China’s economic growth will be eclipsed by the US rate by 2031-35

China’s rapidly aging population will be a hurdle to its economic growth, which will be surpassed by the US in the coming years, according to a top demographer.

Fu-Xian Yi, an expert in reproductive sciences at the University of Wisconsin-Madison and an expert on China’s demography, highlighted that the share of the Chinese population over 65 has 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 seniors make up 15% of the population,” he wrote Wednesday in Project Union. “The average growth rate of high-income countries during this period is just 1.8%.”

Although the US remains the world’s largest economy, its growth rate has lagged behind China’s, despite the second economy slowing sharply in recent years. Last year, China’s GDP grew 5.2%, compared to 2.5% in the US

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

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

In turn, the Congressional Budget Office projected earlier this year that U.S. economic growth will decline much more gradually, falling from about 2.2% in 2025 to 1.9% in 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 the 2023 mark, China’s per-capital income will not grow fast enough in the coming years to catch up as the benchmark rises in line with overall global growth.

Furthermore, the erosion of China’s trade surplus, low interest rates and deflationary pressure will weigh on the currency, making it even more difficult to achieve high-yield status, he said.

“Above all, China must increase household disposable income and face its demographic crisis, which requires a political and economic review,” concluded Yi. “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 necessary transformation could take several decades, if not longer.”

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

Meanwhile, China’s slowdown in growth, the housing crisis, high youth unemployment and US restrictions on key technologies have led to predictions of a the so-called lost decade of stagnation.

China’s leading scholar Anne Stevenson-Yangco-founder of J Capital Research, said earlier this month that “erratic and irresponsible policies, excessive Communist Party control and unfulfilled reform promises have created a dead end in the Chinese economy, with weak domestic consumer demand and slowing growth.”

The root cause of China’s economic problems is the Communist Party’s tight control, which will not go away, while its strategies that focus on adding more industrial capacity and supporting exports are counterproductive, she wrote in a statement. op-ed in the New York Times.

Most economists have recommended that Chinese leaders loosen their control over the private sector and promote more consumption, which would require government reform – “and that is unacceptable,” she added.

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