Category Archives: China

China’s Great Leap Backward

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October 23, 2023Ten years ago this November, the 18th Central Committee of China’s Communist Party held its quinquennial Third Plenum.  The meeting decided on a set of reforms that were well-chosen to sustain the national growth rate.  But the reforms have not been implemented, contributing to a big slowdown in the economy.

  1. The decline in Chinese growth

As of ten years ago, 2013, a naive extrapolation of the differential in growth rates between China and the US suggested that the number two economy would overtake the number one economy by 2021 (when GDPs are compared using nominal exchange rates). Some even said the cross-over year would be 2019. This did not happen; the US economy remains far ahead.  Goldman Sachs and others now project that China’s GDP will not catch up with US GDP until 2035, if ever.  Even if the crossover occurs, it may be only temporary.  The Chinese economy is forecast to peak sometime in the middle of the century, after which the ongoing decline in the labor force will outweigh productivity growth.  This drastic revision of crossover forecasts is one indication of how sharply trend growth in the Middle Kingdom has been revised downward since 2013. read more

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How China Compares Internationally in New GDP Figures

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May 31, 2020 — The World Bank on May 19, as it does every six years, released the results of the most recent International Comparison Program (ICP), which measures price levels and GDPs across 176 countries.  The new results are striking.  It is surprising that they have received almost no attention so far, perhaps overshadowed by all things coronavirus.

For the first time, the ICP shows China’s total real income as slightly larger than the US.  It reports that China’s GDP was $19,617 billion in 2017, in Purchasing Power Parity (PPP) terms, while the United States’ GDP stood at $19,519 billion. read more

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Will the Coronavirus Lead to Global Recession?

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February 27, 2020 —  At the start of the year, the economic mood was tending toward the optimistic.  True, growth had slowed a bit in 2019. US GDP grew 2.3 % in 2019, down from 2.9 % in 2018.  World growth was weak in 2019 as well: 2.9% according to IMF estimates, down from 3.6 % the year before.  Still, there had been no recession.  And forecasts as recently as January called for world growth to rebound in 2020.

Global recession?

Now, just since January, there is new reason for pessimism.  Recessions are exceedingly difficult to forecast and the wise economist avoids trying.  But the odds of a global recession have risen dramatically.  The reason is the coronavirus that originated in Wuhan, technically named COVID-19. read more

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