What happened to the China GDP talk of 6-8 years ago?

[Green Line]

I remember around 2008/2010 it seemed to be a consensus among many people that the Chinese economy would be the largest in the world very, very soon.  I think some estimates were even saying by 2016.  I just looked it up today and this is where it stands:

1     United States    18,558,130  (Thanks Obama!)
2     China            11,383,030


The gap hasn't changed much in the past couple of years, and they definitely won't catch us by 2020 at this rate.  Was all that talk overblown?  Or is China still on track to be the worlds largest economy?  What do you guys think.

(I know if you go by current growth rates, they will be the largest eventually.  I'm more asking if it's sustainable)

[dead0man]

Obviously overblown BS.  Just like Japan in the 90s.  Fearmongering sells.

[politicallefty]

Obviously overblown BS.  Just like Japan in the 90s.  Fearmongering sells.

I don't think Japan was overblown or fearmongering. Japan's growth in the late 80s was explosive and wasn't starting too far back from the US like China. If they'd kept pace in early 90s, they probably would have surpassed the US. Even if the Lost Decade had not happened or been delayed several years, would the implications have really been that serious for US? There's probably a difference when your main economic competition isn't an adversary. Either way, the US economy was due for the Dot-Com Boom in the late 90s.

I don't really know much about the intricacies of the Chinese economy, but even now, China's GDP is at 60% of US GDP. In 1995, the Japan's GDP managed to hit about 70% of US GDP. Looking as far back as 1970, that was the closest any other country has been to the US. Prior to Japan becoming the world's second largest economy (surpassing the Soviet Union in 1977-78), no country was even at half of US GDP.

[Indy Texas]

Obviously overblown BS.  Just like Japan in the 90s.  Fearmongering sells.

I don't think Japan was overblown or fearmongering. Japan's growth in the late 80s was explosive and wasn't starting too far back from the US like China. If they'd kept pace in early 90s, they probably would have surpassed the US. Even if the Lost Decade had not happened or been delayed several years, would the implications have really been that serious for US? There's probably a difference when your main economic competition isn't an adversary. Either way, the US economy was due for the Dot-Com Boom in the late 90s.

I don't really know much about the intricacies of the Chinese economy, but even now, China's GDP is at 60% of US GDP. In 1995, the Japan's GDP managed to hit about 70% of US GDP. Looking as far back as 1970, that was the closest any other country has been to the US. Prior to Japan becoming the world's second largest economy (surpassing the Soviet Union in 1977-78), no country was even at half of US GDP.

Except that it's virtually impossible for any country to "keep pace" at that level unless they want to keep the printing presses running 24/7.

At a basic level, there are three ways a country can increase its total output (i.e. its GDP):
1. Population growth (leading to more people producing things)
2. Substituting work for leisure (people producing more because they work more)
3. Productivity growth (people producing more without working more)

Japan can't do the first one because its population was stagnating for years and is now starting to decline outright.

It has been doing the second one with ferocious intensity for decades and that was a big contributor to their phenomenal growth in the '80s. When more of your people are getting old and no longer working, the people who are still of working age have to work more in order to make up for that. Hence, the archetypal overworked salaryman and the glorification of employees passed out at their desks from working all night.

Productivity growth has been slowing in the US since the 1970s (there was a small bump in the '90s related to the advent of personal computing in offices). I'd imagine the story has been similar in Japan.

[politicallefty]

Except that it's virtually impossible for any country to "keep pace" at that level unless they want to keep the printing presses running 24/7.

At a basic level, there are three ways a country can increase its total output (i.e. its GDP):
1. Population growth (leading to more people producing things)
2. Substituting work for leisure (people producing more because they work more)
3. Productivity growth (people producing more without working more)

Japan can't do the first one because its population was stagnating for years and is now starting to decline outright.

It has been doing the second one with ferocious intensity for decades and that was a big contributor to their phenomenal growth in the '80s. When more of your people are getting old and no longer working, the people who are still of working age have to work more in order to make up for that. Hence, the archetypal overworked salaryman and the glorification of employees passed out at their desks from working all night.

Productivity growth has been slowing in the US since the 1970s (there was a small bump in the '90s related to the advent of personal computing in offices). I'd imagine the story has been similar in Japan.

I'll admit right now that this isn't my strong subject. I'm just looking at the facts and what I already know. I think Japan's growth in the late 80s is one the most impressive in modern history. They increased their GDP by over 50% from 1985 to 1986 and put extremely strong numbers the next two years. Then, the numbers flatlined for a couple years before booming again and peaking in 1995. Like I said, it was very possible for Japan to have surpassed the US, albeit briefly.

I've always been impressed with Japan's economy in relative terms. It was the second largest economy, only to the US, for over 30 years. I agree with you on your list of three. Japan does the second exceedingly well. If they can work on the third, they should probably start growing at a robust pace. I think Japan's main inhibitor of growth is the first. Yeah, the Japanese do live longer than most other First Worlders, but their birth rate and immigration laws are horrendous for future population growth. I don't think they can really increase the birth rate. Ultimately, if Japan wants to really grow its economy, it will have to completely change its immigration policy.  As much as I love Japan, I'm not a fan of its strict immigration policies. I think Japan's only hope to remain a major world economy is to open its doors. If it doesn't, it will keep getting smaller and older and basically not even a hollow shell of what it is even now.

