Also, if current growth rates hold, everyone on the planet will be employed by Amazon in 2 years.

I am not sketical that China has a quickly growing economy, but models that project 20 years into the future often fail to account for black swan events (ex: 9/11, 2008 financial crises, famine/drought, decline in oil price since 2013, etc) that require total model changes. I expect at least 1 of these events in the next 20 years and likely a few. I’m thinking: Environmental crises, Demographics crises in China (too many men, not enough women) Debt crises North Korean crises

Also, I wonder how much innovation will come out of China. As far as I can tell, innovation has generally come from Western countries (mostly the U.S.) and China develops internal clones after seeing what is successful. I don't know if the models are taking into account that China will be technologically lagging behind by several years. Maybe this doesn't have much impact, but I think it might.

I don't think we can underestimate the Chinese power to innovate either - consider Shanzhai[1]. What comparable practice do western cultures have?

Sharing and mashing up IP without restriction and less regulation could be a serious challenge to competition in the traditional sense.

[1] https://en.m.wikipedia.org/wiki/Shanzhai

Imo Shenzen has shown some real supply chain innovation but... seriously you're bringing up counterfeit goods offloading IP development costs onto competitors as an example of innovation from China?

You have to look deeper into the phenomenon. I'm not talking about the illegal practices and poor quality, I'm talking about the fact that these practices often lead to lower cost and accidental innovations due to disregarding IP laws.

I think it's fascinating how certain types of products have been targeted for counterfeiting and how far they have spread. When you look at the ever downward pressure on price (and often, inadvertently quality) demanded by customers, I think it might lead to the conditions supporting these practices.

It's definitely a think outside of the box type of exercise, but, look at open source and compare for a minute. Of course there is a huge differences, but I think the things the comparison highlights are of interest to question.

For the record, my comments weren't mean to be disparaging in any way of the multitude of Chinese innovations. Clearly the Chinese power to innovate has existed for probably longer than many countries and many critical inventions and ideas arose there. For example, gunpowder, paper, compasses, etc.

The IP has to exist before you can "mash it up"

China doesn't need either innovation or to catch up technologically. They have 5x the population of USA. They can be lagging far behind and still have a larger economy.

in the digital and mobile software space and how they can transform society, i am seeing China a year and a half ahead of US and Japan (and quite a bit ahead of Europe). Same in infrastructure where it's decade ahead of the US. No one I know in the cities in China actually carries cash any more. Often I the foreigner am the only one carrying cash. Living without WeChat is pretty much impossible to the extent i have it on my phone explicitly to talk to my Chinese colleagues. If you have a reasonable Alibaba credit score, you don't need any financial paperwork to get visas etc.

Oh they also have a much more advanced surveillance state, complete with a social behavior score system.

Look to a company like DGI, founded and based in China. They seem to be blazing a trail in a tricky technical market: consumer and industrial drones, and manage to be the world market leader.

https://en.wikipedia.org/wiki/DJI_(company)

Regarding demographics, have you seen this? https://www.washingtonpost.com/news/worldviews/wp/2016/11/30...

To see if you are correct I downloaded an executive summary of the report.

Their model does track energy prices – heading: “CHEAP ENERGY TO DRIVE GROWTH IN THE 2020s” and the impact of climate change – heading: “CLIMATE CHANGE STARTS TO IMPEDE GROWTH IN SOME COUNTRIES” among other things. I presume their model must track demographic shifts globally (it'd be a pretty crap model if it didn't) – heading: “AUSTRALIA RISES TO BECOME ELEVENTH LARGEST ECONOMY AS POPULATION RISES” based on what I'm seeing in the summary.

I don't know how they'd factor in crises such as conflicts and financial meltdowns given that you could make a lot of money if you could forecast such things. I guess they have to adjust their models in the face of new realities. I suppose we have to prefix their report with an "all other things being equal" hedge but they do appear to have taken into account obvious enough factors (energy/climate/population/…) which they can kind of keep track of.

