Monday 18 December 2017

Hamish McRae: We must prepare for the day China passes US

Hamish McRae

The moment when China passes the US in economic size is getting closer, at least according to the IMF. It has just predicted that this tipping point will be reached in 2016, much sooner than other predictions, which range from 2020 through to the 2040s.

If this was just one of the many economic predictions that are pumped out every week it might have received little attention. What has given it some edge is that it follows the warning that the US might lose its AAA credit rating, fears that it will be unable to correct its budget deficit, and stories that China may shift part of its foreign-exchange reserves out of dollars and into other currencies.

So it plays to the sense of decline in the US, as well as to the current swagger of China. It is a story that has been widely reported in Beijing; but what does it actually signify?

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