US Growth May Surpass China's for First Time Since 1976

China's economic growth may be lower than that of the United States this year for the first time since 1976 because of its coronavirus lockdowns and President Xi Jinping's strict COVID Zero policy, according to economic predictions.

China's economy is expected to increase by 2% this year, but the United States' gross domestic product is expected to go up by 2.8%, according to a Bloomberg report Friday.

Xi's COVID policy requires shutdowns when viral outbreaks take place, which is hindering the impact of Beijing's monetary and fiscal stimulus measures, the report noted, but in the United States, despite high inflation, consumer spending and hiring remain strong.

Bloomberg said its median forecast for China's GDP growth in 2022 is still over 4%, but still, the country's full-year growth will lag behind the United States's for the first time since 1976, at a time when China was still coming out of the Cultural Revolution, according to World Bank data.

Since that time, China's economy China has expanded faster and has been able to narrow its per-capita GDP.

The news could have political impacts on both sides. In the United States, President Joe Biden is pushing Congress to pass a legislative package in hopes of strengthening the United States against China.

He has already taken credit for the United States' economy outpacing China's, noting in a statement in January that "for the first time in 20 years, our economy grew faster than China's."

Xi is expected to win an unprecedented third term as the head of the Communist Party, but a 2% growth rate lags behind the Chinese government's official target of 5.5% for the year.

This would mean the country will have come in significantly under its planned goal since the late 1990s, when it started publishing its targets.

The 5.5% goal, the country's lowest, was set by the Chinese leaders before the major lockdowns started, including in Shanghai.

Politics may have played some part in the setting of a target that already looked ambitious before the latest pandemic-related measures, according to Stephen Jen, the CEO of Eurizon SLJ Capital.

He and colleague Joana Freire wrote in a report earlier this month that the main reason for the aggressive growth target was that it was "intentionally planted by the 'pro-growth' camp in Beijing to limit further 'crackdowns' and restore a better environment for the private sector to thrive."

Meanwhile, Citigroup Inc. economists Xiangrong Yu and Xiaowen Jin said this week that China could still bounce back, but that would require a "timely and decisive rollout of real stimulus measures."

• China's Economy Grows Still-Weak 4.8% in January-March
• China Fights Economic Slump, Sticks to Costly 'Zero COVID'