Michael Pettis to The Economist: Put Up or Shut Up

April 2nd, 2012
in Op Ed

by Michael Pettis

I recently read in The Guardian an article by enthusiastic orientalist Martin Jacques in which he says that The Economist has just predicted that China’s GDP, betSMALLmeasured in nominal dollars, will will be the world’s largest by 2018.  Earlier estimates, he says had China becoming the largest economy in the world by 2027

I have always been a little skeptical about the 2027 claim, not that it is implausible, let alone impossible.  It is just that given how much we would have to assume about the sustainability of Chinese growth, about the likelihood of current GDP numbers not having been vastly inflated by an over-investment boom, and about the instable range of political outcomes, it seemed to me to be a prediction about as valuable as the world-beating predictions about the USSR in the 1960s or Japan in the 1980s

Follow up:

Still, this 2018 prediction deserves I think more than a little questioning — it requires that nominal Chinese GDP growth in dollars outpace nominal US GDP growth by 12% a year.  I know that in the past The Economist has tended to be a little less skeptical than some others have been about the sources and components of the Chinese growth miracle (not always — different writers at The Economist seem to have very divergent opinions on the subject), but this is a pretty aggressive prediction, more in line with what I would expect from an investment bank, or from a consulting company that helps foreigners access the Chinese consumer market.

I believe some people from The Economist do read my blogs from time to time and so I am wondering whether we could set up a friendly bet — not for too large stakes, please, since my resources are limited, but just so that we can both keep up a sporting interest in the economic news over the next few years.  I would like to bet that by the end of 2018 China will not be the largest economy in the world. 

If I win, perhaps The Economist could invite a very cool underground Chinese band of my choice to perform at their next big conference, whereas if I lose I could buy four-year subscriptions (student rates, please) to a group of Peking University freshmen.  Everybody would end up feeling pretty pleased with themselves no matter who wins, right?  So?

Other Articles by Michael Pettis

analysis blog opinion blog


Related Articles

Analysis articles about China

Opinion articles about China

About the Author

Michael PettisMichael Pettis is a Senior Associate at the Carnegie Endowment for International Peace and a finance professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets. He has taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia University’s Graduate School of Business. He is also Chief Strategist at Shenyin Wanguo Securities (HK). Pettis has an impressive work history on Wall Street, Latin America, Europe and Asia (see his blog China Financial Markets for a complete bio).

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

1 comment

  1. Frank Li (Member) Email says :

    Michael, you will win!

 navigate econintersect.com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved