US-China competition: 2022 data casts doubt on China’s economic rise

0


For China, 2022 was one of the most difficult years in decades. According to official data released this week, gross domestic product growth slowed to 3%, and the country’s population declined for the first time since the early 1960s.

These trends are prompting a rethink of China’s projected path to become the No. 1 economic superpower – recalculations that have major implications for the Indo-Pacific, where China has long served as an engine of regional economic integration and growth. 

Why We Wrote This

As new data on China’s slowing economic growth and declining population has cast doubt on the country’s rise, economists are recalculating their forecasts for U.S.-China competition. Many see strengths and weaknesses on both sides.

“The political and policy elites in many Asian countries constantly watch the Chinese economy, and they understand the head winds,” says Li Mingjiang, associate professor at the Nanyang Technological University in Singapore. “There are doubts now” about how soon – or if – China will surpass the United States, and “that is one of the reasons they want to diversify.”

Yet observers in Asia see weaknesses in the U.S. as well. 

Many countries were shocked in 2017 when the U.S. withdrew from the Trans-Pacific Partnership trade agreement, and are urging the U.S. to join the renegotiated version. China has already applied.

Glen Fukushima of the Center for American Progress says, “The hope in Japan is that the U.S. will get its act together politically and be able to sustain its role as a leading innovative country” in the region.

Millions of Chinese are venturing back to their hometowns this week to usher in the Year of the Rabbit and celebrate long-delayed family reunions. 

But casting a pall over the festivities are ongoing concerns that gathering will bring a new wave of COVID-19 to rural areas with limited health care, as the epidemic has claimed some 60,000 lives since the country abruptly reopened last month, according to official data. “Tough challenges remain,” Chinese leader Xi Jinping said in a holiday video chat with medical workers Wednesday, “but the light of hope is right in front of us.”

China’s chaotic emergence from its “zero-COVID” regime is one of several measures that made 2022 one of the nation’s most difficult years in decades, experts say. 

Why We Wrote This

As new data on China’s slowing economic growth and declining population has cast doubt on the country’s rise, economists are recalculating their forecasts for U.S.-China competition. Many see strengths and weaknesses on both sides.

Beijing released economic data this week showing gross domestic product (GDP) growth declined to 3% in 2022, well below the government target of 5.5% and the second-lowest rate since 1976. It also announced a pivotal demographic shift – the country’s population declined in 2022 for the first time since the early 1960s. India is now expected to surpass China as the world’s most populous country this year.

Although the economy is expected to rebound from the reopening, the long-term trends of slower growth, low productivity, and a graying, shrinking population are prompting a rethink of China’s projected path to become the No. 1 economic superpower – recalculations that have major implications for the world and especially the Indo-Pacific, where China has served for many years as an engine of regional economic integration and growth. 

China’s economy will “experience much slower growth going forward,” says Roland Rajah, lead economist at the Lowy Institute, an independent policy think tank in Sydney. “Demographic and external head winds have intensified, while there is still little sign of the kind of major reforms needed in boosting productivity that could provide an offset.” 

A Lowy report co-written by Mr. Rajah last year projected that while China would become the world’s biggest economy by 2030, “its size advantage over America would be slim and it would remain far less prosperous and productive per person than the United States and other rich countries, even by mid-century.” The Japan Center for Economic Research, which two years ago predicted China would surpass the U.S. in 2028, said in a forecast last month that “China’s GDP will not surpass that of the United States.”

A dog crosses a road at a financial district with buildings under construction, in Beijing Jan. 11, 2023. Economic data released this week by Beijing showed gross domestic product growth slowed to 3% in 2022, and the country’s population declined for the first time since the early 1960s.

Indeed, Asian observers are paying keen attention to the relative balance of power between China and the U.S.



Source link

Comments

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More