When will China become the world's largest economy and how will that affect the USA?

Why the focus on China when it is more likely that Europe will overtake the U.S. first? All Europe has to do is unite - the combined European economies are already bigger than the U.S. economy.

As for China, it all depends on the relative growth rates.

There was a time when China's growth rate was 10% and the U,.S. growth rate was 2%. The past year, China's growth rate has been under 8%

http://www.tradingeconomics.com/china/gdp-growth-a...

http://www.project-syndicate.org/commentary/china-...

and the U.S. has been growing at least a little (over 1%)

http://www.tradingeconomics.com/united-states/gdp-...

Catching up when the difference is 8% takes a lot less time than when the difference is only 6%.

Related is the issue of "convergence". The closer China becomes to being a fully developed economy, the lower its growth rate will be:

http://en.wikipedia.org/wiki/Convergence_(economic...

http://www.hks.harvard.edu/fs/drodrik/Research%20p...

In addition, once a country reaches the "middle income" level, there are additional hurdles to overcome:

http://www.nber.org/papers/w18673

http://moneymorning.com/2009/11/13/mexico-leapfrog...

Then there is the issue of political stability. China did not grow at all rapidly under Mao. It was only after the reforms that cam after Mao's death did the economy take off.

http://en.wikipedia.org/wiki/Chinese_economic_refo...

Whether the political situation will keep the economy growing or cause a major slowdown is not clear. There are signs both ways.

For example:

- there are signs that China's new rich are banding together to keep their power and wealth.

When the power elites unite like this, economic growth suffers:

http://whynationsfail.com/summary/

- that the current growth is due to investment that can't be sustained and that China has to start shifting its economy to be based on consumer spending

http://conversableeconomist.blogspot.com/2013/03/n...

So there are major uncertainties about when China will catch up.

As for what happens when it does, that depends on the U.S. Even without China's growth, the U.S. economy has become much less dynamic, with growing income inequality that is clearly bad for economic growth; is investing less in education, infrastructure, etc.

If this continues, the U.S. will decline, whatever happens to China. If the U.S. addresses these issues, then it can thrive, no matter how well China does.

After all, the U.S. was once the country with the highest standard of living, the best educated work force, etc. It has lost its lead and is now an "also ran".

It will happen in 20-30 years, if they avoid recessions.

It will not affect US in any new way; the decline of low-skill jobs in US has been going on for 20 years. China recently larger economy than Japan, and it did not affect Japan at all.