US economic growth is set to outpace China this year for the first time since 1976, Bloomberg reported on Friday, citing economists.
According to the publication, the lingering effects of the Covid-19 pandemic and recurring outbreaks throughout the country mean that its economic growth will stall, despite Beijing’s fiscal, monetary and regulatory stimulus measures. Analysts polled by the news outlet predict that the globe’s largest economy will grow by only 2% this year, far lower than China’s official growth target of “around 5.5%” for 2022.
“Even in an upside scenario, with an unlikely relaxation of the Covid-zero stance, a 5% expansion – let alone the government’s 5.5% target – looks out of reach,” they said, referring to President Xi Jinping’s Covid-zero policy, which demands curbs on activity when new virus outbreaks happen.
The US economy, however, is expected to grow by around 2.8%, despite multiple-year-high inflation, driven largely by high levels of hiring and consumer spending.
The two countries have long been rivals, with US President Joe Biden having built his economic agenda partly around the goal of showing that democracies can be more economically competitive than China’s “authoritarian model,” as Bloomberg described it. In the fourth quarter of last year compared with the same period in 2020, the US has already raised its GDP by 5.5%, while China only managed 4% growth. However, according to analysts, Beijing still has options to change the situation.
“China still has policy options… At this juncture, a timely and decisive rollout of real stimulus measures is really critical to bring growth back on track,” Citigroup Inc. economists Xiangrong Yu and Xiaowen Jin wrote in a note to the news outlet this week.