Okay, but where will GDP per capita be? If you think about it, it is really sad that China has 1 billion MORE people than the US and yet the GDP of the US is still 165% of China's. GDP per person is the figure that really tells you what the standard of living is for average people, not just total output. The growth of the Chinese economy is not bad for the US. It means more Chinese entering the middle class, buying American goods, offering great products and services to American buyers, etc. If the Chinese economy surpasses ours, it will be a good thing for the US too.

If the Great Firewall is anything to go by, I would expect Chinese people to be spending less on American services due to more services being blocked.

The Chinese government has grown slightly more protectionist as of late, imo their current economic situation is very fragile, despite the western fear of the rise of China. The U.S. economy is very diverse and robust, and has undergone several shocks...China, has not in the modern boom really experienced any sort of deep economic swoons. I fear what houses of cards have been built, which normally don't reveal themselves until the chairs run out. Their government is so hamfisted and wasteful, it's hard not to imagine an economic earthquake on the horizon. The US and Europe are really the main drivers of the world economy right now, China and many emerging economies have been slowing down.

I am fascinated by what may happen in China financially as well. The chairs have run out on the US many times, and Iceland, and Ireland, and Venezuela, and Argentina, and Greece...you get it.

Let’s see what happens in the future. I don’t believe that a lot of things the chinese government is doing right now are sustainable. I believe that somehow the markets will eventually open up and closely resemble the US / Europe. Who knows how long it will take or if it will even happen in my lifetime though. The huge advantage of the US over China is a stable and fair rule of law. Things like the first amendment and private property rights matter a lot for business. The article talks about the year 2032. Do you think the firewall will still be live then? I hope not.

What firewall? My Baidu search results don't mention a firewall.

Can you use Google? Can you use Gmail/Hotmail? Wikipedia? Facebook?

I couldn't from Shanghai

there are many many regular US products that are banned from being exported to China. for example, you can order a Intel Phi processor from your local computer shop and build a hobby computer using that, yet it is criminal offence to sell that to Chinese buyers living in China.

watch the video below, Chinese citizens could end up in US prison for doing that.

https://www.youtube.com/watch?v=I0U6ZMeVrB4

It’s funny because the Phi isn’t even that great compared to a GeForce, which can be imported into china. Heck, they don’t even ban Teslas.

Yeah, I wonder when they are expected to surpass the US in per capita GDP; or the median income adjusted for PPP. A lot of China is still in abject poverty.

Share of China's population living in extreme poverty:

1980: 88.3%

2013: 1.8%

(World Bank)

No one is predicting that for all time. Though China is definitely already upper middle income when it comes to gdp/capita, they aren’t a poor country even if they aren’t a rich one.

PPP isn’t very meaningful, it doesn’t account for many things being more expensive in china for equivalent developed world lifestyles. It just means people have cheaper life styles outside of services.

Is GDP per person really the metric though? Doesn’t wealth/income distribution have something to do with it?

>It means more Chinese entering the middle class, buying American goods

China urban household's per income isn't that much better....at $4500 dollar/year or around $375 dollar/month. https://www.realclearworld.com/articles/2016/09/16/china_is_

> China has 1 billion MORE people than the US and yet the GDP of the US is still 165% of China's That's because the rural population - 800M - only makes about $4/day, or $1400 a year....crippling poor. https://www.realclearworld.com/articles/2016/09/16/china_is_ .... Whenever my clients say they want to expand to China because they have 1.3 billion people! I laugh.

this is also witnessed by many businessmen from Taiwan. they concluded that Chinese living in China can't afford to eat $1 instant noodle, the example they described is that once someone opens up a cup of instant noodle in public, people gather around him/her and start to look at the instant noodle in jealous.

:)

It's interesting to see that while much of Europe's top economies slide down the ladder, Japan is pretty steadfast in maintaining its position as world's no 4 econ --despite all the naysayers and their demographics (which most neoliberal economists insist must change, for them to remain healthy).

Should be interesting to see how China and India use their economic might to influence global culture (i.e soft power).

