China can continue to outgrow the US economy, and Americans shouldn't delude themselves, former Treasury official says
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- China has demonstrated its economy can continue outgrowing the US, Steven Rattner wrote.
- That's despite the China's weaker-than-expected rebound from COVID restrictions.
- "Most important, we should not delude ourselves with the fantasy that China is going to fall under its own weight."
China has demonstrated its economy can continue outgrowing the US, Steven Rattner wrote in The New York Times, warning Americans against any illusions that suggest otherwise.
The former counselor to the Treasury secretary during the Obama administration acknowledged that China's rebound following the end of China's strict COVID policies has fallen short of high expectations.
In fact, fresh manufacturing data Wednesday added to fears over China's economy. And prior signs of stalling performance prompted Rockefeller International's Ruchir Sharma to call the rebound narrative a "charade."
But Rattner said that China has grown 14% since 2020, while the US grew by 6%, and this year China is expected to grow 5.2% compared to 1.6% in the US.
"Yet while the Western press displays increasing skepticism, I believe China will continue to prosper. And as our biggest strategic rival, it will continue to use that prosperity to anchor its assertiveness on issues from the South China Sea to spy balloons and unfair trade practices," he wrote.
To be sure, China faces big challenges, Rattner added, such as the level of control its government maintains over its businesses and a 20.4% youth unemployment rate.
And trade restrictions imposed by the Trump and Biden administrations could slow China's development of key technologies like artificial intelligence, he said.
However, regardless of the hurdles set out for China, the US must get "our own house in order," Rattner wrote.
"China has proved it can continue to grow faster than we do. We need to outcompete the country by raising our growth rate through initiatives like addressing our imprudently large budget deficit and our stultifying rules on the building of industrial facilities," he said.
Raising growth would mean addressing the large US budget deficit, as well as changing regulation that inhibits industrial expansion, he explained.
A STEM workforce should also be encouraged to maintain US technological prowess, while legislation could be implemented to attract new talent from across the world.
"Most important, we should not delude ourselves with the fantasy that China is going to fall under its own weight," Rattner concluded. "The question, for America and its adversary, is whether this rivalry need be destructive or if a more prosperous, cooperative future is still possible."
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