Can China overtake the US in GDP Nominal before the end of this decade? A Thread...


Which Scenario do you think is most likely?


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cbl21

Junior Member
Registered Member
While reading this
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, I found this interesting and fascinating tidbit:

China’s inflation-adjusted economic output will likely hit $11.9 trillion this year, said Nicholas Lardy, an economist and China expert at the Peterson Institute for International Economics in Washington. That is roughly 70% of the U.S.’s expected output—a seven-percentage-point increase from last year, and the largest advance China has made on the U.S. in a single year.

Homi Kharas, a senior global economics and development fellow at the Brookings Institution, said the coronavirus puts China’s economy on track to reach parity with the U.S. in 2028 in absolute terms, using current dollars—two years faster than his pre-coronavirus estimate.
However there may be several interesting scenarios as to how this plays out in the coming decade, and I have four different scenarios for how/when China's GDP can overtake that of the US's: (1) low-baseline growth, low RMB appreciation against USD, (2) low-baseline growth, high RMB appreciation against USD, (3) high-baseline growth, low RMB appreciation against USD, and (4) high-baseline growth, high RMB appreciation against the USD.

TLDR:
Scenario (1)- 2030
Scenario (2)- 2026
Scenario (3)- 2028
Scenario (4)- 2025

Let's get into the nitty-gritty:
For Scenario (1) of low-baseline growth, low RMB appreciation against USD, lets presume GDP Growth Rates between China vs US are as follows for the 2020-29 Decade:

YearChina GDP Nominal Growth Rate (%)US GDP Nominal Growth Rate (%)
20211.0%-8.0%
20228.0%4.5%
20236.7%2.9%
20246.2%2.5%
20256.0%2.2%
20265.8%2.1%
20275.7%2.0%
20285.6%2.0%
20295.5%2.1%
20305.4%2.1%

For context, the 2019 GDP Nominal figures for these two countries are as follows:
YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20191434321374

Applying Scenario (1) growth rates to GDP:
YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201448619664
20221564520549
20231669421145
20241772921674
20251879222150
20261988222615
20272101523068
20282219223529
20292341324023
20302467724528

As such, according to this scenario (1), assuming the exchange rate between USD to RMB remains 1 USD= 7 RMB, then China will overtake the US likely in 2030, which is past this decade. This scenario is most unfavorable for China, precisely because (1) it assumes no appreciation in the value of the RMB, in contrast to recent trends (RMB has appreciated 4%+ these past few months), and (2) it assumes the most pessimistic GDP growth rates for China, a constant deceleration in growth in the Chinese economy for the rest of the decade and that a GDP growth ceiling of <6% (despite as recently as 2017-18, that ceiling being closer to ~7% per annum, and not accounting for the recent easing of the US-China trade war, which was primarily responsible for the lowered growth rates in 2018 and 2019).

In Scenario (2), with low-baseline growth, high RMB appreciation against USD, if we do take into account RMB appreciation against the USD however, such that 1 USD= 6 RMB by 2025, for instance, instead, whereas the growth of the value of the RMB is 16.67% increase in RMB value across 6 years from 1 RMB= 0.143 USD in 2020 to 1 RMB= .167 USD in 2025, meaning a 2.61% increase in RMB value per year on average, we get these GDP Nominal Figures of China vs US:

Applying Scenario (2) RMB appreciation to GDP:
YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201486519664
20221647220549
20231803521145
20241965321674
20252137622150
20262261622615
20272390523068
20282524423529
20292663224023
20302807024528

As you can see, assuming that by 2025, 1 USD= 6 RMB (and less just say RMB stops appreciating after 2025, remaining at the 1 USD= 6 RMB rate), China's GDP (Nominal) will be able to overtake the US GDP (nominal) in the Scenario (2) of low-baseline growth, high RMB appreciation against USD.

For Scenario (3), let us presume China's GDP Growth rates are far more favourable/optimistic for them in the coming decade, especially relative to the US's:

YearChina GDP Nominal Growth Rate (%)US GDP Nominal Growth Rate (%)
20213.6%-8.0%
20227.8%4.5%
20237.1%2.9%
20246.8%2.5%
20256.7%2.2%
20266.6%2.1%
20276.5%2.0%
20286.4%2.0%
20296.4%2.1%
20306.3%2.1%

Applying these GDP Nominal Growth Figures of Scenario (3), assuming no appreciation in the RMB's value against the USD this next decade:

YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201485919664
20221601820549
20231715621145
20241832221674
20251955022150
20262084022615
20272219523068
20282361523529
20292512724023
20302671024528

As such, in Scenario (3), I postulate that China's Nominal GDP can overtake the US Nominal GDP by 2028, similar Homi Kharas' prediction, with GDP growth rates more favourable to/optimistic for China, without accounting for any RMB appreciation in value against the USD.

