China stum­bles in race to pass US as world's big­gest econ­omy

The Pak Banker - - FRONT PAGE -

For the first time in al­most a decade, China has lost ground in catch­ing up with the U.S. econ­omy, when out­put is mea­sured in dol­lars.

US gross do­mes­tic prod­uct in­creased $590 bil­lion in 2015 from a year ear­lier, ac­cord­ing to data re­leased Fri­day. China's econ­omy, while re­port­ing 6.9 per­cent growth for the year, added $439 bil­lion, as a weaker yuan sapped the value of out­put gains in dol­lar terms, ac­cord­ing to data. "The U.S. has come back from the fi­nan­cial cri­sis with ro­bust tech­nol­ogy in­no­va­tion lead­ing the re­cov­ery, while China's econ­omy is head­ing down," said Niu Jun, an in­ter­na­tional-re­la­tions pro­fes­sor at Pek­ing Univer­sity.

"The num­ber it­self isn't a spe­cific rea­son for be­ing ei­ther too op­ti­mistic or pes­simistic, but if China can't suc­cess­fully re­form its econ­omy, the real gap be­tween the two will ex­pand, and it will take longer for China to catch up." Last year was the first time since 2006 that China made no progress in clos­ing the gap with the world's largest econ­omy. While the U.S. econ­omy ex­panded 2.4 per­cent for a se­cond straight year, China slowed to the weak­est ex­pan­sion pace in a quar­ter-cen­tury as old growth driv­ers like heavy in­dus­try and ex­ports slow. As for 2016, China's econ­omy is fore­cast to ex­pand 6.5 per­cent in real terms, while the yuan is pro­jected to de­pre­ci­ate to 6.79 against the dol­lar, down more than 7pc from the av­er­age level in 2015.

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