Why China Won't Be No. 1

Why China Won't Be No. 1

THE SOURCE: “The Sources and Sustainability of China’s Economic Growth” by Gary H. Jefferson, Albert G. Z. Hu, and Jian Su, in Brookings Papers on Economic Activity, No. 2, 2006.

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Will China overtake the United States to become the world’s largest economy? At $2.2 trillion (in 2005), it is already the fourth largest, behind Germany, Japan, and the world leader, at $12.5 trillion, the United States. If China can sustain its nine percent annual growth rate of the past two decades, versus the U.S. rate of about three percent, it will catch up in 25 to 30 years.

Don’t hold your breath, say economists Gary H. Jefferson, Albert G. Z. Hu, and Jian Su. China’s surge is almost entirely the product of rapid gains in industries along the Chinese coast. That growth is likely to slow as their productivity catches up with that of the rest of the world. The remainder of China’s economy is growing much more slowly.

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