We invite you to predict when China’s economy will overtake America’s
THIS week Barack Obama will meet President Xi Jinping of China for informal talks at Rancho Mirage, a resort town in California. The town has hosted some famous names in the past, including Queen Elizabeth II and Frank Sinatra. But it has received few guests as important as Mr Xi. He heads the world’s most populous country—and he might one day lead the world’s biggest economy. China’s GDP is now only half the size of America’s when converted at market exchange rates. Will it eclipse America’s before Mr Xi’s presidency comes to an end in March 2023? The Economist’s interactive chart below allows you to make your own predictions.
Despite its slowdown, China’s economy is still growing faster than America’s. But growth is not the only thing to consider. You should also think about the evolution of prices in both countries and the trajectory of the exchange rate between them. When we first introduced this chart at the end of 2010, we guessed that China’s economy would grow by an average of 7.75% over the next decade and America’s would grow by 2.5%. We guessed that inflation would average 4% in China and 1.5% in America. We also reckoned that China’s yuan would appreciate by 3% a year on average.
If you plug those numbers into the chart now, China’s dollar GDP would eclipse America’s in 2019, long before Mr Xi steps down. Changing the assumptions obviously changes the result, but by less than you might think. Even if China’s growth averages only 4% with the other assumptions unchanged, it will still overtake America by 2022. Mr Xi might then lead both the world’s biggest economy and its biggest country—but only if India’s population doesn’t overtake China’s first!