China Eonomic : A Fallacy Dream?

Many expected China to overtake America as the world's biggest economy sometime around the start of the next decade. But that's looking more and more like a pipe dream, especially after the US widened its lead last year.
The American economy grew by 6.3% in nominal terms – that is, unadjusted for inflation – in 2023, outmuscling China's 4.6% gain.Consequently, the size of China's economy relative to the US fell to 65%, down from its peak of 75% at the end of 2021.And sure, some of that outperformance is because of elevated inflation in the US, but the figures highlight a significant underlying trend: the US economy is emerging from the pandemic in a stronger position compared to China.

You can see this having an impact on the two countries’ stock markets. While US shares have hit all-time highs this month, Chinese equities are currently facing a bear market rout, with losses of over $6 trillion.People didnt expect things to go down this way.

Many had predicted that the US economy would slide into recession last year because of the Fed's aggressive interest rate hikes.Instead, falling inflation and a still-hot job market encouraged Americans to keep spending, which has shielded the economy from a downturn.

China, on the other hand, was expected to experience a strong rebound after the government removed its strict zero-Covid restrictions. But the country's been plagued by a whole host of issues instead: its worst streak of deflation in a quarter-century, an ongoing debt crisis in the property sector, fading consumer confidence, rising joblessness among young people, and a shrinking (and fast-aging) population.What’s more, exports – once a critical pillar of growth – declined in 2023 for the first time in seven years.All those factors have led China to downshift into a slower growth gear sooner than economists had anticipated, with many of them saying the country won't likely wear the top-economy crown anytime soon.Bloomberg Economics, for example, now forecasts that the size of Chinas economy won't exceed that of the US until the mid-2040s. And even then, the lead will be slim and short-lived.