Japan Research Institute: "China's Economic Growth Rate Will Drop Below 4% in 2029, and Will Not Exceed the US by 2040"

The Japanese private research institute predicts that China's economic growth rate will fall below 4% in 2029. The institute pointed out that Sino-US friction, long-term weak domestic demand, and deflationary pressure are the main downward factors.

According to a report by the Japan Economic News on the 16th, the Japan Economic Research Center forecasts that China's economic growth rate this year will be 4.9%, with an average annual growth rate of 4.1% from 2026 to 2030. This figure is 1.3 percentage points lower than the 5.4% average annual growth rate from 2021 to 2025.

The Japan Economic Research Center further predicts that China's economic growth rate will drop to 4.5% next year, 4.4% in 2027, and will record 3.9% and 3.8% in 2029 and 2030 respectively, officially falling below 4%.

The research institute analyzed that the slowdown in economic growth is due to "although the United States has reduced additional tariffs on China, weak domestic demand and deflationary (falling prices during economic recession) pressures still constitute downward factors." It especially pointed out that if the United States significantly increases the tariff rates on Chinese goods, the speed of China's economic growth decline may accelerate further.

In the long term, the Japan Economic Research Center predicts that China's average annual economic growth rate will drop to 3.5% from 2031 to 2035, and further to 2.8% from 2036 to 2040. Analysts believe that the rapid population reduction leading to a decline in labor productivity during this period will hinder economic growth.

The research institute also predicts that China's nominal gross domestic product (GDP) has already exceeded 60% of the US, and although it will increase to about 80% by 2040, it will still not surpass the US.

Additionally, the Japan Economic Research Center forecasts that China's per capita nominal GDP will grow by 7% in 2026, reaching $14,740. Nikkei noted that this figure is slightly higher than the World Bank's high-income national standard - per capita national income (GNI) of $13,936.

However, the newspaper also pointed out: "In China, due to concerns about the future, families tend to save, and corporate competition is becoming increasingly fierce, and deflationary pressures are continuously increasing." And it analyzed that "if alleviating deflationary pressures takes a long time, the process of China entering the ranks of high-income countries may be delayed."

Original: toutiao.com/article/1851709533716489/

Statement: This article represents the views of the author alone.