Record inflation but the US is about to overtake China in terms of growth

Bloomberg reported on May 20 that China’s strict Covid-19 containment strategy meant that its economic growth could be surpassed by the US for the first time since 1976.

The world’s second-largest economy will grow only 2% this year (said to be lower than the 5.5% target set out), according to a Bloomberg report on May 18. By comparison, US gross domestic product (GDP) is forecast to grow 2.8% this year.

“Even in a positive scenario, with a sustained ‘no Covid-19’ stance, 5% growth – let alone the Chinese government’s 5.5% target – looks likely” – Bloomberg said.

China’s GDP per capita is still lower than that of the US. Photo: Bloomberg

Beijing is applying financial and monetary stimulus measures … but they are limited by the “no Covid-19” strategy. Meanwhile, the US, despite having to deal with high inflation, growth was driven by strong employment and consumption.

In January this year, US President Joe Biden confirmed for the first time in 20 years, the US economy is growing faster than China.

Even so, Bloomberg forecasts China’s GDP growth in 2022 will still be above 4%.

World Bank data also shows that this year will be the first time that China’s full-year growth rate lags that of the US since 1976.

Chinese policymakers have repeatedly made commitments on measures to support growth. Vice Premier Liu He hinted earlier this week that Beijing may be willing to give up its grip on technology companies.

Economists Xiangrong Yu and Xiaowen Jin of Citigroup Inc. commented that China still has policy options by promptly and decisively deploying stimulus measures to get growth back on track.