China to Overtake the US: Not Anytime Soon

This article is painful to read if you aren't interested analytical macroeconomic essays but his conclusion is interesting. Don't look for China to overtake the US economy in this century.

Despite the government's hype, China has a long way to go to reach prosperity

I don't see it happening in the next 50 years. I think China has too many large hurdles to overcome, and in most cases, the government is in no hurry to tackle them. Take Shanghai, the most progressive of cities in China. Contrary to the common cliche among western tourists, Shanghai is not "New York on speed".

Shanghai is a great city, but it is a third world city. A few bullet points:

1. NO ONE drinks the water out of the pipes.
2. Construction is horrendous. Even the best developers build ratty buildings out of cheap materials that are designed to look passable for three years. Any building over 3 years (other than those build by westerners in the late 1800s/early 1900s) is an eyesore.
3. Despite being modern by Chinese standards, corruption is endemic at all levels of Shanghai government. It is better than Hunan maybe, but it isn't passable in Europe.
4. There is no western accounting system here. Every Chinese company has three sets of books. The books shown to the tax guys; the one the general manager shows to his partners; and the more accurate one which still wouldn't withstand the scrutiny of a PWC or ENY.
5. Much of the infrastructure is out of date and insufficient for modern demands. Case in point: the phone system. We'd do better with two cups and a string.
6. Beijing controls very little. It is no small problem with the central government cannot exercise control over local governments which in rural areas tend to be corrupt and brutal.
7. China's yuan must at some point be freed from the dollar. That will take time.
8. There is no freedom of the press; no freedom of religion; no freedom of speech.
9. Laws are frequently not enforced and rarely understood. The judicial system is not independent from the rest of government so the courts hold their collective fingers in the air to see which way the wind is blowing in Beijing on any given day. As a result there is no predictability or confidence in the judicial system.
10. There is no banking system in China. Banks exist to prop up state owned companies, not lend money or accept deposits. I can't wire money from my account to another individual's account. My company cannot wire money from its account to my account.
11. It is an environmental disaster.

You can enjoy living in China and visiting China, and I've certainly met expats who disagree with me. But no one, including the government and its subjects, is interested in seeing major changes anytime soon.