Oil is likely to get less relevant over the course of the century but likely still a staple much like coal and iron ore is to modern industry. This would affect the relevance of the petrol dollar coupling.I always said that do not expect relations to improve under Biden. He’s not going to roll back most of Trump’s action against China.
The areas China and US are competing with are not negotiable.
Climate change is the exception. But even here the US is looking out for its own interests. A warming world hurts America and strengthens Russia as vast swathes of land in Siberia is opened up for Russian developments. Russia food production and GDP increases 5x by 2080 as the world warms; making Russia a superpower!
What is the prevailing view on whether China will have an economy which is twice the size of the USA by 2030-2035?
This has been outlined in the Australian Government planning white papers.
Much of this notion that China would have double the US gdp in defence circles was due to the efforts of mandarin speaking China hawk Michael Pillsbury. He was promoting this idea years back and it was based of purchasing power parity. The idea that he wanted to get through people's heads is that nominal(market exchange rates) are not a great reflector of comprehensive national strength when a nation masters the commanding hights of production.Personally I think no friggin way barring something catastrophic happening, which I don’t foresee either.
Wait, why is China’s 2020 nominal gdp 14 trillion? I thought China reported it to be 100 trillion yuan which is 15.4 trillion usd. Although IMF claims its 14.9 trillion...I think if you go by PPP, then there is a better than 65% probability that 2X US economic size can happen.
There are 3 major factors here:
1. China climbing up the value chain: Probability 100%, since we are already seeing it happen in real time. Everything from NIO, Xpev, Hongqi, Ehang and SOLO to Huawei and DJI.
2. The increase purchasing power of the RMB vs. the USB and the compounding effects of capital: Probability 75%.+ If you read Macropolo.org's detail analysis of the 14th 5 year plan
- Their closest competitor, the United States, will need until at least Q3 2023 to get back to 2019 state of normalcy. Don't take my word for it, take it from McKinsey's
- China has laid all the ground work in terms of 5G and national confidence (boosted by COVID-19), necessary for execution.
- No one else has the scale nor the comprehensive planning and execution capability and authority to out compete them.
So yea, I think they will pull off the 14th year plan. And with that, it will set everything into motion, such as devaluing of the USD, and decreased US competitiveness.
3. Precipitous US decline: Probability 50%+ US is in the shit right now. The politics are not going to help.
It could play out as follows. Note, China significantly undercount its GDP, it real nominal GDP is probably somewhere around $17T, and not the $14T it claims. Likewise, I think US GDP is a bit bloated, and likely around $18T, boasted by over inflated legal and medical service "productivity".
USA: I applied a modest 3% GDP decrease until 2024. Then a highly aggressive 2% increase from 2024 to 2035
Year USA China 2020 20 14 2021 19.4 15.12 2022 18.818 16.0272 2023 18.25346 16.98883 2024 18.61853 18.00816 2025 18.9909 19.08865 2026 19.37072 19.8522 2027 19.75813 20.64629 2028 20.15329 21.47214 2029 20.55636 22.33102 2030 20.96749 23.22426 2031 21.38684 24.15323 2032 21.81457 25.11936 2033 22.25087 26.12414 2034 22.69588 27.1691 2035 23.1498 28.25587
China: I applied an 8% increase to 2021, then 6% from 2022 to 2025. Then a 4% increase from 2026 to 2035
A more aggressive scenario could be:
Again, not quite 2X, but certainly not impossible. Toss in a 30% devaluation of USD to RMB exchange rate, and that 65% quickly becomes closer to 85%.
Year USA China 2020 20 17 2021 19 18.7 2022 18.43 20.196 2023 17.8771 21.81168 2024 18.05587 23.12038 2025 18.23643 24.5076 2026 18.41879 25.73298 2027 18.60298 27.01963 2028 18.78901 28.10042 2029 18.9769 29.22444 2030 19.16667 30.39341 2031 19.35834 31.60915 2032 19.55192 32.87351 2033 19.74744 34.18846 2034 19.94491 35.55599 2035 20.14436 36.97823
The only thing that could fuck up the Chinese is a war in Taiwan. But they are not that stupid. They could apply financial sanction to the island after they have reach technological parity in semiconductors, then just wait until Uncle Sam is exhausted, then come and mop up after 2035.
On the other hand, there are shitloads of factors that can trip up US, such as:
- COVID containment and return to normalcy,
- domestic unrest and terrorism
- political gridlock
- another Trump
- tax revenue shortage in its major urban centers
- increase cost of deficit spending
- USD devaluation
- Euro and RMB gaining up to bypass SWIFT