China’s Economy is Over the Hill and Will Not Pass the USA in GDP

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In 2022, Nextbigfuture noted that China’s economy had basically stalled out. China’s economy was extraordinary and outperformed relative to other countries for decades. It did this by catching up.

China’s economy will be stalled for the 10-15 years as its population and working age population shrinks and ages. However, after the stall is the steep fall where China’s population gets even older, there is no more urbanization and the population shrinking gets worse.

China can offset some of these problems with megacity regions. This is merging many cities around Shanghai, Beijing and Hong Kong into super-regions. However, those would be one-time 15-30% boosts over two decades or so.

China was able to follow the Japan model for an economic rise but China has fallen into the low fertility-aging population trap. The development radical antiaging is needed for these problems to be reversed. This means developing super-medical technology that can reverse aging damage which would make people in their 80s and beyond like people in their 30s.

China will NOT pass the US economy in exchange rated terms. China’s population is already declining and the working age population will shrink substantially. The US economy was $25.5 Trillion in 2022 while China’s was 121 Trillion Yuan 2022 (US$17 trillion). China is 48% below. Losing working age population with some rural replacement means there is no 1-3% per year boost in productivity from increasing working age population and urbanization.

The US has generation Z emerging as economic demographic driver for the next 10-15 years. The Best case China picks up 2% per year but more likely holds even or falls further back. China median age going from 37.5 to 43 from 2023 to 2030. This is like Japan’s median age shift 2002-2009. China would need the US dollar to collapse for it to pass the US GDP on an exchange rated basis. China will want to keep its currency weak by design or unintentionally.

China’s overall economy is larger than the US on a purchasing power parity basis. It is about 1.2 times bigger than the US. China now might get to 1.3 to 1.4 times bigger than the US economy and then peak at that level on a purchasing power parity basis.

A lot of China’s population will be heading over 60 in the next seven years. Perhaps 10% of China’s population will retire and another 10% will be far less productive in their 60s. Consumption and economic activity also declines drastically for people in their late 50s and 60s.

China’s official demographics in 2022 were:
By the end of 2022, the national population was 1,411.75 million (including the population of 31 provinces, autonomous regions and municipalities and servicemen, but excluding residents of Hong Kong, Macao and Taiwan and foreigners living in the 31 provinces, autonomous regions and municipalities), a decrease of 0.85 million over that at the end of 2021. In 2022, the number of births was 9.56 million with a birth rate of 6.77 per thousand; the number of deaths was 10.41 million with a mortality rate of 7.37 per thousand; the natural population growth rate was minus 0.60 per thousand. In terms of gender, the male population was 722.06 million, and the female population was 689.69 million; the sex ratio of the total population was 104.69 (the female is 100). In terms of age structure, population at the working age from 16 to 59 was 875.56 million, accounting for 62.0 percent of the total population; population aged 60 and over was 280.04 million, accounting for 19.8 percent of the total population; population aged 65 and over was 209.78 million, accounting for 14.9 percent of the total population. In terms of urban-rural structure, the permanent residents in urban areas was 920.71 million, an increase of 6.46 million over the end of the previous year; and the permanent residents in rural areas was 491.04 million, a decrease of 7.31 million. The share of urban population in the total population (urbanization rate) was 65.22 percent, 0.50 percentage point higher than that at the end of the previous year.

11 thoughts on “China’s Economy is Over the Hill and Will Not Pass the USA in GDP”

  1. No talk of all the immigration (legal and illegal) migrating to both countries? It’s in the millions each year. Neither country’s government wants it to stop, mainly to make sure low wage service and construction and energy field workers are abundant.

  2. An interesting stat would be the number of working hours needed to produce salable goods or GDP, which obviously is decreasing. Which would seem to counter the gross population to wealth ratio.
    In the meantime there is the overarching stat WRT to GDP per cap

  3. Or the CCP could just order all the old people to die. After all that’s what the CCP does best.

  4. Humans today are vastly more productive per capita than they were 100, 500, or more years ago. I didn’t say 25 or 50 years, because the computer and internet advantages have not yet fully played out. Just as populations start to decline, along comes AI – which is NOT a coincidence – to boost the most productive feature of humans, their brains. Most industrial technology has been dedicated to boosting human brawn until the latter half of the 20th century and computers.
    There are great efficiencies in agriculture, robotics, transportation that are just beginning to be understood, let alone rolled out.
    Unfortunately, lessening resource use is not a feature of advanced economies and for that reason alone, there needs to be fewer people. A Park Avenue couple with 1 kid can consume 10X what an Ethiopian farming family with 6 kids consumes.
    The problem isn’t just number of people, it’s resource use, and no serious effort to scale that back has been achieved.

    China, Japan, South Korea, will experiment with robot replacements, AI etc. to replace a young work force that is not longer there. These force multipliers will take over huge swaths of industry – both brawn and brain – that we can barely understand now. A planet with 4-6 billion people will live better than one with 8 billion that lives today, also longer once longevity science finally kicks in at scale.

  5. Even China fertility rate remain at current level (which I doubt because China government will take measures), China GDP will still easily surpass US for three reasons:
    1. Geopolitical advantage: World is transitioning to multipolar and China yuan will become one of main reserve currencies. This will boost China GDP.
    2. Economy of scale: High tech requires huge upfront cost/resource. One reason US high tech dominant over Europe is size of US economy and when Europe countries can work together in Airbus, they can compete with US. China sheer size will help them a lot in high tech industries. This will boost productivity then GDP.
    3. Meritocracy: China doesn’t have noble tradition like Japan or the West. Confucianism emphasize talent over family background. Even kids of politburo members or billionaires cannot be accepted to Beijing university if their gaokao scores are not high enough. In US, there are many ways to go to Harvard or Stanford if your parents are billionaires or very powerful political. This will make meritocracy in China better in long term then boost productivity and GDP.

  6. But still, even with shrinking population, 700 million working age by 2050. That’s going to be at least double the United States working population by 2050. So if China can grow it’s gdp per worker to even 50% of US, it can still be bigger yet.

    • You’re missing Bigger picture. that working age population will have to spend a lot of effort supporting the massive elderly population. that is the issue

      • Which means that technically, they could have a larger nominal GDP than the US because money spent on adult diapers and retirement homes counts as GDP. However, they would have a terrible debt to GDP ratio, constrained household/national budgets, and poor private capital availability.

        In reality, many of those elderly would be taken care of at home by people who would otherwise spend more hours in formal employment, limiting how much their care counts towards GDP. And this skewing of the economy to one sector will limit their innovation/productivity in other sectors.

        Unless the adult diaper industry has a lot of useful spinoffs.

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