The U.S. and China, the world’s No. 1 and No. 2 economies, are expected to switch places in the rankings 2028 — five years sooner than expected — thanks in part to China weathering the coronavirus pandemic better than the West, according to the Centre for Economics and Business Research.
Chinese President Xi Jinping said in November that it was “entirely possible” for his country’s economy to double in size by 2035 under the government’s new Five-Year Plan, which plans to achieve “modern socialism” in 15 years, Bloomberg reported.
Based in London, the Centre for Economics and Business Research is an economic policy and forecasting research center and consultancy. In its World Economic League Table, the consultancy reported that in dollar amounts, China will exceed previous expectations that predicted it would overtake the U.S. economy in 2033, largely based on the impact of covid-19.
China’s share of the world economy has risen from 3.6 percent in 2000 to 17.8 percent in 2020. During that period, China went from a poor country to an upper-middle-income economy with GDP per capita in 2019 of $10,839 based on International Monetary Fund values.
“The Chinese authorities reacted vigorously to covid-19, according to the report. “As a result the Chinese economy has sustained less economic damage than any other major economy. China is estimated to be likely to have positive GDP growth of 2 percent in 2020, whereas other major economies are expected to have negative growth for the year.”
China ranks amongst the highest in the world for most technology indicators including technology governance, innovation, ease of access to tech funding) and it’s continuing to improve its position. However, the country is ranked down on the competitiveness of both its product and labor markets, the report said.
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“The skillful management of the pandemic and the hits to long-term growth in the West mean that China’s relative economic performance has improved … We expect the trend rate of growth for China to be 5.7 percent annually from 2021-25 and 4.5 percent annually from 2026-30 and 3.9 percent annually from 2031-35.”
The same report shows that the U.S. share of world GDP rose from 24.6 percent in 2019 to 25 percent in 2020. The U.S. has a GDP per capita of $63,051 in 2020.
“Thanks to a strict early response, China has managed to avoid re-introducing the harshest pandemic-fighting measures after the first wave and, unlike most other advanced economies, has avoided a recession in 2020,” the report said. “We expect the United States’ share of global GDP to decline from 2021 onwards… Following a strong post-pandemic rebound in 2021, we expect the trend rate of growth of the US to be 1.9 percent annually from 2022-24 and 1.6 percent annually for the rest of the forecast horizon.”
In its ranking of 193 countries, the consultancy also calculated that China could become a high-income economy as soon as 2023. India is expected to move up the rankings to become the No. 3 economy at the end of the 2020s.
