The possibility that China will overtake the United States as the world’s biggest economy is declining as the country faces an obvious slowdown, according to Cornell professor and former International Monetary Fund (IMF) official Eswar Prasad.
In a recent interview with Nikkei, Prasad said that the economies of the two countries—currently the first and second biggest economies in the world—have taken opposite trajectories, with the U.S. likely to maintain its growth while China continues to face structural problems like high public debt and a low birth rate.
“China faces a variety of fragilities, including undesirable demographics, a collapsing real estate market, deteriorating investor sentiment at home and abroad, and the lack of clarity over a new growth model,” Prasad said.
“Even a 4 to 5 percent growth rate will be difficult to sustain over the next few years. The likelihood of the prediction that China’s GDP will one day overtake that of the U.S. is declining.” Newsweek contacted Prasad for comment by email on Monday.
China at least made some sense. China has a far larger population than the USA so it didn’t need to at the bleeding edge of economic development to have an economy larger than the USA.
China could also reform its economy in the future to resolve its current issues to make its way into a post-industrial economy.