Japan's GDP per capita in 1995, is 60% more than that of US. Now their GDP per capita is 60% of U.S...which says a lot.

The rank actually doesn't say too much. Japan's power is waning, while European country, I know is controversial and hated by conservatives, has EU. EU has a much bigger representation in world economy in terms of the effects of policy and regularization.

The EU will continue to shape regulation and policy, but with rising China and India, there may be some change in that.

I'd say it's good to have the EU and the US set some regulation minimums (EU is stronger in some areas, the US is stronger in other areas) but China and India will likely begin influencing policies --perhaps for the better. For example, China regulating (banning) the importation of certain rubbish.

W/re GDPP[1], they have always had an issue with productivity vis a vis the US. However, your figures exaggerate the extent, according to this: https://www.bls.gov/ilc/intl_gdp_capita_gdp_hour.htm#table02

[[1], to your point below]GDP per employed person at PPP which to me is more reflective of an economy.

Your referred number is PPP, not GDP.

My source is from World Bank:

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...

A lot of that was just asset bubbles though. That wealth wasn’t real, just like the Chinese property bubble today.

Measured how?

http://hdr.undp.org/en/composite/HDI

Um, Japan was #2 and has been sliding down since about 1995-ish.

Understood, but after that they have been holding --and apparently will be able to hold till at least 2032, per pub. On the other hand Euro countries keep losing position.

One can't expect them to hold off countries with 10x their pop.

China invests in solar, renewables and R&D while the US cuts science funding and tries to keep coal alive. With the current leadership Chine will overtake the US much sooner than 2032 and rightfully so.

'Rightfully'? In other words, on a moral basis, investing in solar power and renewables (China still burns huge amounts of coal - it has to) trumps massive political repression?

https://www.nytimes.com/2015/11/04/world/asia/china-burns-mu...

Pure numbers is the worst way to try to make this comparison. Quantity is not the same as quality, and quality really matters when you're analyzing national economies.

What often gets lost in the equation, because it's difficult to put a number to, is robustness. The Chinese economy can be looked at as a gaggle of one trick ponies. For example, you can go to a Chinese factory, hand them a blueprint, and get very good results, on maybe the third run, after you iron out all the kinks.

American industry iterates on proven designs that have been iterated on continuously since the Industrial Revolution. Our creative professionals can get very specialized. I met a young lady engineer once who could talk your ear off about toilets. She was in charge of a very niche aspect of toilet design and her one specialty likely numbered in the hundreds.

Now I'm not saying that Chinese engineers can't produce quality products. What I'm saying is that as quality as these products are, they're still stone age in many, many, many respects compared to American designs. Techies can't really see or understand this because all of this collected industrial knowledge isn't open source and is passed through institutions.

They can produce a toilet that works. We can produce a toilet design that lasts 4 times longer, uses 30% less water, meets recyclability guidelines for porcelain, does not compromise strength yet is 40% lighter, and can be packed 30 per pallet rather than 10. Sure it gets manufactured in China, and they might rip off one of our designs, but they're going to be perennially playing catch-up. Can they make that toilet in 10 different fashions to match both upscale and low-end bathrooms? Rinse and repeat for every single other consumer and industrial product that modern society uses.

We've been dominant in so many areas for so long that for China to even get on our level would mean to first create a middle class that's the same size as ours, so they can start iterating on a similar level as we have been doing for over a hundred years. That's no mean feat. Just because they're moving similar quantities of products around as we are doesn't mean that that wealth is getting shared with the public enough to create a professional class.

And until they can create a professional class of their own, they will always be playing second fiddle to our professional class.

Perhaps(!) there is something inherently superior about Western nation's ability to innovate, but who's to say we must continue to innovate? At some point, will we not reach a "good enough" point for toilet design after which cost is the more likely determining factor? And can not the same thing be said of many things, such as televisions, cell phones, etc? Is this a possible direction the future could take? Keep in mind, the US wasn't always on top, just because Japan didn't take over doesn't mean China can't, sometimes things do change fundamentally.

