China will be the dominant economic power in 2030, even if the U.S. economy stages a turnaround as it did in the 1990s, argues Arvind Subramanian, author of upcoming book Eclipse: Living in the Shadow of China's Economic Dominance.
The only question (barring a complete Chinese collapse) is how big that dominance is, according to Subramanian, a senior fellow at the Peterson Institute for International Economics, who frames it as a matter of arithmetic.
He assumes that because China has size and demographics on its side, it will inevitably overtake the U.S. even if it maintains a fraction of its current economic growth.
Over the next 20 years, he projects the U.S.-China growth differential to favor China by 4.5 percentage points. Under alternate scenarios - in which the U.S. booms or China decelerates - he admitted that the differential could narrow.
However, even under these alternate scenarios, China's economic dominance will come to dwarf the U.S.
Below are charts of projected economic dominance, an index the author calculated using the following equation:
0.6 * share of world trade + 0.35 * share of world GDP + 0.05 * share of world net exports of capital
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