The uproar caused by the formation of the Asian Infrastructure Investment Bank died down near the end of March. Through the formation of the AIIB, the Chinese government has been able to make both superficial and tangible gains. Even former United States Secretary of the Treasury Lawrence Summers issued a warning: “I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out.” His commentary is clear and significant: “The global economic tide has started receding from the U.S. and moving toward China.”
These types of events will continue to take place. Ultimately, this is a reflection of the economic power of both China and the United States. The most significant indicator of economic power is gross domestic product. China’s economy, after 30 years of fast economic development, has begun to slow down over the last two years. Over the past five years, the U.S. economy has shown the effects of the financial crisis. It is only recently that the country’s GDP growth has begun to speed up. Although most do not doubt that China, the world’s second largest economic power, will ultimately surpass the United States, becoming the world’s number-one economic power, there is a difference in opinion of the time frame. Those who are pro-China believe that we will surpass the United States in five, 10 or, at the most, 15 years. On the other hand, those who favor the United States believe that it will be a lengthy process: 30 or even 50 years. Some even contend that China’s economy will never surpass that of the United States. Various nongovernmental organizations and international organizations have joined this debate, and one after another given their own predictions.
Governments are always cautious in regard to these types of topics. The Chinese government has never expressed any intention to surpass the United States; it has also never put forward GDP projections for the two countries. The U.S. government has been even more cautious on this front. However, this does not mean that it is indifferent. Lately, the U.S. media has been reporting on the 2030 economic projections published by the U.S. Department of Agriculture. The report ranks the world’s 20 largest economies 15 years from now. Surprisingly, this report was published by the USDA and not the U.S. Department of Commerce, the CIA or some other economic department. Even though the report was published by the USDA, this is still a forecast from the U.S. government. We should look at the conclusion.
According to the projections, by the year 2030, the United States will have an almost insignificant lead as the world’s number-one economic power; U.S. GDP could reach $24.8 trillion. China will hold the world’s number-two spot with a GDP of $22.2 trillion; this is comparable to that of the United States. In 2006, U.S. GDP represented 25 percent of global GDP; it dropped to 23 percent by 2015, and will make up only 20 percent by the year 2030.
These predictions recognize the totality of China’s economy; it could surpass the United States within the next 15 years! If you are optimistic about the development of China’s economy, and optimistic about China’s RMB exchange rate appreciation, there is a high probability that, within the next 15 years, China’s total economy could catch up with or even overtake that of the United States.
From the rankings, one can deduce which countries Americans believe to be powerful. Let’s look at India. The Western world has always had great expectations for India in the hopes that it would compete with and check China as a major power. With its democratic system, culture, language, population, etc., it’s believed that the country has unlimited potential. Therefore, India’s GDP in 15 years is expected to reach $6.6 trillion, and in one fell swoop will surpass Japan’s $6.4 trillion GDP. India will jump from its current ranking as number eight all the way to number three. But wait a moment, $6.6 trillion? This is only slightly more than one-fourth of China’s 2030 GDP, and still doesn’t compare to China’s total economy in 2015. It appears that, in the eyes of Americans, India is still a country that has a long way to go.
Next, let’s look at Japan. Regardless of whether Japan continues to emphasize its own importance and loyalty, Americans are disappointed by its economy. The entire country is still adjusting to the loss of its designation as the world’s second largest economy. It never thought that it would lose its title as the world’s third largest economy so soon. With such a glorious past, how will it revive its economy? This is a very difficult problem, and it’s one that China faces as well.
We can still find a bright spot: In 15 years, Asian countries will hold the world’s second, third and fourth top economic spots. Indonesia and South Korea will rank in the top 20. This is no exaggeration; in the future, Asian countries, led by China, will become the center of the world’s economy.
It should be noted that there is a large margin of uncertainty in the projections published by the USDA. These numbers are not necessarily accurate. The only thing that can be said for certain is that this is one of only a few institutions that has issued long-term global economic projections. Even the International Monetary Fund issued an economic forecast that only projects out two years.