A Japanese think tank has pointed out that the Chinese Communist Party’s (CCP) actions to clamp down on private enterprises and other significant industries undermine the Chinese economy’s ability to grow.
On Dec. 15, the Japan Center for Economic Research (JCER) released the seventh issue of the Asia Medium-Term Economic Outlook Report, forecasting economic growth for 15 countries or regions in Asia from 2021 to 2035. The report also compares and indicates the economic prospects of the United States, Australia, and Canada.
JCER revised its view a year ago in its latest forecast and said that the Chinese economy cannot overtake the U.S. before 2033.
Previously, JCER suggested that China could become the world’s largest economy by 2029 as the COVID-19 epidemic dragged down the U.S. economy. If the epidemic develops into a more significant threat, China’s gross domestic product (nominal GDP) will surpass that of the United States.
In other words, the report argues that the CCP’s policy of economic control must be delayed for four to five years before China’s economy can surpass that of the United States.
The report also predicts that although China’s economy may surpass that of the United States for the first time in 2033, as China’s population grows, the United States will once again become the most significant economic power by 2056.
JCER said the forecast is primarily based on a macroeconomic forecasting method known as the “production function” and takes into account specific events such as political changes and regulations that impede growth.
The report is nine years longer than the International Monetary Fund’s (IMF) World Economic Outlook, which only provides until 2026. At the same time, the forecast is also different from the European Development Bank’s forecast for Asia that only focused on observing the growth of developing countries. JCER said this is a more comprehensive and long-term forecast for the Asian economy.
In addition, after Beijing introduced financial regulations to curb excessive real estate investment, investment is expected to decline.
The latest forecast also considers the rapid economic recovery of the United States this year. The report argues that this benefits from a large-scale stimulus plan promoted by the U.S. government.
The report also pointed out that the “Taiwan situation” will be the key to determining the Asian economy in the next few years. Should the CCP take action against Taiwan, the Asian economy will be severely affected.
The forecast also indicates that South Korea will surpass Japan’s GDP per capita in 2027 and Taiwan in 2028.
The report points out that the essence lies in Korea and Taiwan’s efforts to develop digital transformation, whereas Japan’s digital transformation is relatively slow.
JCER warned that Japan’s economy could fall into long-term negative growth in the 2030s unless it accelerates its digital transformation.