Now, lets consider the most optimistic scenario for China: Scenario (4), which postulates high-baseline growth, high RMB appreciation against the USD for China. Here, like before, assuming if we do take into account RMB appreciation against the USD however, such that 1 USD= 6 RMB by 2025, for instance, instead, whereas the growth of the value of the RMB is 16.67% increase in RMB value across 6 years from 1 RMB= 0.143 USD in 2020 to 1 RMB= .167 USD in 2025, meaning a 2.61% increase in RMB value per year on average between 2020-25, we get these GDP Nominal Figures of China vs US:


YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201524719664
20221686520549
20231853421145
20242031121674
20252223822150
20262370622615
20272524623068
20282686223529
20292858124023
20303038224528

According to this Scenario (4), the most optimistic scenario possible, China's Nominal GDP can overtake the US Nominal GDP by 2025, as well as become the first-ever $30-trillion USD economy.

What do you guys think? Which of these 4 scenarios do you think is the most likely? Please leave your thoughts or comments in the thread below. I'd love to hear what you guys think!

Note: for Scenarios 1 & 2, the GDP Growth Rates for both US and China for the years 2020 and 2021 are directly from the IMF June 2020 Global Forecast.
 

horse

Junior Member
Registered Member
It probably will happen, that the Chinese economy will be bigger than the United States economy by the end of this decade.

That is assuming that the exchange remains stable. However, a US Dollar depreciation is a real possibility these coming years will all the QE.

We have to remember that during the Obama years, he ended his reign as the only US President to never experience a year of 3% growth for the US economy which was the historical long term average. Slower US growth maybe permanent.

Recovery from the pandemic will not be smooth. The news is probably far worst than what the mainstream media reports in the USA. The financial news reports the numbers, but does not really comment on how bad they really are. Those numbers suggest years of tough sloughing.

And finally, this trade war started by Trump, and the tech war, both are a drag on growth. The Chinese economy is already growing bouncing back strong from the pandemic. The American economy has yet to do that, and it may never will bounce back like the Chinese economy has after the pandemic.
 
Last edited:

weig2000

Junior Member
I linked and commented this WSJ article earlier in the Chinese Economics thread. I pointed out that this year China's nominal GDP will likely be at about 75% of that of the US.

Under an average scenario, China's nominal GDP in dollar terms will likely catch up with the US's around 2025.
 

cbl21

Junior Member
Registered Member
  • Thread Starter Thread Starter
  • #5
Oh guys, deep apologies, I kind've screwed up the tables so the dates are all off. I can't delete this one, unfortunately. Let me repost the correct datasets:

TLDR (corrected):
Scenario (1)- 2029
Scenario (2)- 2025
Scenario (3)- 2027
Scenario (4)- 2024

Let's get into the nitty-gritty:
For Scenario (1) of low-baseline growth, low RMB appreciation against USD, lets presume GDP Growth Rates between China vs US are as follows for the 2020-29 Decade:

YearChina GDP Nominal Growth Rate (%)US GDP Nominal Growth Rate (%)
20201.0%-8.0%
20218.0%4.5%
20226.7%2.9%
20236.2%2.5%
20246.0%2.2%
20255.8%2.1%
20265.7%2.0%
20275.6%2.0%
20285.5%2.1%
20295.4%2.1%
For context, the 2019 GDP Nominal figures for these two countries are as follows:
YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20191434321374
Applying Scenario (1) growth rates to GDP:
YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201448619664
20211564520549
20221669421145
20231772921674
20241879222150
20251988222615
20262101523068
20272219223529
20282341324023
20292467724528
As such, according to this scenario (1), assuming the exchange rate between USD to RMB remains 1 USD= 7 RMB, then China will overtake the US likely in 2029, which is just at the end of this decade. This scenario is most unfavorable for China, precisely because (1) it assumes no appreciation in the value of the RMB, in contrast to recent trends (RMB has appreciated 4%+ these past few months), and (2) it assumes the most pessimistic GDP growth rates for China, a constant deceleration in growth in the Chinese economy for the rest of the decade and that a GDP growth ceiling of <6% (despite as recently as 2017-18, that ceiling being closer to ~7% per annum, and not accounting for the recent easing of the US-China trade war, which was primarily responsible for the lowered growth rates in 2018 and 2019).

