America Will Remain the World’s Top Economy by 2035 – This Spot Was Promised to China, but Xi Jinping’s Failure With COVID Changed Everything.
The Japan Center for Economic Research report also predicts that India will overtake Japan in 3rd place by 2025.
It was written. Nothing could move the lines any further. For years, analysts at the Japan Center for Economic Research (JCER), one of the most influential economic think tanks in Japan, have been predicting, like their American colleagues, that China, with its 1.4 billion inhabitants, would very quickly become the world's leading economic power ahead of the United States.
In their 2021 study, JCER analysts even estimated that the gross domestic product (GDP) of the Asian giant led by Xi Jinping, which had resisted so well to the coronavirus pandemic, was going to impose itself at the top of the world hierarchy as early as 2028.
But Xi Jinping's inflexible zero-COVID policy and tensions with the United States have emerged and upset those predictions, JCER economists explained in a new report on Thursday, December 15, 2022. “China's GDP will not exceed that of the United States,” they said, before explaining that the growth of the two nations will now evolve, during the next decades, at similar rates.
Beijing is no longer able to generate the increases in activity that would have allowed it to catch up. Xi Jinping is largely responsible for this regression of the economic forecasts for China in the future.
The tech war
According to their calculations, China's GDP growth is going to slow down very sharply, even beyond the zero-COVID crisis that has been crippling the country's activity for months. “The decoupling between the United States and China, which will prevent China from accessing advanced technologies, is becoming a heavy handicap for the Chinese economy,” write the experts.
With this tech war that Western countries will wage, worried about the rise of tensions around the status of Taiwan maintained by Xi Jinping, Chinese growth could fall to around 1% per year in the 2030s. After that, it is the fall in the working population that will limit China's growth potential.
For the JCER, these demographic changes will profoundly change the ranking of the major Asian economies. Japan has been on the world podium of economic powers since 1966 (in second and then third place since 2010), but it will fall back to fourth place by 2025 when its GDP will be overtaken by that of India.
Based on UN projections, the researchers point out that India will become the most populated country on the planet in April 2023 with 1.42 billion inhabitants, overtaking China, which has occupied this position for several hundred years. India is still “gaining” eight million inhabitants per year while Japan is losing 800,000 per year. As its productivity gains cannot compensate for this decline, the archipelago can no longer sustain a solid increase in its nominal GDP.
More traumatic for the Japanese collective unconscious, the JCER reveals that Japan's GDP per capita will fall behind that generated in Taiwan as early as 2022, and will be overtaken by that generated in South Korea by 2023.
Previously, the think tank had estimated that these catch-ups would only occur at the end of the decade, but it explains that the rapid devaluation of the yen against other major currencies and the weakness of its productivity compared to neighboring countries have accelerated Japan's downgrading. “Japan is behind Taiwan and South Korea in investments in intangible assets, such as research and development, but also in tangible assets such as machine tools,” note the Japanese researchers, who are concerned that the country, penalized by its slow digitization and its very old population, will not be able to recover its productivity in the coming years.
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