The latest report from the International Monetary Fund (IMF) has China eclipsing the U.S. as the world’s largest economy in 2016. According to the IMF, the next U.S. President will be the last to lead the United States as the world’s largest economic power. The IMF has dubbed it the end of the ‘Age of America’.
Many are questioning not only the accuracy of the report, they are also exploring motives that may be driving the IMF to stir up global sentiment in regards to the U.S.
The current Chinese economy is roughly one-third the size of the U.S. and the United States is also a major consumer of Chinese made goods. The Chinese are also the largest purchasers of U.S. treasuries.
There seems to be little evidence to support the IMF’s claim. Here are a few red flags regarding the IMF report:
- China has more people living in poverty than the entire population of the U.S.
- China has been plagued by accounting irregularities (scandals) among its publicly owned and traded companies for years.
- The Chinese have suppressed the value of their currency to gain trade advantages.
- The Chinese economy would have to continue to grow at 10 percent annually year over year with no drop. While the U.S. economy would plug along at 2.7 percent growth.
- IMF doesn't use per capita GDP.
- The United States is the largest consumer of Chinese goods.
- Chinese demographics are working against their economic growth. By 2040, its elderly population will exceed the total population of Germany, France, Britain, Italy and Japan today.
What do you think?