BEIJING – If everything goes right for China, it will surpass the United States as the world’s largest economy, in current dollar terms (and more quickly in real terms), by 2021. Its per capita income will reach that of today’s lower tier of high-income countries. But, despite its forward momentum, the Chinese economy faces looming risks in the coming decade.
The immediate risk is continuing stagnation, or recession, in Europe. In the last decade, export growth has accounted for roughly one-third of China’s overall economic growth, and about one-third of Chinese exports went to the European Union. If the situation in Europe continues to deteriorate, China’s growth will be dragged down.