According to the Economist, China's GDP will overtake the US by 2018. According to the IMF, this is likely to happen in 2016. According to Goldman Sachs, the World Bank and many other analysts, even assuming a more subdued Chinese growth rate and a moderate increase in the value of the RMB, by 2030, China's economy will be two and half times bigger than the United States, in fact bigger than the sum total of the economies of the U.S, EU, and Japan combined.

This is essentially a matter of arithmetic. China's population is four times the U.S. So if China's average productivity is bigger than a quarter of the U.S, its economy will be bigger than the United States (China Choice, Hugh White, Black Inc, Australia, 2012, "The power of numbers" pp. 28-31).

According to the World Intellectual Property Organization Report (2012), China is now by far the world's largest filer of patents, trade marks and industrial designs, for the first time in a century as a developing country. According to the Royal Society, this year China is set to overtake the United States in citations in scientific literature.

As a fifth of mankind in China is unleashing its latent productivity, the comparative outcome should not therefore be surprising.

Remember what happened when America's economy grew much bigger than Britain even before the Second World War? The supremacy of the British Pound finally gave way to the almighty dollar. (The Battle of Bretton Woods, Benn Steil, Princeton University Press, Princeton and Oxford, 2013).

However, because of China's big population, China's per capita GDP will remain not much more than half of the United States even by 2050, considering China's fast aging population and the many resource, ecological and other constraints the country is facing.

Nevertheless, the RMB is on an ascendant trend as more and more countries have China as the largest trading partner, including Japan. Indeed, the RMB has ipso facto eclipsed the greenback as the world's leading "reference currency"". Click here

With China promoting RMB internationalization for trade settlements, currency swaps and investments in and out of China, the Chinese yuan will progress internationally from a trading currency, to an investment currency and finally to one of the world's reserve currencies, perhaps like the Pound Sterling, along side with the USD.

This is happening as naturally as water follows down the mountain (Tao Te Ching, Lao Tzu, 6th century, BCE). Zero-sum thinking aside, is this a great calamity for the world to be resisted?

Shakespeare says "There is a tide in the affairs of men" (Julius Caesar). Even King Canute struggles to stem it.

Best regards,

Andrew