By Steven Mezias/Abu Dhabi
In 2016, the Chinese economy will be bigger than the US economy; should we care?
A recent International Monetary Fund report data predicted that China would surpass the US as the largest economy in 2016. Although the report itself was low key, it elicited some dire reactions. For example, one published comment predicted that the next US president would have the dubious honour of presiding over America’s fall! This tone continued with alarming statements about the future of the global military and monetary order.
The projection has also triggered a debate about what measures are appropriate for such a comparison, for example gross domestic product versus purchasing power parity or national versus per capita comparisons.
In the end, however, I believe reaction to the projection should be tempered in the same way that one learns to handle a birthday after passing a certain age. It is simply a demarcation point in a longer continuous process; overreacting to being a year older hardly constitutes a sensible response to the inevitable process of aging.
A process that facilitates reflection about the roles of China and the US in the global economy would suggest supplanting quick reactions to a single statistic with reflection about the roles of China and the US in the global economy.
Such analysis should address how their roles have been changing over past decades and will continue to change over the coming decades. This will likely prove a far more useful exercise than fixating on the relative sizes of the two economies.
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Professor Stephen Mezias is Abu Dhabi campus Academic director, INSEAD Business School.
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