In Scenario (2), with low-baseline growth, high RMB appreciation against USD, if we do take into account RMB appreciation against the USD however, such that 1 USD= 6 RMB by 2025, for instance, instead, whereas the growth of the value of the RMB is 16.67% increase in RMB value across 6 years from 1 RMB= 0.143 USD in 2020 to 1 RMB= .167 USD in 2025, meaning a 2.61% increase in RMB value per year on average, we get these GDP Nominal Figures of China vs US:

Applying Scenario (2) RMB appreciation to GDP:
YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201486519664
20211647220549
20221803521145
20231965321674
20242137622150
20252261622615
20262390523068
20272524423529
20282663224023
20292807024528
As you can see, assuming that by 2025, 1 USD= 6 RMB (and less just say RMB stops appreciating after 2025, remaining at the 1 USD= 6 RMB rate), China's GDP (Nominal) will be able to overtake the US GDP (nominal) in the Scenario (2) of low-baseline growth, high RMB appreciation against USD by 2025.

For Scenario (3), let us presume China's GDP Growth rates are far more favourable/optimistic for them in the coming decade, especially relative to the US's:

YearChina GDP Nominal Growth Rate (%)US GDP Nominal Growth Rate (%)
20203.6%-8.0%
20217.8%4.5%
20227.1%2.9%
20236.8%2.5%
20246.7%2.2%
20256.6%2.1%
20266.5%2.0%
20276.4%2.0%
20286.4%2.1%
20296.3%2.1%

Applying these GDP Nominal Growth Figures of Scenario (3), assuming no appreciation in the RMB's value against the USD this next decade:

YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201485919664
20211601820549
20221715621145
20231832221674
20241955022150
20252084022615
20262219523068
20272361523529
20282512724023
20292671024528

As such, in Scenario (3), I postulate that China's Nominal GDP can overtake the US Nominal GDP by 2027, similar Homi Kharas' prediction, with GDP growth rates more favourable to/optimistic for China, without accounting for any RMB appreciation in value against the USD.

Now, lets consider the most optimistic scenario for China: Scenario (4), which postulates high-baseline growth, high RMB appreciation against the USD for China. Here, like before, assuming if we do take into account RMB appreciation against the USD however, such that 1 USD= 6 RMB by 2025, for instance, instead, whereas the growth of the value of the RMB is 16.67% increase in RMB value across 6 years from 1 RMB= 0.143 USD in 2020 to 1 RMB= .167 USD in 2025, meaning a 2.61% increase in RMB value per year on average between 2020-25, we get these GDP Nominal Figures of China vs US:


YearChina GDP Nominal (Billions, USD)US GDP Nominal (Billions, USD)
20201524719664
20211686520549
20221853421145
20232031121674
20242223822150
20252370622615
20262524623068
20272686223529
20282858124023
20293038224528

According to this Scenario (4), the most optimistic scenario possible, China's Nominal GDP can overtake the US Nominal GDP by 2024, as well as become the first-ever $30-trillion USD economy.

What do you guys think? Which of these 4 scenarios do you think is the most likely? Please leave your thoughts or comments in the thread below. I'd love to hear what you guys think!

Note: for Scenarios 1 & 2, the GDP Growth Rates for both US and China for the years 2020 and 2021 are directly from the IMF June 2020 Global Forecast.
 

horse

Junior Member
Registered Member
Oh, forgot to mention something that I always believed in, which is basically just the numbers.

The charts reminded me of that, so thanks.

Once China catches up to the USA in economic size, it will not stay there, it will accelerate away.

Look at Huawei for example. The caught up to Nokia and Ericsson, and now accelerating away. They still going regardless of whatever restrictions those goofballs in the White House can think of.

Throw that skinny Chinese woman in jail! Yes! High-five!

Bloody imbeciles.

:oops:
 

KYli

Senior Member
After restating provinces and municipalities that overstated and inflated their GDP, China GDP would still revise upward 10-15% if using the the latest NSA standard. I think China has intentionally delayed the revision and wait til its economy is approaching of the US before revision. Add to the fact that the US is printing excessive amount of money and running enormous twin deficits, the yuan should appreciate in the next few years. Therefore, I wouldn't be surprised that China GDP would surpass the US within 5-7 years.
 

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