Although the International Monetary Fund (IMF) predicted that China will replace the United States as the world's largest economy by as early as 2016, it is too premature to glorify China's model of state-led capitalism and sound the death knell for America's economic dominance, argues Nita Ghei in an op-ed piece in the Washington Times on June 3.

For starters, it is a "bad idea" to draw sweeping conclusions from a "single number" - in its latest World Economic Outlook, IMF economists expect the Chinese economy to reach $19 trillion, compared to America’s $18.8 trillion. "Long-term economic forecasts, especially linear predictions such as the IMF’s, are notoriously inaccurate," Ghei warns, not to mention the fact that "five years is a long time" and China may well be "in the midst of an unsustainable bubble."

More important, Ghei argues, "to talk about GDP in the aggregate without talking about how well off the people are is to risk making grave errors." After all, China's per capita income stands only at about $7,500 in purchasing power parity (PPP) terms, while that of the US is currently as high as $47,500. Indeed, "the Middle Kingdom has a lot of catching up to do," Ghei says.

However, China's growth is by no means "bad news" for the US, as growth is not a "zero-sum game" and "a wealthier China, India or any other country offers a larger market for American goods." In fact, the expansion of the world economy will benefit all parties involved, for "the more people move out of poverty the better."

But how well the US responds and how quickly it grows will depend to a large extent on its own policies, Ghei says. If the US doesn't "return to the pro-market, limited government, lower tax principles" and continues to allow government intrusion into markets, as "championed by the Obama administration and congressional Democrats," they may well "help make the IMF's prediction come true."