China’s share of the global economy is declining and its shift could “change the world order,” according to one investor.
Ruchile Sharma said The country’s decades of growth have come to an end. Its share of global GDP is expected to shrink by 1.4% over two years.
In nominal dollar terms, which Sharma argues is the most accurate measure of an economy’s relative strength, China’s share began to decline in 2022 following a series of strict coronavirus measures.
Chairman of Rockefeller International explained that China’s share is expected to decline further in 2023, exceeding 17%.
This decline puts China on a growth trajectory of 1.4% by 2025, a decline not seen since the 1960s and 1970s, when Mao Zedong presided over economic stagnation.
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This decline will see China record 1.4% economic growth by 2025, a decline not seen since the 1960s and 1970s, when Mao Zedong reigned in economic stagnation.
It was not until the 1970s that the economy began to improve under new leadership.
There has been a rapid increase from 1990 to 2021, with the global economy jumping from less than 2% to 18.4%.
However, China will not contribute to global GDP growth over the past two years.
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“China’s decline could reorder the world,” Sharma told the Financial Times.
“Since the 1990s, the country’s share of global GDP has expanded, mainly at the expense of Europe and Japan, but over the past two years, its share has remained roughly stable.
“The gap left by China is being filled primarily by the United States and other emerging countries.”
The Chinese government has maintained its annual growth target of 5%, supporting the International Monetary Fund’s forecast of 5.4% growth in 2023, and hopes to achieve this again this year.
Sharma declined to use real GDP growth as a metric, saying Chinese authorities could adjust the numbers to suit projections and mask a possible decline.
He added: “At a historic turning point, China’s rise as an economic power is being reversed. The greatest world story of the past half century may be over.”
“But no matter what Mr. Xi does, the country’s share of the global economy is likely to decline for some time. The world is now post-China.”