China’s economic growth will be eclipsed by U.S. rate in 2031-35

Fu-Xian Yi, a specialist in reproductive science at the University of Wisconsin-Madison and an expert on China’s demographics, pointed out that the share of the Chinese population that’s over 65 had jumped to 15.4% in 2023 from 7% in 1998.

“Historically, no country has managed to achieve 4% growth in the subsequent 12 years after the elderly made up 15% of the population,” he wrote Wednesday in Project Syndicate. “The average growth rate for high-income countries during this period is just 1.8%.”

While the U.S. remains the world’s largest economy, its growth rate has lagged China’s, even as the No. 2 economy has slowed sharply in recent years. Last year, China’s GDP expanded by 5.2%, compared to 2.5% for the U.S.

But Yi sees the tables turning by the next decade and drew a parallel between China’s aging population and how similar demographic trajectories cooled off the Japanese and German economies.

“Based on these historical trends, China’s growth rate is likely to slow to 3% by 2028 and fall below that of the U.S. from 2031 to 2035,” he predicted.

For its part, the Congressional Budget Office projected earlier this year that U.S. economic growth will ease much more gradually, sliding from about 2.2% in 2025 to 1.9% by the early 2030s.

China is also unlikely to achieve “high-income” status, based on the World Bank’s per-capita income threshold, Yi added. After falling just short of 2023’s mark, China’s per-capital income won’t grow fast enough in the coming years to catch up as the benchmark rises in line with overall global growth.

On top of that, China’s eroding trade surplus, low interest rates, and deflationary pressure will weigh on the currency, making it even tougher to reach high-income status, he said.

“Above all, China must raise household disposable incomes and tackle its demographic crisis, both of which require a political and economic overhaul,” Yi concluded. “Given that China today is even more averse to economic reforms than it was when Deng Xiaoping launched his market-oriented reforms in 1978, rapid change is highly unlikely. The required transformation may take several decades, if not longer.”

Pointing to China’s aging population, veteran strategist Ed Yardeni last year said the country could become “the world’s largest nursing home.”

Meanwhile, China’s slowing growth, real estate crisis, high youth unemployment, and U.S. restrictions on key technologies have led to predictions of a so-called lost decade of stagnation.

Top China scholar Anne Stevenson-Yang, cofounder of J Capital Research, said earlier this month that “erratic and irresponsible policies, excessive Communist Party control and undelivered promises of reform have created a dead-end Chinese economy of weak domestic consumer demand and slowing growth.”

The root cause of China’s economic problems is the Communist Party’s tight grip, which isn’t going away, while its strategies that focus on adding more industrial capacity and leaning on exports are counterproductive, she wrote in an op-ed in the New York Times. 

Most economists have recommended that Chinese leaders loosen their hold on the private sector and promote more consumption, which would entail reforming the government—”and that is unacceptable,” she added.