IMF: The Age of America About to End

Somehow I doubt these predictions are going to bear out. History always repeats itself. In the 1980s it was Japan that was going to crush the American economy. For the last twenty or so years the Japanese economy has been flat (it's still the 3rd biggest in the world however).<p>Japan tried to boost the economy with massive expenditures in it's infrastructure, to no avail. Compare that to China's approach of building high speed rail networks that get cancelled, and to build huge 'cathedrals in the desert' - cities that are overpriced by the government, who refuse to let the price to be dictated by the market (which is what would happen in a true capitalist system). The result is that most locals are priced out of the market. The reason that the cities are being built in the first place is to drive growth figures. Not having any oversight may result in some dramatic revelations about China's supposed growth in the coming years.<p><a href="http://news.bbc.co.uk/2/hi/8691083.stm" rel="nofollow">http://news.bbc.co.uk/2/hi/8691083.stm</a><p><a href="http://www.bbc.co.uk/news/business-11748644" rel="nofollow">http://www.bbc.co.uk/news/business-11748644</a><p><a href="http://www.sbs.com.au/dateline/story/about/id/601007/n/China-s-Ghost-Cities" rel="nofollow">http://www.sbs.com.au/dateline/story/about/id/601007/n/China...</a><p>Related HN discussion:<p><a href="http://news.ycombinator.com/item?id=2386584" rel="nofollow">http://news.ycombinator.com/item?id=2386584</a><p>EDIT: Added link<p>EDIT 2: Typos

Remember that China holds a lot of our debt. You will not see much public chest beating from China over this because of that fact. Both are equally vested in each others success as the other. China does not want value of the US bonds to plummet and US needs a stable manufacturing partner. At least for the foreseeable future, this economic and political two-step will continue.<p>However this does present serious doubts about the irrational exuberance in the strength of our markets for long term. It is hard to gauge China and its intentions. I am not saying that US has moral supremacy over China, but that China seems to be doing now what US used to do, for its own stability sake, twenty years ago. It is preparing to be the economic behemoth, despite the troubles it face in real estate and regionally.<p>The next twenty years should be pretty interesting.<p>Edit: I wanted to add a reference to this paper out of the Pentagon from two Pentagon top level staffers who assert that we should reduce our military spending and reinvest it in our youth. A very prescient analysis of where United States is heading, in the world. I wanted to add it as its own HN submission, but was not sure if it would be well received. Here is the link to the pdf: <a href="http://www.wilsoncenter.org/events/docs/A%20National%20Strategic%20Narrative.pdf" rel="nofollow">http://www.wilsoncenter.org/events/docs/A%20National%20Strat...</a>

<i>Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.</i><p>So we won't be the top any longer, but we'll still be enormously dominant. So? Competition drives innovation.<p>All the "America is doomed" folks act as if America is going to crumble to pieces simply because we are no longer the only gorilla in the room.

&#62; It’s a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn’t work. You can’t stay on top if your economy doesn’t.<p>Kind of tongue-in-cheek - but that's a lesson I learned from playing Civilization. I know it's just a game, yadda yadda, but sometimes I do wonder how much of it translates into reality. E.g., if this was a game of Civ, China's domination would be pretty much ensured at this point: they have so many "cities" that their "production" output and "science" output will overtake anyone else's in short order.<p>In fact, that's how I prefer to play the game often: just build minimal defenses to make sure my cities are not conquered, and invest in growth as much as possible. Sooner or later, I'm the 800 kg gorilla of the whole Civ map.

<i>"According to the IMF forecast, whomever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy."</i><p>Technically this has already happened, as the EU has a larger combined GDP than the US.<p>It's also not too surprising. For it's land area, the US is very sparsely populated, and 350m people are not going to have the same economic purchasing power as 1000m people, assuming the latter group can catch up in terms of infrastructure and technology with the former group.

Why is this story here? It should be posted to Digg and Reddit, home to all the people awaiting the Ron Paul Revolution and are posting stories about peak oil and the need to return to the gold standard.<p>Unless, of course, the content of this article is somehow going to influence your business plans or YC application or your Ruby or JavaScript code. (No, I didn't think so.)<p>Butterfly flaps wings<p>Adjust your business model<p>The U.S. is doomed

Oh yes, lets parade out yet another rising Chinese menace story.<p>Are we counting the cities worth of empty condos in the Chinese GDP? How exactly did the IMF arrive at these numbers? Is there external confirmation of government stats?<p>There are definite signs that there's a bubble waiting to pop in China, just as it did in the US, so i view even analyses by the IMF with some skepticism if they're based on government reporting, given that the government of China has both the means and the incentive to present itself as a growing economic power.<p>How about we hold off on the sound and fury until 2016, mmkay?

Right now, oil and commodities are transacted in US dollars so countries have to stock-pile dollars. When China becomes the dominant economy, this won't probably won't be the case for long.<p>See this discussion from yesterday -- "Petrodollar Warfare -- AKA the "Oil Currency Wars" (<a href="http://news.ycombinator.com/item?id=2477659" rel="nofollow">http://news.ycombinator.com/item?id=2477659</a>)

We would remain, however, the most technologically advanced nation. Plus, GDP per capita would remain far higher. The majority of economists consider GDP per capita the most important thing when determining the wealth of a nation.

We speak of Real-GDP, but the day when China overtakes the US in RGDP/capita is still a very long way off.<p>Still, probably a good time to start learning the ol' Mandarin.

Unlike most other commenters here, I like this article and the general premise. I would be surprised if GDP in China increased so rapidly without also impacting PPP multiples, though. The article was a little light on this angle, but I would mentally adjust their number out to take into account the likely fact that increased GDP in China will continue to drive cost of living up. This pushes out the date a bit.

Comparing the US and China "nations" doesn't make sense. A Chinese person can "become" an American, but an American doesn't become a Chinese.

Yes, America has the worst economic system there is except for all the others that have been tried.<p>China? You GOT to be kidding! They are run by a one party dictatorship. They run essentially a centrally directed, command economy. They are still so poor that on average they have a tough time even getting enough rice for their people.<p>So, starting from where they are, they can get a fantastic rate of growth basically borrowing science, technology, and finance from America. BUT: Once they quit crawling, get up on all fours, and start walking, then they will face the fact that they have some serious problems: (1) Total suckage for a constitution. (2) Similarly for their political and legal systems and human rights, e.g., little things like freedom of the press. (3) Next to nothing in 'democratic traditions'. (4) A lot of filthy air and water. (5) A population with a quite old average age.<p>So, once they are standing, their people will want to do things about (1)-(5). As a country, they will struggle. The struggles may become violent. On "One fine day" (I know, Japan, not China), they will get (1)-(4) solved; solving (5) will be harder.<p>Then they will be about where America was in, say, 1950. As they move ahead, actually to do better than America they will have to do well with things that are new, with pushing the envelope, with making progress on new ground. Then they will begin to see the enormous advantages of political freedom, freedom to cut new ground in our research universities, free enterprise, freedom of the press, freedom in art, guarantees of freedom from an oppressive government, etc. They will still have the problem of a population with too old average age and a bad ratio of people to land and natural resources.<p>Net, bet on the economy in China continuing to grow rapidly for some years, but don't bet on China actually beating America in any significant sense this century.

<a href="http://www.cnn.com/video/#/video/world/2011/04/24/gps.fareed.take.china.us.cnn?iref=allsearch" rel="nofollow">http://www.cnn.com/video/#/video/world/2011/04/24/gps.fareed...</a>