China is on track to overtake the US as the world’s largest economy by the end of the decade, according to the International Monetary Fund (IMF). By 2024, China’s economy will be more than twice the size of America’s and three times Japan’s. The IMF predicts that China’s share of world economies “GDP in purchasing power parity (PPP) will be even higher than US GDP, and that adjusted prices will apply. China has made by far the largest contribution to growth in recent years, replacing the US by keeping the world’s smallest economies on their toes.
To be sure, rebalancing would remain a major player in the global economy and would be better positioned for long-term growth. It would also be very different from trading partners in the region and the rest of the world. It would certainly reduce the risk that importing countries will take protectionist measures against China’s exports. Such a rebalancing will not only provide a more sustainable domestic growth strategy but will also help to reduce global economic imbalances.
China will dominate the world, and why most business leaders are blind to its impact, in our recent article on China. When it comes to soft power, the US ignores human rights and values, while China is already overtaking it.
China’s robust growth is edging ever closer to its goal of 1.5 billion people by 2020 and 2.4 billion by 2030.
As a result, Chinese and US exports fell by 7.8% in June, and the Chinese economy’s net export share has shrunk sharply over the years, now falling below 1% of total GDP. This is not surprising, since China is the world’s second-largest economy after the United States, and it’s per capita income is above the global average. China has not been deeply affected by the recent downturn in the US economy, the worst since the 2008-09 financial crisis, but it is one of the largest exporters of goods and services to other countries.
Given China’s central role in global growth, there is no evidence that growth has slowed significantly or that it has been able to remain so high. It is simply that its economy has not been damaged as much as the impact in the rest of the world, including the United States, has been shrinking in the face of its role as a global economic locomotive. There is little doubt that China will be at the center of the global cycle for the next five years, but, with China and the US and other major economies in an ongoing economic war, economic “warfare” will inevitably transform into a broader slowdown in the global economy in 2018-19.
China’s engagement with developing countries has long been driven by the resources needed to feed its growing economy, but now its economy is struggling. It faces an aging population, a shrinking workforce, and a lack of investment in its infrastructure. The role of China’s special economic interests is particularly worrying, as its influence is expanding and manifesting itself in markets where it is otherwise uncompetitive. The Chinese government, because the legitimacy of the Party depends on the health of the Chinese economy and its engagement in the developed world.
China’s exports are lowering consumer prices around the world, and its imports are beginning to have a big impact on global commodity prices. Asian countries are increasingly trading with China, owing to a growing imbalance in world trade, particularly in commodities such as oil and gas. If Indonesians are divided, there is little ambiguity about which country dominates, with a share going to the US and a share to China as the top economy. But if they were divided over which economy is the leader, they would have a better chance of choosing China as the global economy’s leader than the United States.
Favorable views of “Chinese economic influence” are more common among those who believe their country has good economic ties with China and who favor closer economic ties with China. Those who claim that China is the world’s leading economic power are much more likely to favor stronger economic ties with China than with the United States.
In Lebanon, for example, those who claim that China is the world’s leading economic power are much more likely to believe that the US is a top economy seeking stronger economic ties with China. The United States is ranked as the second-largest economy in 21 of the 34 countries surveyed, while China is considered the top economy in 12 countries and is tied with Britain and Japan as the top economic powers in the world. China has the largest foreign exchange reserves in the world and has made a major contribution to the growth of the global economy in recent decades. Economically, China’s strong economic influence over many of its neighbors has enabled it to dominate global markets in several key industries and has had a significant impact on world trade and economic growth.