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TOKYO -- China's nominal gross domestic product is unlikely to surpass that of the U.S. in the next few decades, the Japan Center for Economic Research said in an estimate, dropping a forecast last year that the world's two largest economies would switch places in 2033.
The Chinese economy will slow as a result of its stringent zero-COVID policy and stronger U.S. restrictions on exports to China, the Nikkei-affiliated think tank said Wednesday. Over the long term, labor shortages stemming from the country's dwindling population will act as a drag on its economic growth, it added.
Every December, JCER releases long-term growth forecasts through 2035 for 18 economies in the Asia-Pacific region.
When the pandemic struck in 2020, JCER forecast that China would overtake the U.S. as the world's biggest economy in terms of nominal GDP in 2028 at the earliest, taking into consideration Beijing's quicker containment of the virus and economic reopening. In 2021, however, JCER pushed that forecast back to 2033 on the grounds that Beijing's tighter IT regulations would hamper innovation.
This year's forecast envisions a further slowdown in China's economic growth to below 3% in the 2030s. In 2035, it will drop to 2.2%, down 0.8 percentage point from the 2021 estimate and close to U.S. growth of 1.8% in the same year. Although China's economy, as measured by nominal GDP, will approach that of the U.S., it will be only be 87% as large as that of the U.S. in 2035, according to the think tank.
There are two main factors behind China's expected slowdown in economic growth.
First is zero-COVID. Although China announced measures on Dec. 7 to ease some curbs, infections are increasing in cities such as Beijing. For its 2022 forecast, JCER assumed that all restrictions, including those on overseas travel, would be lifted in or after 2025.
China's consumer sentiment index fell to an all-time low in April, after the economy slowed following the lockdown in Shanghai. The index was flat in October. Many households are concerned about the future and are keeping a tighter grip on spending.
The second factor is U.S. restrictions on exports to China. In October, President Joe Biden's administration imposed new regulations requiring exporters to obtain licenses from the Commerce Department to sell advanced semiconductors and other high-technology products to Chinese companies. In addition, Republicans, who will hold the majority of the seats in the U.S. lower house from January, are demanding tough action on China.
JCER believes these two factors will slow the pace of productivity gains in China. In the event of a Taiwan contingency, the think tank predicts the growth of the Chinese economy will be further weighed down as foreign companies will accelerate their shift away from the country.
In the long run, China's population decline is forecast to act as a drag on growth. "China will be unable to surpass the U.S. economically, even after 2036," JCER said, due to slower productivity gains coupled with labor shortages.
The Communist Party of China has set two long-term targets for 2035 and the middle of this century in amendments to the constitution made in October. Its target for 2035 is to raise the nation's per capita GDP to that of a midlevel developed country.
The party has not released specifics, but experts believe it has Italy and Spain, with per capita GDP of around $30,000, in mind. JCER puts the figure at $25,745 in 2035, down 8.6% from its forecast two years ago.
The constitution vows that China will be "a modern socialist country" by the middle of this century, leading the world in fields ranging from the economy to military might. But it is possible that China will be unable to close the gap with the U.S.
China may be haunted over the long term by obstacles such as U.S. export restrictions, the zero-COVID policy, its own curbs on the domestic IT industry and others, and property market adjustments.
asia.nikkei.com
The Chinese economy will slow as a result of its stringent zero-COVID policy and stronger U.S. restrictions on exports to China, the Nikkei-affiliated think tank said Wednesday. Over the long term, labor shortages stemming from the country's dwindling population will act as a drag on its economic growth, it added.
Every December, JCER releases long-term growth forecasts through 2035 for 18 economies in the Asia-Pacific region.
When the pandemic struck in 2020, JCER forecast that China would overtake the U.S. as the world's biggest economy in terms of nominal GDP in 2028 at the earliest, taking into consideration Beijing's quicker containment of the virus and economic reopening. In 2021, however, JCER pushed that forecast back to 2033 on the grounds that Beijing's tighter IT regulations would hamper innovation.
This year's forecast envisions a further slowdown in China's economic growth to below 3% in the 2030s. In 2035, it will drop to 2.2%, down 0.8 percentage point from the 2021 estimate and close to U.S. growth of 1.8% in the same year. Although China's economy, as measured by nominal GDP, will approach that of the U.S., it will be only be 87% as large as that of the U.S. in 2035, according to the think tank.
There are two main factors behind China's expected slowdown in economic growth.
First is zero-COVID. Although China announced measures on Dec. 7 to ease some curbs, infections are increasing in cities such as Beijing. For its 2022 forecast, JCER assumed that all restrictions, including those on overseas travel, would be lifted in or after 2025.
China's consumer sentiment index fell to an all-time low in April, after the economy slowed following the lockdown in Shanghai. The index was flat in October. Many households are concerned about the future and are keeping a tighter grip on spending.
The second factor is U.S. restrictions on exports to China. In October, President Joe Biden's administration imposed new regulations requiring exporters to obtain licenses from the Commerce Department to sell advanced semiconductors and other high-technology products to Chinese companies. In addition, Republicans, who will hold the majority of the seats in the U.S. lower house from January, are demanding tough action on China.
JCER believes these two factors will slow the pace of productivity gains in China. In the event of a Taiwan contingency, the think tank predicts the growth of the Chinese economy will be further weighed down as foreign companies will accelerate their shift away from the country.
In the long run, China's population decline is forecast to act as a drag on growth. "China will be unable to surpass the U.S. economically, even after 2036," JCER said, due to slower productivity gains coupled with labor shortages.
The Communist Party of China has set two long-term targets for 2035 and the middle of this century in amendments to the constitution made in October. Its target for 2035 is to raise the nation's per capita GDP to that of a midlevel developed country.
The party has not released specifics, but experts believe it has Italy and Spain, with per capita GDP of around $30,000, in mind. JCER puts the figure at $25,745 in 2035, down 8.6% from its forecast two years ago.
The constitution vows that China will be "a modern socialist country" by the middle of this century, leading the world in fields ranging from the economy to military might. But it is possible that China will be unable to close the gap with the U.S.
China may be haunted over the long term by obstacles such as U.S. export restrictions, the zero-COVID policy, its own curbs on the domestic IT industry and others, and property market adjustments.
China's GDP unlikely to surpass U.S. in next few decades: JCER
Effects of zero-COVID policy prompt think tank to drop earlier forecast
asia.nikkei.com
