You Decide: When Will China Surpass America?

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Who says analyzing the battle for economic hegemony between China and the U.S. can't be fun?

The Economist has created a tool that allows readers to estimate the year in which China will overtake America as the world's largest economy. All you need to do is enter assumptions about how much gross domestic product (GDP) and inflation will grow in China and the U.S per year, and how much the Chinese yuan will increase in value over time

The Economist's Ryan Avent at the Free Exchange blog provides some pointers:

Given reasonable assumptions, China will pull ahead within the next ten years. if you play around with the interactive, you'll find that this isn't particularly sensitive to changes in the variables. If you double expected American growth from 2.5% per year to 5% per year, you push the key date back from 2019 to...2022. If you then slow China's growth to 5% annually, you delay il sorpasso to 2028. Absent a total disaster in China, the transition will take place, and that right soon. Why? Well, China remains far behind the developed world in per capita terms, and because there is plenty of catch-up left to accomplish, there's plenty of room for rapid growth. And China's population is enormous. It has over four times as many people as America, and so its output per capita only needs to be about a fourth of America's to match it in total size.

Avent also wonders how America's transfer of global leadership to China will work:

Exactly once in the history of the industrialised world has a dominant great power lost its status to another dominant great power, and that already tiny sample size is of limited use in informing us about the future. Britain and America shared a language, a culture, and a general political philosophy of liberalism and democracy. They were explicit friends and allies. Perhaps most important, they were both rich, in per capita terms. Chinese culture is alien to Americans, and its primary political values appear to be quite different from those of the world's current hegemon. The two countries are not enemies, but their relationship is explicitly adversarial. And while America is rich, hundreds of millions of Chinese citizens will remain extremely poor at the time China assumes the top spot in the GDP league tables.

Plug away:

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