THEY'RE GETTING OLD WITHOUT EVER GETTING RICH:

Lost in much of the fretting (or boasting) about American declinism is the massive lead the American economy continues to hold over China, despite four decades of rapid growth for the latter. The total output of the US economy in 2019 was US$21.4 trillion, significantly larger than China's output of US$14.3 trillion. On a per-capita basis, the division becomes more stark--US$65,280 to US$10,261 (at current US$).

America's share of the world economy has remained virtually unchanged since 1980, when it accounted for 25.2 percent of world GDP. As of December 31st, 2018, the US share only dropped to 23.9 percent. Over the same period, Japan's share of world GDP fell from 9.7 percent to 5.8 percent, while the European Union's share fell from 34.6 percent to 22 percent. This suggests that China's rise has been at the expense of other countries' share of the global economy, rather than that of the US.

Furthermore, China's economy had already been slowing since peaking at 14.2 percent growth in 2007, before dropping to 6.6 percent in 2018. As Derek Scissors of the American Enterprise Institute argued last year, the quicker China slows down, the less likely it will be able to catch up with the US. While the Chinese Communist Party (CCP) insists that China will experience a gradual slowdown, internal factors suggest a more rapid slowdown would not be out of the question. In the aftermath of the pandemic, China watchers warned that the CCP had doubled down on the debt-fuelled, state-directed investment strategy which characterized its response to the 2008 global financial crisis.

As observed by late Indian economist Deepak Lal, the aftermath of the big surge in public spending post-2008 saw industrial producer prices fall steadily after 2011. This deflation was partly attributed to the glut in production in major Chinese industries such as steel, coal, glass, aluminium, solar panels, and cement. While this may inflate China's baseline output (and therefore GDP), the question is whether these add value to the economy.

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