The U.S. will remain wealthier than China for the next 50 years or more — long after the Asian economy is expected to overtake the U.S. to become the world’s largest, an economist said on Friday.
“I think it’s very unlikely that … China will get to U.S. levels of GDP per capita — that’s our measure of wealth — for at least the next 50 years if ever,” Simon Baptist, global chief economist at the Economist Intelligence Unit, told CNBC’s “Street Signs Asia.”
GDP per capita measures an economy’s output per person and is a common gauge of prosperity.
The latest International Monetary Fund data available showed China’s GDP per capita was forecast to be $10,582.10 in 2020 — roughly six times smaller than $63,051.40 in the U.S.
Baptist’s comments followed Joe Biden’s first official press conference since taking office, during which the U.S. president said he will not let China become “the leading country” globally.
“I see stiff competition with China. China has an overall goal — and I don’t criticize them for the goal. But they have an overall goal to become the leading country, the wealthiest country in the world and the most powerful country in the world,” Biden said.
“That’s not gonna happen on my watch,” he added.
U.S.-China may be ‘evenly matched’
Baptist said China will become “the other very large power” alongside the U.S. on the global stage. Which of the two is more powerful depends on where they wield that power, he added.
“I think in Asia, it probably will be very difficult for the U.S. to remain the most powerful country through the 2030s, but they’re going to remain evenly matched for quite a long time,” said Baptist.
Asia has emerged as an important battlegroundin the ongoing U.S.-China rivalry.
Beijing expanded its economic and political influence in the region when the U.S. under former President Donald Trump appeared to be retreating.
In contrast, Biden has made Asia a priority in his foreign policy. Biden has recruited several prominent Asia experts into his administration. In one of his first foreign engagements as president, he also met virtually with leaders of Japan, India and Australia.
U.S.-China relations have been off to a rocky start under the Biden administration.
Last week, the first high-level meeting between the two countries kicked off with an exchange of insults. Earlier this week, the U.S. and some of its Western allies slapped sanctions on Chinese officials and entities for human rights abuses in the Xinjiang region — Beijing has since retaliated against the European Union and the U.K.
China set to be world’s largest economy
The Chinese economy — in nominal U.S. dollar terms — is projected to overtake the U.S. around 2032 and become the world’s largest, said Baptist. That forecast was brought forward from 2034 because of the Covid-19 pandemic, he added.
China has bounced back sharply from the coronavirus-induced economic crisis. It became the only major economy to grow last year, after posting GDP growth of 2.3%. In contrast, the U.S. economy contracted by 3.5% in 2020 compared to a year ago, estimated the Bureau of Economic Analysis.
Baptist’s forecast appeared more conservative than others. Helen Qiao, head of Asia economics at Bank of America Global Research, told CNBC last month China’s economy would surpass the U.S. around 2027 to 2028.
The U.S. economy “ultimately will become smaller just because China’s population is so much bigger,” said Baptist. “Now it doesn’t really mean anything in particular when your dollar value of GDP takes over, but it’s a bit of a milestone.”
