How plausible is it that China will overtake the US to become the world’s largest economy in forthcoming decades? In the standard way that economists measure the size of economies, the Chinese economy remains materially smaller than the US economy – only around 64 per cent of its size as of 2024 – even though China caught up considerably over the couple of decades to 2020 (with the US outgrowing China since then). But what will happen over the rest of the Twenty-First Century? Will China overhaul the US and eventually become so much larger that it will become much more militarily powerful as well (e.g. easily taking over Taiwan and perhaps threatening Korea and Japan as well)?
Or do demographics means that China is now doomed to fall back? After all, the Chinese population, now some 1.4 billion persons, has already fallen below that of India, as the effects of longstanding Chinese policies to try to curtail what was seen as excessive population growth have proven more successful than intended. On some projections, the Chinese population is now seen as dropping to 500 million by 2100 – an average drop of about 1.4 percent per year.
By contrast, the US population, although expected to peak around 2080 (that growth being significantly driven by immigration), is thereafter expected to fall back only modestly, and in 2100 is expected still to be rather larger than it is now (around 365 million in 2100 versus about 335 million today). That constitutes annual growth of about 0.1 per cent per year.
So if the Chinese economy were to even maintain its current proportionate size to the US’ (64 per cent) it would need to overcome a 1.5 per cent per annum population-change effect through faster growth in GDP per capita. To reach total US GDP by 2100 it would need to outperform those population headwinds and grow 0.6 per cent faster than the US economy on average each year. That means achieving around 2.1 per cent per annum faster growth in GDP per capita.
Now there is scope for Chinese GDP per capita to catch up with that of the US. Currently Chinese GDP per capita is only 16 per cent of US GDP per capita. At 2.5 per cent faster growth in GDP per capita per year the Chinese would close the gap.
So the Chinese population is still projected to be higher than the US population by 2100 but not dramatically so, and that means that in order for the Chinese economy to become larger than the US economy China would need to close most of its gap in GDP per capita over that period – roughly equivalent to reaching three quarters of US GDP per capita by that time. For context, current UK and French GDPs per capita are around 62 and 65 per cent of US GDP per capita. So to overhaul US GDP by the end of the century, China would have to become much richer, relative to the US, than the UK and Germany are today.
Many things are possible over such a long timescale, of course. Projections done in 1925 of which world economy would be largest in 2000 would have been unlikely to predict the top ten accurately. Wars, pandemics, economic mismanagement and technological changes can have huge unpredictable impacts over such a timescale. Yet even in the 1925 to 2000 case much of the ultimate order would not have been a surprise. Over long periods, the mathematics of demography and relative economic performance tend to have a certain inexorability.
Perhaps China will embrace more market and democratic orientations in forthcoming decades, boosting growth. As the population shrinks there will be a period in which that population gains in economic terms through using infrastructure intended for larger populations without restriction and with the ability to allow it to deteriorate without committing so many resources to maintenance. Conversely, perhaps the US will become more isolationist and protectionist, cutting its economy off more and more from the world, making its growth consistently slower.
Many things are possible. But the most likely outcome is that Chinese hopes of outgrowing the US enough to become the world’s largest economy, with the military and diplomatic implications that would have, are now unlikely ever to see fulfilment.
How plausible is it that China will overtake the US to become the world’s largest economy in forthcoming decades? In the standard way that economists measure the size of economies, the Chinese economy remains materially smaller than the US economy – only around 64 per cent of its size as of 2024 – even though China caught up considerably over the couple of decades to 2020 (with the US outgrowing China since then). But what will happen over the rest of the Twenty-First Century? Will China overhaul the US and eventually become so much larger that it will become much more militarily powerful as well (e.g. easily taking over Taiwan and perhaps threatening Korea and Japan as well)?
Or do demographics means that China is now doomed to fall back? After all, the Chinese population, now some 1.4 billion persons, has already fallen below that of India, as the effects of longstanding Chinese policies to try to curtail what was seen as excessive population growth have proven more successful than intended. On some projections, the Chinese population is now seen as dropping to 500 million by 2100 – an average drop of about 1.4 percent per year.
By contrast, the US population, although expected to peak around 2080 (that growth being significantly driven by immigration), is thereafter expected to fall back only modestly, and in 2100 is expected still to be rather larger than it is now (around 365 million in 2100 versus about 335 million today). That constitutes annual growth of about 0.1 per cent per year.
So if the Chinese economy were to even maintain its current proportionate size to the US’ (64 per cent) it would need to overcome a 1.5 per cent per annum population-change effect through faster growth in GDP per capita. To reach total US GDP by 2100 it would need to outperform those population headwinds and grow 0.6 per cent faster than the US economy on average each year. That means achieving around 2.1 per cent per annum faster growth in GDP per capita.
Now there is scope for Chinese GDP per capita to catch up with that of the US. Currently Chinese GDP per capita is only 16 per cent of US GDP per capita. At 2.5 per cent faster growth in GDP per capita per year the Chinese would close the gap.
So the Chinese population is still projected to be higher than the US population by 2100 but not dramatically so, and that means that in order for the Chinese economy to become larger than the US economy China would need to close most of its gap in GDP per capita over that period – roughly equivalent to reaching three quarters of US GDP per capita by that time. For context, current UK and French GDPs per capita are around 62 and 65 per cent of US GDP per capita. So to overhaul US GDP by the end of the century, China would have to become much richer, relative to the US, than the UK and Germany are today.
Many things are possible over such a long timescale, of course. Projections done in 1925 of which world economy would be largest in 2000 would have been unlikely to predict the top ten accurately. Wars, pandemics, economic mismanagement and technological changes can have huge unpredictable impacts over such a timescale. Yet even in the 1925 to 2000 case much of the ultimate order would not have been a surprise. Over long periods, the mathematics of demography and relative economic performance tend to have a certain inexorability.
Perhaps China will embrace more market and democratic orientations in forthcoming decades, boosting growth. As the population shrinks there will be a period in which that population gains in economic terms through using infrastructure intended for larger populations without restriction and with the ability to allow it to deteriorate without committing so many resources to maintenance. Conversely, perhaps the US will become more isolationist and protectionist, cutting its economy off more and more from the world, making its growth consistently slower.
Many things are possible. But the most likely outcome is that Chinese hopes of outgrowing the US enough to become the world’s largest economy, with the military and diplomatic implications that would have, are now unlikely ever to see fulfilment.