I'm not worried about China because I think its economic growth is from brute government force. I don't think the fundamentals are there. I think China's far more likely to experience a serious implosion than to get anywhere near the US in terms of GDP. China still does not have what we in the First World would call a true middle class.

[buritobr]

Until 2008, China's GDP was growing at a rate of 10% per year. Nowadays, China's GDP is growing at a rate of 6% per year. USA's GDP is growing at a rate of 2% per year.
China is still catching up, although it is catching up at a slower rate.

[angus]

I remember around 2008/2010 it seemed to be a consensus among many people that the Chinese economy would be the largest in the world very, very soon.  I think some estimates were even saying by 2016.  I just looked it up today and this is where it stands:

1     United States    18,558,130  (Thanks Obama!)
2     China            11,383,030


The gap hasn't changed much in the past couple of years, and they definitely won't catch us by 2020 at this rate.  Was all that talk overblown?  Or is China still on track to be the worlds largest economy?  What do you guys think.

(I know if you go by current growth rates, they will be the largest eventually.  I'm more asking if it's sustainable)

If you asked the question, "Which is the richest nation?" once every 500 years starting, say, 4000 years ago, the answer to the question would have been "China" every time except the last two times.  In the early 1500s the answer was probably Spain and in the early 2000s the answer was the United States.  Of course China will surpass the US.

But they'll do it on their own terms.  I remember reading 20 years ago that in 20 years China's GDP would surpass that of the US and I thought then it was a little far-fetched.  Even ten years ago I said as much on this forum.  I don't agree that it's "fearmongering" but rather mediocre investment advice.  I won't call it bad investment advice.  If you find a solid chinese firm that sells good stuff then by all means invest, but the huge growth rate that China experienced after they were honored with the "most favored nation" sobriquet by the Clinton administration in the 90s wasn't sustainable.  They don't have the messiness of democracy, so that gives them an edge, but their internal demand is nearly saturated.  

The prediction that China will again be the richest nation on earth is a safe one.  No one goes out on a limb when he makes that prediction.  The prediction that it'll become so in a certain year is useless.  No one knows when that will happen, and frankly it doesn't matter.  If you see a good opportunity and want to gamble on it, then gamble.  There's no guarantee that your investment will pay off, but you can't make megamoney by playing it safe.

[Beet]

If China gets stuck in the middle income trap, as looks more likely, its nominal GDP will never surpass the U.S.

China's current problems are because its political leadership quality has deteriorated sharply. The revolutionary generation (Mao; Deng) lived lifetimes. When they were bad, they were epically bad (Mao), but when they were good, they were epically good (Deng). Since then what they've had is increasingly a generation of mediocres, in a dysfunctional political system. Anyone who challenges authority of sticks his head out is chopped off (such as Bo Xilai). The present top of the party is rather unimpressive at most things, besides consolidating his own power. All of this has had negative knock-on effects on the economy.

[PresidentSamTilden]

The 2008 recession and subsequent weak "recovery" worldwide is what happened. China is mostly an export driven economy. Consumption in both the US and Europe (China's largest trading partners) nosedived following this and has been very slow to increase.

Here is the raw data on US exports to China. Look at the meteoric rise starting from 2001, and then how it has plateaued following the crisis. https://www.census.gov/foreign-trade/balance/c5700.html#2008

[GMantis]

I remember around 2008/2010 it seemed to be a consensus among many people that the Chinese economy would be the largest in the world very, very soon.  I think some estimates were even saying by 2016.  I just looked it up today and this is where it stands:

1     United States    18,558,130  (Thanks Obama!)
2     China            11,383,030


The gap hasn't changed much in the past couple of years, and they definitely won't catch us by 2020 at this rate.  Was all that talk overblown?  Or is China still on track to be the worlds largest economy?  What do you guys think.

(I know if you go by current growth rates, they will be the largest eventually.  I'm more asking if it's sustainable)

In 2010 China's economy was about 35% of the US economy. It is now over 60%. This can hardly be considered little change.

[GMantis]

They don't have the messiness of democracy, so that gives them an edge, but their internal demand is nearly saturated.  

This is a ridiculous claim when you consider the potential growth in consumers as living standards improve.

[jaichind]

I remember around 2008/2010 it seemed to be a consensus among many people that the Chinese economy would be the largest in the world very, very soon.  I think some estimates were even saying by 2016.  I just looked it up today and this is where it stands:

1     United States    18,558,130  (Thanks Obama!)
2     China            11,383,030


The gap hasn't changed much in the past couple of years, and they definitely won't catch us by 2020 at this rate.  Was all that talk overblown?  Or is China still on track to be the worlds largest economy?  What do you guys think.

(I know if you go by current growth rates, they will be the largest eventually.  I'm more asking if it's sustainable)

Most of those projections were for PPP GDP and not nominal GDP.  And as of 2015 PRC PPP GDP did exceed the USA.  So in that sense those PPP GDP projections were quite accurate.   As for nominal GDP some of the projections in 2009-2010 for the PRC overtaking the USA are now in retrospect too optimistic.  The differences is actually not because the PRC GDP growth rates under-performed those projections but it was more about the assumed appreciation of the CNY relative USD was not as strong as expected.  Starting in 2014 CNY stagnated and then weakened against the USD when most projections from 2009-2010 called the CNY to strength against the USD contentiously.