China is likely to overtake the US as the world’s biggest economy before the end of the decade after outperforming its rival during the global COVID-19 pandemic, a report has said.
The Centre for Economics and Business Research (CEBR) said that it expects the value of China’s economy when measured in dollars to exceed that of the US by 2028, half a decade sooner than it expected a year ago.
In its annual league table of the growth prospects of 193 countries, the UK-based consultancy group said that China has bounced back quickly from the effects of COVID-19 and would grow by 2 percent this year, as the one major global economy to expand.
With the US expected to contract by 5 percent this year, China would narrow the gap with its biggest rival, the CEBR said.
Overall, global GDP is forecast to decline by 4.4 percent this year, in the biggest one-year fall since World War II.
“The big news in this forecast is the speed of growth of the Chinese economy. We expect it to become an upper-income economy during the current five-year plan period [2020-2025]. And we expect it to overtake the US a full five years earlier than we did a year ago,” CEBR deputy chairman Douglas McWilliams said.
“Other Asian economies are also shooting up the league table,” McWilliams added. “One lesson for Western policymakers, who have performed relatively badly during the pandemic, is that they need to pay much more attention to what is happening in Asia, rather than simply looking at each other.”
China’s share of global GDP has increased from 3.6 percent in 2000 to 17.8 percent last year, and would continue to grow, the CEBR said.
It would pass the per capita threshold of US$12,536 to become a high-income country by 2023.
Even so, living standards in China would remain much lower than in the US and western European countries.
In the US, the average per capita income is about US$63,000, while in the UK, it is about US$39,000.
The CEBR said that departure from the EU would not prevent the UK — likely to be the world’s fifth-biggest economy this year — from being one of the better-performing economies in the next 15 years.
“We expect the trend rate of growth for the UK to be 4.0 percent annually from 2021 to 2025 and 1.8 percent annually from 2026 to 2030 and 1.8 percent annually from 2031 to 2035,” the consultancy said.
“The UK is forecast to be overtaken by India in 2024, but otherwise holds its place in the league table to 2025,” it added. “By 2035, UK GDP in dollars is forecast to be 40 percent more than that of France, its long-standing rival.”
India, after overtaking France and the UK last year, had fallen back behind the UK as a result of a sharp fall in the value of the rupee.
However, the dip is to be short-lived, with the world’s second-most populous country on course to be its third-biggest economy by 2035.
The CEBR said that environmental issues would start to have a serious impact on the shape of the world economy over the next 15 years, following a period in which the effects of global heating have become apparent more quickly than previously feared.
With countries making plans to make the transition to net-zero carbon economies, the CEBR said that there would be weaker demand for fossil fuels and lower oil prices.
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