Imagine three Chinas

Revisiting "India as #1", 16 years later

In November 2009, I did a blog post entitled “India as #1”

When Tyler Cowen asked me for my most absurd belief, one idea that I came up with was that India will have the world’s largest economy in the year 2109.

First let’s ask ourselves why most people would find this prediction a bit far-fetched. Most of us have never even visited India, but we have seen media images that often show a very crowded and underdeveloped country. It is very hard to imagine how India’s economy could ever surpass the US. More astute observers might notice that India does have nearly 4 times the US population, and it is not that hard to imagine that their per capita GDP might eventually reach 30% of US levels.

But the population advantage of India raises an even greater hurtle. Right now, China has a per capita GDP that is twice as high as India’s. Even worse, China is growing more rapidly. And China’s total population is larger than India’s. So how could India possibly overtake China within the next 100 years?

Photo by Lewis J Goetz on Unsplash

We are still a long way from the year 2109, but two of the three things I mentioned have already reversed. India now has a larger population than China, and India’s economy is now growing considerably faster than China’s economy.

And this is only the beginning. Since writing that post, China’s fertility rate has plunged far more dramatically than anticipated. While India’s current population is only few percentage points larger than China’s current population, Indian fertility is far higher. In 2025, China had 7.92 million births, whereas India had roughly 23 million. Those figures provide a hint as to the relative size of each country’s workforce in the second half of this century. The future of these two demographic giants will look vastly different than the present.

Less than a year after my 2009 forecast, I became even more optimistic about India:

So here’s the new prediction:

Year: 2081

Workforce ratio: China will have 60% of India’s workforce.

Productivity ratio: India will have 60% of China’s worker productivity.

GDP ratio: 1:1

Fortunately, I won’t be alive then to be mocked for my prediction. Poor Lester Thurow and Robert Fogel may not avoid that ignominious fate. Ultra-pessimistic Thurow says it will take China at least 100 years to catch up to the US in GDP (actually, they are just 5 to 7 years away in PPP terms.) And ultra-optimistic Fogel says China will have twice the EU’s per capita GDP by 2040. Twice!?!? Fogel’s a great economist, but I wouldn’t say that forecasting GDP is his strong suit.

I was right about China surpassing the US in total GDP in PPP terms, and I will very likely be right that China will not be twice as rich as Europe by 2040 in per capita terms. Perhaps it’s worth another post to consider why very smart people can make such seemingly implausible predictions. But then some would view my India #1 prediction as just as implausible, so who am I to complain?

In any case, it is now pretty clear than in 2081 China’s workforce won’t be anywhere near 60% of India’s workforce, perhaps only a third as large. India’s per capita GDP (PPP) is currently barely 40% of China’s, but India is growing considerably faster and will likely eventually reach 60% of China’s per capita income.

Intelligent people know just how hard it is to predict the distant future. Heck, even 5 years ago most of us failed to see that AI was about to become a big story, just as 7 years ago most of us failed to predict Covid. Even a month ago, I didn’t anticipate the Iran War (although I did frequently tell my readers that nationalism inevitably leads to militarism.)

Given the difficulty in predicting the future, we need to overweight surprising trends that we now know with almost 100% certainty. One of those trends is that in the year 2055, there will be roughly three times more 30-year-old Indians than 30-year-old Chinese. That’s because we now live in a world where relatively few people die young, and immigration/emigration trends simply don’t move the needle very much in countries with 1.4 billion people. Futurologist should begin their analysis with surprising trends that we already know will happen and work outward from those points.

PS. In 2011, I moved the crossing point up to the year 2060. As with my TDS, no matter how outrageous my predictions, I cannot keep up with reality.

Photo by Julian Yu on Unsplash

PPS. And don’t say, “total GDP doesn’t matter”. Total GDP matters when considering size of an economy and per capita GDP matters when considering living standards. For instance, the huge size of China’s economy results in it having a disproportionate impact on global commodity markets. You might think it doesn’t matter that Germany’s GDP is larger than Belgium’s GDP, despite a lower GDP per capita. I do.