Losing first place
An international organization recently predicted that China would surpass the United States as the world’s largest economy in just five years. Is this cause for worry? N.C. State University economist Mike Walden responds.
“Well, first of all …, let’s put this in perspective. Of course, China is a very large country with many more people than the United States. It has been growing very rapidly. It was a major economic power centuries ago. The Chinese are very capable people. So, it’s not surprising, I think — once they adjusted their economic system — that they would begin to grow and actually their economy converge to ours.
“I will say that on a per-person or what we call a per capita basis, the U.S. economy is still much, much larger and is going to remain much much larger for decades to come. But you’re absolutely right, in terms of total amount of goods and services produced, China is converging to us.
“Now another little factoid though, you can argue that actually the U.S. has been the number two economy for a number of years, if you count the European community as an economic unit. The European community — which composes most of western and central Europe, actually, to include all of the economies in that area — they have a gross domestic product which is, how we measure this, much larger.
“We don’t give out any prizes for the world’s largest economy. And although, I think, many would look at China growing economically as being a competitor us, they also present big market opportunities, particularly for U.S. exports.
“So, I think you can clearly look at this in terms of some minuses but also in terms of some pluses.”Category: Economic Perspective