According to Eswar Prasad, a professor at Cornell University and a former International Monetary Fund (IMF) official, the likelihood that China will overtake the United States as the world's largest economy is decreasing as the country appears to be facing a slowdown.
In a recent interview with Nikkei, Prasad said the two countries' economies – currently the world's second-largest economies – have taken opposite trajectories, with the US likely to maintain its growth while China continues to face structural problems such as high public demand Debt and low birth rates.
“China faces a host of vulnerabilities, including undesirable demographics, a collapsing real estate market, deteriorating investor sentiment at home and abroad and a lack of clarity on a new growth model,” Prasad said.
“Even a growth rate of 4 to 5 percent will be difficult to maintain in the next few years. The likelihood that China’s GDP will one day overtake that of the United States is decreasing.”
Passengers at a train station in Hengyang, China, on January 31, 2024. The economies of the United States and China are going in two different directions, said expert Eswar Prasad.
STR/AFP via Getty Images
While inflation soared in the immediate aftermath of the COVID-19 pandemic in the U.S., driving up the cost of living and stoking fears of an impending recession, the country's economy proved resilient to the challenges of recent years. In the final quarter of 2023, the US grew above expectations at a rate of 3.3 percent and the country created more than 350,000 jobs.
China, on the other hand, experienced a very bumpy post-pandemic recovery due to a combination of factors beyond the pandemic, including the aging workforce, slower domestic demand and an ongoing crisis in the real estate sector, which had driven the explosive growth of the country in recent decades.
This is a developing story and will be updated as more information becomes available.
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Newsweek strives to challenge conventional wisdom and find connections in the search for common ground.
Newsweek strives to challenge conventional wisdom and find connections in the search for common ground.
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