ICYMI: Bloomberg: US Growth Seen Outpacing China’s for First Time Since 1976
May 20, 2022
|Key Point: “The world’s second-largest economy will grow just 2% this year, Bloomberg Economics wrote in a report Thursday. By comparison, US gross domestic product will increase 2.8% this year, Bloomberg Economics predicts.”|
Bloomberg: US Growth Seen Outpacing China’s for First Time Since 1976
By Tom Hancock and Chris Anstey
May 20, 2022
The world’s second-largest economy will grow just 2% this year, Bloomberg Economics wrote in a report Thursday. By comparison, US gross domestic product will increase 2.8% this year, Bloomberg Economics predicts.
While Beijing is applying fiscal, monetary and regulatory stimulus measures, the impact is being blunted by President Xi Jinping’s Covid Zero policy, which requires strict curbs on activity when virus outbreaks occur. The US, while struggling to cope with high inflation, is still being propelled by strong hiring and consumer spending.
The Bloomberg Economics call is on the bearish end of the spectrum, with the median forecast for China’s 2022 GDP growth still over 4%. If they have it right, this year would be the first time that China’s full-year growth pace has lagged behind that of its rival since 1976, when China was emerging from the tumultuous decade of the Cultural Revolution, World Bank data show.
Since the “reform and opening up” campaign launched in the late 1970s, China has enjoyed faster expansion rates, with plenty of scope still remaining for its per-capita GDP to narrow the gap with the US.
President Joe Biden, who is urging congressional lawmakers to pass a package of legislation aimed at strengthening US competitiveness against China, would be sure to seize on such a relative growth outcome. He has framed his economic agenda in part around demonstrating whether democracies can stand up to Xi’s authoritarian model.
Measuring the fourth-quarter of last year compared with the same period of 2020, the US expanded 5.5% against China’s 4%. American growth in the final three months of last year was accentuated by a jump in inventories. It remains to be seen whether the US can outstrip China on a calendar-year average basis.