According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
Some points are worth mentioning that weren’t mentioned in the article. A lot of figures were thrown around, but no attention was given to China’s large population. The vast majority of people there live in abject poverty. They will persist to live that way well beyond whatever benchmark is prognosticated when China’s economy surpasses the U.S. Life in the United States will beat, on average, whatever standard applies to China. Hopefully the economic prosperity and a growing middle class will serve as a catalyst for change (I hate that word for some reason!) in China, but I wouldn’t count on it.