Will China surpass the US by 2030?
According to Justin Lin Yifu, former vice president of the World Bank, currently a professor at Beijing University, China, the ongoing war in Ukraine will not stop China's efforts to overcome the US to become the world's largest economy by 2030, despite the recent sell-off of Chinese bonds by foreign investors.
SCMP quoted Justin as saying: I am quite confident in my estimate that China will surpass the US by 2030. The Russia-Ukraine war will affect China, but at the same time will also affect the US. All countries will have slower growth rates.
The US and its allies have stepped up repeated sanctions against Russia, including removing Russian banks from the international payment system SWIFT and cutting or banning imports of Russian oil and gas.
Brent crude oil prices rose to a 13-year high of $139/barrel on March 7, and along with that, created great uncertainty for the global economy.
However, Mr. Lin predicted that China's inflation will not increase rapidly despite rising oil and food prices.
On March 5, Prime Minister Li Khac Cuong set a growth target for China's consumer price index (CPI) this year at about 3%. CGTN reported that on March 9, China released CPI data for February at 0.9%, unchanged from January.
We hope the war will end soon. If so, the impact (on the Chinese economy) will be limited, Mr. Lin said on the sidelines of the Chinese parliamentary session taking place in Beijing.
However, an uncertain sign has penetrated the Chinese bond market as foreign investors took a rare move to cut 67 billion yuan ($10.6 billion) held last month to 3.67 trillion yuan ($580 billion), despite the yuan's exchange rate against the USD approaching a four-year high.
It is unclear who cut because no specific figures have been provided, but ANZ Bank has previously estimated that the Russian central bank and the Russian sovereign wealth fund - both sanctioned - could hold $ 140 billion in Chinese bonds.
Mr. Lin, who has a PhD in economics from the University of Chicago, is known for his strong belief that China has the potential to maintain an average annual growth rate of 8% until 2035. He is also a long-time supporter of the state's active role in industrial planning to help developing countries quickly catch up with advanced economies.
China's Goals
China has set a GDP growth target of about 5.5% this year, compared to the actual growth rate of 5.1% over the past two years and the International Monetary Fund's estimate of 4.8% for 2022.
Mr. Lin gave his ambitious economic growth estimate based on China's un exploited potential, which will ensure growth of at least 2-3 percentage points compared to the US in the coming years.
According to senior advisor Lin, China has room to upgrade its traditional industries. As the most populous country, China has a comparative advantage and a large domestic market. In the new economic field, China also has the advantage of being able to "turn the lane to overcome", according to Mr. Lin.
The State Council's Center for Development Studies, a government consultancy, previously estimated that China would surpass the US by around 2032.
In November 2021, Bloomberg quoted a report by management consulting firm McKinsey & Co. saying that China had surpassed the US to become the leading country in net assets, with assets increasing 17 times over the past 20 years, accounting for a third of global growth during this period.
In 2021, China's GDP grew by 8.1%, far exceeding expectations and bringing the country's economy closer to the size of the US economy.
However, SCMP quoted Chinese Deputy Foreign Minister Lac Ngoc Thanh as saying that China "does not care" about becoming the world's largest economy but cares about a better life for its people.
Last year, China's economy reached 3/4 the size of the US economy and the country was considered a strategic opponent with Washington's increasing efforts to block technology and economic divide.
expert Lin criticized the US for using global financial infrastructure - including SWIFT and the USD system - as a sanctions tool, which was a threat China faced in 2019. He said that business and politics should be separated, because otherwise it will bring shocks to the international financial system.
Beijing has stepped up the building of a cross-border payment and settlement system in yuan and continues to promote the use of Chinese currency abroad more.
Mr. Lin said that the international development of the yuan is in line with China's rising economic power, but admitted that even if Beijing surpasses Washington in terms of economic scale, it will not ensure that the yuan will replace the USD. According to him, it will be a long process.
