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1/8
While straight-line projections may be inviting, they are really questionable even in the best of circumstances. Bloomberg says that if China’s economy can stick to the growth trajectory of recent years, it’ll surpass the U.S. within the next decade. https://twitter.com/lisaabramowicz1/status/1320650887791083520
While straight-line projections may be inviting, they are really questionable even in the best of circumstances. Bloomberg says that if China’s economy can stick to the growth trajectory of recent years, it’ll surpass the U.S. within the next decade. https://twitter.com/lisaabramowicz1/status/1320650887791083520
2/8
This is true if it is just a statement about arithmetic. For China’s GDP to match that of the US in ten years requires that Chinese GDP grow annually by roughly 3.4 percentage points more than the US. In the past five years, China grew by 4.3 percentage points faster.
This is true if it is just a statement about arithmetic. For China’s GDP to match that of the US in ten years requires that Chinese GDP grow annually by roughly 3.4 percentage points more than the US. In the past five years, China grew by 4.3 percentage points faster.
3/8
Can China grow by 3.4 percentage points faster over the next ten years? Perhaps, but at the rate Chinese growth has been slowing, that would be pretty extraordinary – and historically unprecedented: no investment-driven “miracle” economy in history has been able to avoid...
Can China grow by 3.4 percentage points faster over the next ten years? Perhaps, but at the rate Chinese growth has been slowing, that would be pretty extraordinary – and historically unprecedented: no investment-driven “miracle” economy in history has been able to avoid...
4/8
a difficult adjustment once it was unable to increase the debt burden quickly enough.
Consider that total social financing (the official measure of aggregate debt) grew in the past five years from 123 trillion to 251 trillion, or from 191% of GDP to 254% of GDP at...
a difficult adjustment once it was unable to increase the debt burden quickly enough.
Consider that total social financing (the official measure of aggregate debt) grew in the past five years from 123 trillion to 251 trillion, or from 191% of GDP to 254% of GDP at...
5/8
the end of 2019, and that by the end of this year total social financing it will be around 280-85% of GDP. Assuming (very, very optimistically) that there will no deterioration from the past five years to the next ten years in the amount of credit growth required to...
the end of 2019, and that by the end of this year total social financing it will be around 280-85% of GDP. Assuming (very, very optimistically) that there will no deterioration from the past five years to the next ten years in the amount of credit growth required to...
6/8
generate a unit of GDP growth, this implies that by the end of the decade, China’s official debt-to-GDP must be at least 400% and perhaps as much as 450% if it is to reduce its growth rate by just 1 percentage point.
generate a unit of GDP growth, this implies that by the end of the decade, China’s official debt-to-GDP must be at least 400% and perhaps as much as 450% if it is to reduce its growth rate by just 1 percentage point.
7/8
Unless you assume that there is no relationship between high growth rates and the surge in debt, in other words, to say that China’s GDP will match that of the US in a decade if it can grow 3.4 percentage points faster annually than the US might sound like a reasonable...
Unless you assume that there is no relationship between high growth rates and the surge in debt, in other words, to say that China’s GDP will match that of the US in a decade if it can grow 3.4 percentage points faster annually than the US might sound like a reasonable...
8/8
statement, but it is no different than saying that China’s GDP will match that of the US in a decade if its debt-to-GDP ratio can rise from 280% to 400-450% in ten years. If the latter statement isn’t plausible, neither is the former.
statement, but it is no different than saying that China’s GDP will match that of the US in a decade if its debt-to-GDP ratio can rise from 280% to 400-450% in ten years. If the latter statement isn’t plausible, neither is the former.
