IMF cuts growth forecast by 5.2% →5%
GDP, 64.5% of the size of the U.S. economy
Due to the size of the economy, China is less likely to overtake the United States in a short period of time. The International Monetary Fund, which was relatively optimistic about China’s economic situation, also lowered its growth forecast for this year.
The IMF announced the “World Economic Outlook” on the 10th and lowered China’s economic growth forecast for this year by 0.2 percentage points from 5.2% to 5.0%. “As China’s real estate crisis deepens, it could pose a risk to the global economy,” the IMF said. The growth forecast for next year was also lowered by 0.6 percentage points from 4.8 percent to 4.2 percent.
Hong Kong’s South China Morning Post (SCMP) reported, “China’s grand goal of toppling the U.S. to become the world’s largest economy is becoming more suspicious. Considering the depreciation of the yuan and the IMF’s forecast, the gap with the U.S. could widen again.”
According to SCMP, China’s gross domestic product (GDP) as of the first half of this year was 64.5% of that of the United States, the lowest level since 2020. The figure reached a record high of 77.3% in 2021, when China’s economic growth rate exceeded 8%, but fell to 70.7% last year.
Rhodium Group of the United States, a research company, said, “It is due to the delay in China’s reform,” adding, “Let alone this decade, China will not be able to catch up with the United States in terms of GDP this century.”
China has not officially set a goal of overtaking the size of the U.S. economy, but it continues to monitor the difference in economic size with the U.S. In May, the National Development and Reform Commission pointed to high inflation and a strong dollar as the reasons for the widening gap between China and the United States.
Wang Huiyao, a researcher at the China Globalization Center, a non-governmental think tank, argued that China’s fundamentals are still strong. “As long as we maintain annual growth of 4% to 5%, China has a significant opportunity to surpass the United States by 2035, ” he said.
Some say that the government needs more active consumption support measures for China’s economic growth. “It is urgent to come up with measures to boost consumption, including cash gift certificates,” Wang Yong-ri, general manager of China International Futures, said in a recent report. “The government should maintain discipline, refrain from economic interference, and promote further growth by defending law and equality while pushing for reforms.”
EJ SONG
US ASIA JOURNAL
