Mr Sheets, who served as the under secretary for international affairs at the US Treasury under President Obama, forecast that China’s economy would average growth of 4pc over the medium term, down from 10pc before the financial crisis.
He said: “Challenges loom from high-debt levels, stresses in the property sector, ageing demographics, and geopolitical headwinds.
“The government has responded by seeking to foster advanced manufacturing, high-tech production, and green infrastructure. But whether this push will be sufficient is an open question.”
Setbacks over the past two years mean Citi’s base case is that China’s economy will now only overtake the US in the “early 2040s”, Citi said. Just a year ago, the bank believed it would become the world’s largest “in the mid-2030s”.
Mr Sheets said it was “plausible” that it could take as long as “until 2080” for the switch to happen. He added: “We now believe that Chinese overtaking is ‘likely’ but we no longer see it as ‘inevitable’.”
Analysts have predicted for years that China would surpass the US as the world’s biggest economy thanks to its rapid growth rates and slowing expansion in the West.
Goldman Sachs began speculating in 2003 that China could overtake the US by 2041.
At the time, China was just 15pc of the size of the US. However, its economy grew rapidly after joining the World Trade Organisation (WTO) at the start of the millennium. As a result, many observers began to predict that China could overtake the US this decade.
However, Beijing’s zero-Covid policies have driven a major slowdown in recent years. Attitudes towards Beijing have also hardened in Congress, with both Republicans and Democrats calling for economic and financial ties with China to be severed, including the removal of the low tariffs introduced on Chinese goods when it joined the WTO.
