China will 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, according to a report in The Guardian.
The Centre for Economics and Business Research said that it now expected 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 China had bounced back quickly from the effects of Covid-19 and would grow by 2% in 2020, as the one major global economy to expand.
With the US expected to contract by 5 per cent this year, China will narrow the gap with its biggest rival, the CEBR said. Overall, global gross domestic product is forecast to decline by 4.4 per cent this year, in the biggest one-year fall since the Second World War.
China’s share of global GDP has increased from 3.6 per cent in 2000 to 17.8 per cent in 2019 and will continue to grow, the CEBR said. It would pass the per capita threshold of $12,536 to become a high-income country by 2023.
Even so, living standards in China will remain much lower than in the US and western European countries. In the US, the average per capita income is just over $63,000, while in the UK it is just over $39,000.
The CEBR said departure from the EU would not prevent the UK – likely to be the world’s fifth biggest economy in 2020 – from being one of the better performing economies in the next 15 years.
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. But the dip will be short-lived, with the world’s second most populous country on course to be its third biggest economy by 2035.
The CEBR said 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 had become apparent more quickly than previously feared.
With more countries making plans to make the transition to net carbon zero economy in the coming decades, the CEBR said there would be weaker demand for fossil fuels and lower oil prices. The cost of a barrel of crude would fall below $30 by 2035, it said.