> who's to say we must continue to innovate?

It's inherent in human nature, the perception that things could be better and the desire to improve them.

> Keep in mind, the US wasn't always on top,

You're right, but it's the Brits that preceded us as the major world power. We inherited their legal system and commercial focus, it was a big reason why we were able to take the lead.

The other is our scale. The reason we talk about China being a rival and not Japan is that massive populations drive far far more progress, and as advanced as Japan is in many things, they simply don't have the scale needed.

The colonial economics that made Great Britain great were an outgrowth of the old agrarian empires, which subjugated local populations in order to derive a competitive advantage from them.

Now that subjugation is becoming less and less politically acceptable over time, if countries want to be powerful, they need to form large polities themselves. Only the US and China have massive, similarly-oriented populations that can work together long enough to create national wealth.

> It's inherent in human nature

Indeed it is, but the most innovative product doesn't always win in the market place. The never ending desire for the newest thing may have cost constraints, maybe even ones that we haven't historically encountered before.

> We inherited their legal system and commercial focus, it was a big reason why we were able to take the lead.

Is there any reason to believe this is a pre-requisite of success though?

> The other is our scale.

China knows a thing or two about that.

I don't happen to believe there is only one path to success/dominance as it is a combination of many factors, not to mention the fact that luck/coincidence/timing is potentially far more important than people realize. Going on recorded human history, we're also dealing with relatively small sample sizes when it comes to making confident predictions of how things as complex as human cultures and global economics will pan out.

> Indeed it is, but the most innovative product doesn't always win in the market place

Well, if you go over my original comment again, I was more referring to process innovations and not feature innovations. Things like reducing material costs, logistics improvements, sustainability improvements. These are the sorts of things that you can't really say no to and that you're always going to be looking for more of.

> Is there any reason to believe this is a pre-requisite of success though?

China is an outlier in many, many ways. But when you look at Europe where much of the industrial and commercial success was historically, you'll see that the particular sorts of social innovations form the foundation on which market economies thrive.

We saw how a command economy played out when a nation wanted to be a superpower before. The USSR simply collapsed under its own weight. The incentive to produce and innovate can't come from one place. Great Britain's market focus and political innovations allowed a society to rise up that created it's own incentives.

China can throw mountains of resources to solve one problem. But they're limited to only solving one problem at a time. Because the incentives for success can only come from the state.

I wish that people started focussing more on the Gini Index and rooting for their country or region to top that list: https://www.cia.gov/library/publications/the-world-factbook/...

“Distribution of family income - Gini index measures the degree of inequality in the distribution of family income in a country. The more nearly equal a country's income distribution, the lower its Gini index, e.g., a Scandinavian country with an index of 25. The more unequal a country's income distribution, the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If income were distributed with perfect equality the index would be zero; if income were distributed with perfect inequality, the index would be 100”

In this table Finland is #1, USA, 40th from the bottom, China is 30th from the bottom. This shows that the size of your economy and how fairly the wealth is distributed is not correlated. It also says that the so-called "American Dream" is a fantasy for much of the population. I also think that this is an index that is important to track _over time_ and I don't know of anyone doing that because then you could see if the country/society/region you're living in is getting more or less unequal over time. I know that I'd prefer that my daughter lived in a country where the wealth was more evenly distributed than than when I was growing up.

In Rawls' Theory of Justice he gets you to imagine that by a "veil of ignorance" you don't know where your position in society is. Given that, he says, you'd prefer a more fairly balanced society and world because you don't know which segment of society you'd be born into and which part of the world. Going by Rawls you'd prefer to be born in Finland (or most places in Europe) rather than China or the USA.

I'm no economist, but according to this super accurate spreadsheet I made - looks like China will overtake the US 2019.

I make some bad calculations based on bad assumptions. Like GDP = GDP per cap * pop (though it worked out roughly). I took the average yearly growth of US from 2000 - 2016 and the average yearly growth of China from 2000 - 2016, plotted them and compared them.

