indicator, real personal income. The jobful recession-that-isn’t-quite-a-recession continues. This can’t go on forever. At some point either the job market will crack or other economic measures such as GDP and GDI will begin to catch up with it.