China has seemed to endure the financial crisis relatively unscathed. Now, a new assessment by the World Bank estimates that China may be able to sustain its strong economic growth for the long-term, potentially even surpassing the U.S. economy. From The Economic Times:
Estimates showed that China’s current relative status to the US was similar to Japan’s in 1951, and South Korea’s in 1977, who were in their high-speed development period, World Bank Chief Economist and Senior VP Justin Yifu Lin said.
“By the year of 2030, measured by purchasing power parity, China’s economic size may be twice as large as the US…and China’s per capita income would be half of that of the US by then,” Chinese state run Xinhua news agency quoted Lin as saying.
Lin did admit there were various structural adjustments to be made in the Chinese economy.
… China should consider ways to rebalance its economy towards domestic demand, given the inevitable slowdown in the exports and the need to reduce trade surplus.
China also needs to reduce its income disparities and rebalance short-term growth and long-term environmental sustainability, he said.
In other words, China’s economic potential is not inevitable. Various events could derail economic growth. From Bloomberg News:
Global risks include surging food, commodity and fuel prices that pose a threat to social stability, “as demonstrated by events that unfolded in Tunisia and Egypt,” Lin said.