There is an intersect (China leading) on total GDP in 2019 and an intersect (China leading) of GDP per capita in 2030.

Anyway, here's an image of it: https://imgur.com/vKjJCpN

You have China’s GDP growth at 16%. Even the Communist party only claims 7%, though that and the reported consistency is doubted by many economists.

Honestly, I had no idea what I was doing. I just plugged in the numbers I got from Google and hoped they'd paint a picture.

This is not correct as per most of the other leading institutions. By virtually every measure China's economy is either already bigger than US or is going to overtake US within 1-2 years (i..e before 2019). The reason there is bit of uncertainty is because China had devalued Yuan which effectively reduces its GDP even if net purchasing power had been increased. Also, no one truly knows China's GDP except their government.

Here's better data: https://www.weforum.org/agenda/2016/12/the-world-s-top-econo...

Quote from above:

Both the IMF and the World Bank now rate China as the world’s largest economy based on Purchasing Power Parity (PPP), a measure that adjusts countries’ GDPs for differences in prices.

You don't have to be economist to understand this either. You can go to virtually any corner of the Earth, walk in to a shop and find that roughly 50%-80% things in there are made in China. Think about that for a second. There are over 200+ countries in the world, 85% of people are outside China and still half of the stuff is made by just one country. There is often a someone in China making money when a person anywhere on the planet walks in to a shop and buys something. Think about the scale of that GDP now.

That's by PPP[0]. The CEBR report is stating that China's economy will be bigger than the U.S. in absolute terms (PPP is a relative measure, look it up) by 2032. That means that population size notwithstanding China could choose to outspend the U.S. dollar-for-dollar on its military or space budget or infrastructure or whatever. You get the idea – the implication is that over times economic might should shift the balance of global power.

[0] https://en.wikipedia.org/wiki/Purchasing_power_parity

> You can go to virtually any corner of the Earth, walk in to a shop and find that roughly 50%-80% things in there are made in China.

My iPhone was made in China, yet the bulk of the purchase price goes to pay Apple (US) shareholders and employees - very little goes to Foxxconn (China) shareholders and employees.

Everyone and their mother has been predicting the eventual economic dominance of China the for literally decades.

Truly groundbreaking work.

Exactly, just yesterday a China central Bank official just gave hints of bankruptcy https://www.bloomberg.com/news/articles/2017-12-25/pboc-offi...

and a few months back, the China central bank chief warned about the rapid growth of debt https://www.cnbc.com/2017/10/23/china-central-bank-chief-new...

The dominos will have to fall sometime. A lot of china’s private sector debt is actually believed by the debtees to be implicitly public sector. With SOEs, the lines are always blurred anyways.

It was supposed to happen in 2020, not sure why they pushed it back to 2032. It will happen, I just wouldn’t take much stock in any predictions.

sub-heading:

-> CEBR[0] publishes World Economic League Table and predictions

So what you're saying is that this UK company (CEBR) that periodically updates its economic league table[1] based on data it collects and collates should stop doing so and go out of business. Or are you saying that Bloomberg, a company that focuses on financial terminals and journalism, should stop reporting financial information like this?

I wanted to add a snarky, "Truly groundbreaking comment" but I managed to stop myself.

edit: added link to league table report, can be yours for just £195

[0]Centre for Economics & Business Research "leading economic forecasts & analysis" https://cebr.com/

[1] World Economic League Table 2018 https://gcp.global/uk/products/welt-2018

  CEBR should go out of business

I don't think that's necessary. However, if their entire business model is making predictions like these, which are almost never accurate, then they probably should.

  Should Bloomberg stop reporting this type of thing

Maybe, if their "reporting" amounts to an advertisement for CEBR's product without an ounce of critical/additional input. For instance, they could try something like:

  "projections like CEBR's have been made in the past. Most recently, [CEBR-like org] predicted China would surpass U.S. in 20XX."

Japan was supposed to overtake the US economy by 1995, I believe ...

