China may never become the world's biggest economy and has thrown out its old playbook, Mohamed El-Erian says

Though blowout growth of past decades has helped China become the second-largest economy in the world, Beijing's approach towards the current slump has dampened views that it will overtake the US. "It is time for the markets to recognize that China is not reverting to its old economic and financial playbook, and its return as a powerful driver of global economic growth is unlikely in the near future," El-Erian wrote. After China lifted pandemic restrictions late last year, the economy saw a brief rebound early this year. Leaders are further unlikely to pursue traditional stimulus, out of a worry that continued reliance on it would increase the chances China would fall into the middle-income trap and also encourage corruption, El-Erian wrote. Challenges to growth will persist, and China will have to implement larger debt restructuring measures. "The authorities will also need to overcome their now overwhelming inclination towards centralization and, instead, enable but not micromanage the emergence of powerful private sector engines of growth. Despite what many may continue to tell you, it is no longer a given that China will become the world's largest economy." Bloomberg Economics said on Tuesday that China is unlikely to permanently take the top spot, predicting gross domestic product would briefly surpass the US's in the mid-2040s, but by "Only a small margin" before "Falling back behind." The economists - who previously saw China overtaking the US in the 2030s - believe GDP growth will slow to just 1% by 2050, revised down from an earlier prediction of 1.6%..