China's economy is likely to still be the world's second biggest in 2050, trailing the U.S., according to analysis just released.
The prediction by Capital Economics is at odds with a common view that China is set to surpass the U.S. as the world's biggest economy and stay there.
The London-based consultancy forecasts that China's economic clout will not increase steadily relative to the U.S. through time, due in part to its workforce declining by more than 0.5 percent a year by 2030. Meanwhile, the U.S. workforce will expand over the next 30 years, supported by higher fertility than in China and immigration, it said.
"The most likely scenario is that slowing productivity growth and a shrinking workforce prevent China ever passing the U.S.," the analysis said.
The firm's forecast said the pace of economic convergence between the countries depended on what happens to productivity, as well as inflation and the exchange rate. It said that if China does not overtake the U.S. by the mid-2030s "it probably never will."
"State control of the economy is one aspect of Xi Jinping's belief that the Party should be dominant in all aspects of China's society," he told Newsweek.
"Most people think that China's economic growth will remain much stronger, so overtaking the U.S. is just a matter of time. My view is that China's growth has slowed significantly over the past decade and that this is likely to continue, mainly because productivity growth is declining.
"If it does, China might get close to the U.S. in economic size around 2030, but not overtake."
He said that the "demographic headwinds" would continue to be a drag on China's economy. "There's a chance that China makes it to number one, then falls back again as this demographic drag increases," he added.
Last year, China closed its GDP gap with the U.S., expanding its economy by 2.3 percent to $14.7 trillion. This is only $6.2 trillion less than the American GDP, down from $7.1 trillion in 2019, CNBC reported.
In January, a preliminary estimate by the Bureau of Economic Analysis (BEA) showed that American GDP contracted by 2.3 percent last year in current-dollar terms to $20.93 trillion.
Last month, separate analysis suggested that COVID-19 might mean that China's GDP could overtake the U.S. earlier than expected because the American economy had been hit harder by the pandemic. The prediction by the financial group Nomura said that on "reasonable growth projections" China could surpass the U.S. by 2028, CNBC reported.
Alicia García-Herrero, chief economist for the Asia-Pacific at French investment bank Natixis, agreed China could continue to lag behind the U.S. economy.
"This is possible since average real GDP growth in China could well hover around 2.5 percent in 2035 and onwards, which will mean that China would stop converging with the U.S. and maybe even diverging," she told Newsweek.
"The fall of the labor force is one reason but also decelerating productivity," she added.
Source: Newsweek