China has many of the same problems with country supported banks, bad loans to prop up the economy, etc.

They did overtake U.S in terms of GDP per capita by 1995, with a margin of 60%. China doesn't have to do this, they only need the GDP per capita to be 1/3 of that of US, they can surpass US in terms of nominal GDP.

I am disliking the current US debt-based economy already. It is pretty frustrating that they keep delaying the gov shutdown by only weeks.

> India’s advance won’t stop there, according to the CEBR, which sees it taking the top place in the second half of the century.

what's the reasoning behind this claim? Purely population growth?

Also surprised Brazil is supposed to have a top 6 economy by 2032. Isn't their economy in the gutter and based on soybean and oil production?

What's wrong with soybean and oil? Economy of Australia is beef and coal. Brazil also produces and exports aircrafts.

Maybe. True that the U.S.wastes many opportunities, but then again, the problems get harder as a country grows. It seems that economies often find it hard to continue the pace of growth past the manufacturing boom, or so I've heard and seen.

So soon, out of top 10 economies - half will be from Asia: China, India, South Korea, Japan, Indonesia. Two from Americas - US, Brazil. Two from Europe: Germany, France and One from the Atlantic Ocean - UK.

Some British may not like it but the UK is a European country by geography, too.

Projections say that in 500 years I’ll be 526 years old.

Wasn't it supposed to be by 2025?

Disclaimer: I'm completely uneducated in this, so please point out my glaring flaws of logic.

I have no doubt that China will be a major economic player in the coming decades. Having said that, they have major hurdles to clear, perhaps most of which is transitioning from a manufacturing to a service economy that exists outside of China.

China's services-based companies that you all think of (Tencent, Baidu, Alibaba, etc.) all ape on foreign services and succeed under the protection of government (via. the GFW). Meanwhile, the massive uplift of median wage and living conditions has increased the labour costs in China. I've seen it in my own work, where our 'manufacture in China' approach isn't nearly as beneficial as it was 5+ years ago, since it now costs more due to underlying wages (i.e. controlling for forex). This sort of puts a time limit on their growth at the current rate, because as it becomes more expensive, manufacturing will move (and already is) to other cheaper areas (such as Bangladesh, India and further to Africa).

In other countries, that uplift has broadly aligned with a transition out of manufacturing to services due to the higher education capacities, with subsequent offshoring of said manufacturing. The problem is, those services-based companies compete on a global scale and utilise that global market size to support higher profits (since duplicating knowledge is easier than duplicating phyiscal things). I can't think of on example off my head of a Chinese services-based company that's competed on a global level yet.

I think until that can happen (and I don't see how that happens, particularly but not limited to in tech, when the playing field is so distorted by government policy such as the GFW - it just encourages companies to focus domestically only), China will struggle to make that next step and continue to fuel their economic growth as manufacturing becomes too expensive with the growth of wages. The foreign influx of money from manufacturing will slowly dry up as it goes elsewhere. In turn, I think that'll lead to a stagnation unless they can transition, and I suspect that transitioning (to a level that the West operates) probably requires a ratio of market size to median wage that isn't possible by simply remaining domestic (in the most part, that is you need at least a minimum quantity of global companies to bring in overseas wealth and support the rest).

Interestingly, I've seen a little example of this attempted, where China is trying to build the infrastructure for future manufacturing places, but that's sort of a one-trick operation. For example, they've invested a heap of money into building infrastructure (rail, for example) through Africa. However, it's only a subset of a truly global economy and probably has a finite life as a stop-gap.

So yes, their growth is almost undoubtably going to be relentless and ongoing, but my uneducated opninion is that the pace will taper off sooner than most people expect as they struggle to convert high domestic manufacturing output to domestic knowledge and services output.

Do they not have the ability to construct an entirely new economic, once-again low cost manufacturing zone staffed by some of the hundreds of millions of peasant farmers still working the land? Do they not have the population, know how, and political leverage to serve multiple pricing tiers of manufacturing?