A contestation of Superpowers: China may overtake the US as World's leading economy in the future
Early reforms help China’s economy shift their fortunes
The nation has experienced a series of reforms and restructuring in attempts towards establishing a respectable and stable economy that could compete with that of the West. Though this road towards becoming a global powerhouse had initially been marred by the poor and restrictive policies enacted during the infamous Cultural Revolution with the first efficient change taking place once the then Chinese Leader, Deng Xiaoping driving the reforms to focus on agriculture and rural developments as well as the first official household responsibility system in what was known as the PRC (People's Republic of China). Critically, during this timeline in China’s history the development of TVE’s (Township and Village Enterprises) had quickly brought major areas of China’s economy up to standard and successfully sustaining 35.6% of China’s industrial output at the end of the 1990’s which provided a work to nearly 100 million people.
Significantly, after the Chinese Economy experienced growth under the dual track system, economic differences became more recognizable between the urban and rural regions of the country as well as geopolitical contrasts shared between the coastal and inner regions. Though, it was due to these early adaptations that had set China towards becoming the one major economy to expand in the current economically turbulent pandemic-stricken times, as reports by the Centre for Economics and Business UK, has calculated that China is expected to overtake the US economy by 2028, roughly ten years ahead of earlier predictions set. Moreover, China has been noted a significant growth in its overall GDP share from an initial of 3.6% during the early 2000’s towards a more impressive 17.8% during 2019 and likely to become classified as a high income nation by 2023.
Source: The Maritime Executive
Furthermore, the US economy has thus far fared the worst off after the effects of the Coronavirus as the nation has faced 300,000 deaths as well as having 18.5 million confirmed cases. With the US’s economic fragility and situation complicated and ridden by a set of emergency monetary policies introduced as well as fiscal in nature stimulus and pending arguments over the next best strategy likely to leave 14 million Americans unemployed and within a certain set of social welfare. Contrastingly, the Chinese economy is continuously evolving and making steady progress as the nation has benefited due to effective monitoring of the Coronavirus as well as innovative policy developments focusing on key economic commodities primarily manufacturing. China’s predicted overall growth is estimated to experience an average of 5.7% from 2021 to 2025 and eventually set to slow to about 4.5% during 2026 to 2030 as confirmed by various economic reports compiled. Moreover, a report offered by the Chief Economic Bureau explains China’s success as ‘’thanks to a strict early response, China has managed to avoid re-introducing the harshest pandemic-fighting measures after the first wave and , unlike most other advanced economies, has avoided a recession in 2020.’’
Source: India Today
Confidence in China’s Leadership strategies builds stability
China’s current president Xi Jinping had highlighted that the Chinese Economy is more than capable of doubling its economic capacity in 2035 with his governmental team likely to progress further under its next Five Year Plan aiming to achieve a ‘’modern socialism’’ in the upcoming 15 years. While US economists have admitted flaws in their overall financial governing approach as follows ,‘’typically, we compare ourselves with other Western economies and miss out on what often is best practice, especially in the rapidly growing economies in Asia.’’
Additionally, China’s impressive economic results during the course of the pandemic suggests that China has now become a major decision maker in world affairs thus changing the manner which forces the rest of the world to choose how to interact with the economic hub of Beijing. With China now able to reclaim the coveted top position for foreign investment ousting the US after losing the position to the US during 2015 with 2020 figures highlighting the immense level of foreign investments reaching an astonishing $129.5 billion during November 2020. In continuation, China has developed greater economic ties with fellow Asian nations as fifteen of these neighboring nations as well as China itself, had committed to the Regional Economic Partnership as well during November 2020 in order to re establish relationships and reduce existing barriers within the continent. In the preceding month, a major trade deal had been initiated between the European Union States developing a strategic investment deal with China as well.
China’s looks to carry momentum into future success
A statement released by the Chief China economist at TS Lombard, Bo Zhuang highlights that, 'countries will have to deal with a bipolar world rather a unipolar world.’ To add further to this bold claim, China now accounts for more than one quarter of the world’s entire middle class with average spending per person rising from $11 to $110 which Kharas, a member of the Brookings Institution clarifies that China’s current milestones, ‘wouldn’t have been reached for two more years if COVID-19 hadn’t happened.’
Concerningly for the US and Western Europe which are being outshone by China, have witnessed a series of multinational companies such as the likes of General Motors and Volkswagen AG exceeding sales targets in China as compared to within their own markets.
Overall, China has quickly become the world’s go to spot for business and the globe's production line and main supplier coincidentally aided by the economic repercussions induced by the pandemic, China produced and exported face masks, medical gear and remote work kits to the entire world. Analysts are already aware that China is a powerhouse taking the economic scene by storm, however the extent of China’s economic growth is yet to be understood as China’s leaders have developed a tradition of downplaying their success due to fear of avid watching rivals of their ascent.
- Richardt Schoonraad