Mountain range

How soon and at what height will China’s economy peak?

Estimates vary, depending on assumptions about population, productivity and prices

China has this year liberated its economy from the lockdowns, quarantines and other strictures of its "zero-covid” regime. But it has not freed itself from longer-term worries about its growth prospects. Its population is shrinking. Its epic housing boom is over. Thanks to a regulatory crackdown on e-commerce firms, the Communist Party has cowed the tech billionaires it once courted. Jack Ma, a former teacher who became one of China’s most celebrated entrepreneurs, has returned to teaching—in Japan.

The Communist Party now prizes security over prosperity, greatness over growth, sturdy self-reliance over the filigreed interdependence that distinguished China’s past economic success. Foreign investors are more wary, seeking to relocate or at least diversify their supply chains. And America is eager to limit Chinese access to some "foundational technologies”. The economics of mutual benefit has yielded to the geopolitics of mutual suspicion.

All this has led many analysts to cut their long-term forecasts for China’s growth, even as they raise predictions for this year. Some ask how much longer China’s economy can grow faster than America’s. The answer will affect far more than factory orders or personal incomes. It will shape the world order.

The previous consensus, both within and outside China, was that its economy would soon eclipse America’s. That, in turn, would allow China to become the world’s pre-eminent military power, and so supplant America as the world’s most powerful country. This remains a common view. Yao Yang, a respected economist at Peking University, believes China’s GDP can overtake America’s by 2029.

But others believe China’s economic clout relative to that of its rivals is nearing a peak. Hal Brands and Michael Beckley, two American political scientists, argue that China’s rise is already coming to a halt. The age of "peak China”, as they call it, is upon us—and it is far less Olympian a summit than most had predicted.

In 2011 Goldman Sachs projected that China’s GDP would surpass America’s in 2026 and become over 50% larger by mid-century. No peak was in sight. At the end of last year the bank revisited its calculations. It now thinks China’s economy will not overtake America’s until 2035 and at its high point will be only 14% bigger (see chart).

China’s peak looks similar in an influential forecast from last year by Roland Rajah and Alyssa Leng of the Lowy Institute, an Australian think-tank. Others see an even lower summit. Capital Economics, a research firm, argues that China’s economy will never be number one. It will reach 90% of America’s size in 2035 and then lose ground. In so far as the Peak China thesis can be captured in a single projection, this is it.