Interesting (and thanks AEI for disabling copy and paste!):
When will China pass the US in economic size? The near universal belief that the People's Republic of China (PRC) has already passed or is soon to pass the US in size has multiple distinct flaws. These range from the gross--Chinese government statistics are unreliable--to the subtle--none of the ways economic size is measured are especially reliable.
Obviously, the policies of the two countries matter, especially whether China ever returns tothe pro-market reform path. While evaluating the competing development models is contentious and complex, growth arithmetic is simple. Putting policy aside, "the year 2030" turns out not to be a bad call for when China will pass the US in economic size, but so is "never."
This fits well with my understanding. China may pass us by--or not.
And if China does pass us by they might not hold it.
The AEI paper discusses problems with purchasing power parity, which I have problems with as a general replacement for GDP as a measure of national economic strength. Needless to say the paper has a much more informed discussion than my generalist issues with it.
Also, the paper discusses "bad GDP" as one-time additions to GDP that don't actually have longer-term benefits--like building a power plant never connected to the electrical grid (which is something I touched on in what was going to be in the next data dump but which I moved below in two paragraphs, given that it is related to my "sugar rush" comment).
China's Belt and Road Initiative (BRI) is a massive infrastructure project that will no doubt have great effects on China and the places it is built. But I don't know why we assume this centrally planned mega-project will work any better than any other socialist state-driven projects that pretend that state managers can plan ahead with that much knowledge, merely because of its fantastic scale.
I have no confidence that China's rulers know what the effects BRI will have on Asia where the BRI is being built or on China itself. The track record says that despite a short-term sugar rush during the construction phase that China blows the money without a good return on investment. It will take time, but that's my prediction.
And seriously, does this sound like deep long-range Chinese planning abilities?
Beijing is hurtling from one economic reform attempt to the next, but it’s creating ever more problems in its wake. At the plenary meeting of China’s rubber-stamp legislature, Beijing rolled out yet another slate of adjustments to its economic reforms. The steps taken at the National People’s Congress are the latest in China’s ambitious plans to micromanage its way through its slowdown without sparking a financial crisis. This round is aimed primarily at the private sector, which is suffering from a major credit crunch. The quick fix: some 2 trillion yuan (nearly $300 billion) worth of cuts to corporate taxes, fees and pension contributions – which combined are worth as much as 2 percent of China’s gross domestic product – plus pledges to get lending to those who need it. The reality is that the problems Beijing is trying to address now are the direct result of prior attempts to fix other problems.
I can't see much more than that without subscribing, but that's the gist, eh?
I certainly have not been impressed with claims China plans decades ahead.
Practically speaking, I don't know what is more dangerous. A China convinced it will dominate the global economy. Or a China that knows it will fall short of or fail to hold the crown.
UPDATE: Related thoughts on over-estimating China, including my often repeated caution that it is easy to see our problems while it is tough to reall absorb their problems from afar.
On the other hand, in 1941 Japan gave us a lot of problems with just 1/8 to 1/10 of our GDP. So don't dismiss China.
