For years, we have said it again and again, in a tone that is sometimes fatalistic, sometimes jubilant or frightened: the XXe was the century of the United States, the 21ste century will be Chinese.
Concrete sign of this event: the moment of the anticipated “overtaking” of the United States by China, measured by the comparison of gross domestic products.
A moment which, at the dawn of the century, was announced for 2020, but whose horizon continues to recede. Even to the point that this overcoming, long announced as inevitable, now seems uncertain.
GDP is an arbitrary, contested and disputable measure of the quality of life and economic power of a state or nation. Numbers don’t tell the whole story, and calculation methods vary. Comparing different GDPs, particularly to determine the relative standard of living of a country, is hazardous.
This is why the concept of “purchasing power parity” (PPP) was introduced a few decades ago, to reflect the fact, for example, that 25,000 US dollars in country although 50,000 dollars in country Y.
To take the China–United States comparison: the $225 billion Chinese military budget (at current currency conversion rates) is perhaps not that far — in fact and in real capacity — from the $700 billion. of the American military budget, among other things because of the 4 to 1 ratio between the respective salaries of soldiers from the two countries.
In 2022, US GDP was $25.5 trillion; that of China, 18,000 billion. But the “artifice” of the PPP calculation causes Chinese GDP to jump to some 30,000 billion… which would already make it the leading country in the world. But when we compare, not the standards of living, but the power and influence of a country internationally, we prefer to keep the traditional method of exchange rates.
And so… China is still far from the mark. Even if in 40 years it has achieved growth never seen in history, in terms of size and speed, it is today experiencing a significant slowdown, the end of an era. With real political and strategic consequences.
In 2010, the most often cited forecasts of “overshoot” generally placed it at the beginning of the 2020s. The weekly The Economist even ventured to mention 2019 as “the fatal year” for the United States…
Today, the London research center CEBR (Centre for Economics and Business Research) revised its forecasts and pushed back the hypothetical “year of overshoot” to 2036. As for The Economist Intelligence Unithe postponed it several times, from 2019 to 2026… then to 2032 and 2039!
Many economists doubt that the Chinese economy will ever surpass that of the United States. Even if this were to happen, it would be brief, because according to the same futurists, there would quickly be a “counter-overshoot”. With two underlying reasons.
The first is demographic. Already this year, China’s population has started to decline, while India has moved to first place in the world. Currently, the UN predicts that in 2100 there will be fewer than 800 million Chinese (compared to almost 1,400 million today). The Shanghai Academy of Social Sciences (quoted by France Inter, early 2023) suggests a possible drop to 587 million at the end of the century: a real collapse!
The demographics of the United States, by comparison, remain dynamic: 282 million inhabitants in 2000; 309 million in 2010, 331 million in 2023.
The other major growth factor is that labor productivity, the second major growth factor, is slowing in China. Xi Jinping’s authoritarianism worsens the situation: the levers of the economy have been brought back under the control of a tyrannical Communist Party, which demands loyalty and annihilates the initiative potential of entrepreneurs.
The misadventures of the Alibaba company and its boss, Jack Ma (who literally disappeared after his sudden resignation in 2019), illustrate the forced submission that characterizes public life in China.
Political tyranny, deflating real estate bubble, terrible debt of local authorities, financial sector with feet of clay, massive unemployment of qualified young people: on the brink of 2024, the Chinese economic outlook appears gloomy.
The CEBR’s hypotheses for 2100 are spectacular: American GDP would exceed that of China by 45%… In first place, we would find India, whose economy would be 90% larger than that of China… and 30%. higher than that of the United States.
Faced with such an anticipated catastrophe, Xi Jinping and the Communist Party can react in two ways. They can put water in the wine of the dictatorship, return to the opening of the economy to the world, seek again investments and skills from abroad.
The second, more threatening path could be dictated by Xi’s haste to achieve the goals he considers essential, before demographic and economic decline takes over.
Which means: effectively supporting those who provoke wars and put the West in difficulty: Putin, Hamas, the Iranian ayatollahs… And triggering the much-feared “Operation Taiwan”, considered by the nationalist hawks in Beijing as the key to a supposed “Chinese renaissance”.
François Brousseau is an international affairs columnist atHere Radio-Canada. [email protected]