China’s catch-up is faltering

A weak currency and sustained deflation mean that China’s economy is on course to shrink as a share of the global economy for a fourth consecutive year, when measured at market exchange rates. China has gone from more than three quarters the size of the US in 2021 to under two thirds today. Real growth remains stronger in China than the global average. But the era in which China’s share of global output was surging has ended. This will limit China’s capacity to project economic power in future.