Revising down the rise of China
The future of China’s ongoing global rise is of great importance to both China and the rest of the world. Predicting long-term economic performance is inherently difficult and open to debate. Nonetheless, the authors show that substantial long-term growth deceleration is the likely future for China, given the legacy effects of its uniquely draconian past population policies, reliance on investment-driven growth and slowing productivity growth. Even assuming continued broad policy success, projections suggest growth will slow sharply to roughly 3% a year by 2030 and 2–3% a year on average over the three decades to 2050. Growing faster, up to say 5% a year to 2050, is notionally possible given China remains well below the global productivity frontier. However, the authors also show that the prospect of doing so is well beyond China’s track record in delivering productivity-enhancing reform, and therefore well beyond its likely trajectory. China also faces considerable downside risks.
The authors' projections imply a vastly different future compared to the dominant narrative of China’s ongoing global rise. Expectations regarding the rise of China should be substantially revised down compared to most existing economic studies and especially the expectations of those assessing the broader implications of China’s rise for global politics. If China were on track to grow at 4–5% a year to 2050, as many seem to hold, it follows that China would be on course to become the world’s most dominant economy by far. With 2–3% growth, China’s future looks very different. China would still likely become the world’s largest economy. But it would never establish a meaningful lead over the United States and would remain far less prosperous and productive per person than America, even by mid-century.