Nation set to be largest economy in 2028
Handling of pandemic helped put China 5 years ahead of earlier forecast
China is expected to overtake the United States as the world's largest economy in 2028, five years before previously forecast, and its economy will more than triple in size over the next 15 years, according to a new report.
The World Economic League Table 2021, produced by the Centre for Economics and Business Research, a London-based economic research consultancy, also predicts that China will become a high-income country by 2023, well within the 14th Five-Year Plan (2021-25) period.
China's successful handling of the pandemic compared with Western countries was one of the major factors in it moving up the rankings. In last year's report, the size of its economy was predicted to exceed that of the US in 2033.
Douglas McWilliams, deputy chairman and founder of the CEBR, said the economic performance of China was one of the main features of this year's report, which analyzed 193 countries.
'"The big news in this forecast is the speed of growth of the Chinese economy," he said.
"Other Asian economies are also shooting up the league table. 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."
Asian economies are predicted to make major strides over the next 15 years, according to the report.
Indonesia is expected to rise from being the 15th largest economy in 2020 to the eighth in 2035. Over the same period, the Philippines is expected to rise from being the 32nd largest economy to being the 22nd; Bangladesh from 41st to 25th; and Malaysia from 40th to 28th. India, which has been badly hit by the pandemic, lost its slot as the fifth-largest economy in the league table to the United Kingdom and is not expected to reclaim that spot until 2024.
By 2035, three of the top five economies will be in Asia.
The report also highlights the brutal impact of the COVID-19 pandemic on the global economy－not only killing an estimated 1.7 million people, but also wiping $6 trillion off the world economy's output.
Kay Daniel Neufeld, the CEBR's head of macroeconomics, said the pandemic has hit European countries particularly hard. Italy's GDP is predicted to contract by 11 percent this year, Germany's by 8 percent, and Spain's by 8 percent.
"The pandemic has tested the political and economic fabric of European economies unlike anything seen during peacetime," Neufeld said. "Governments of all political colors have subscribed to the need to prop up their economies with vast stimulus programs, even though many countries were still struggling to bring their debt levels under control following the global financial crisis."
The report points to the importance of China's domestic economy in driving growth forward and highlights the new "dual circulation "strategy, which President Xi Jinping first outlined in May. It aims to harness both domestic and external economic forces, with the domestic market as the mainstay and the domestic and foreign markets complementing each other.
The report predicts that China will grow 2 percent this year, 5.7 percent annually from 2021 to 2025, 4.5 percent annually from 2026 to 2030 and 3.9 percent from 2031 to 2035. By 2035 it will have an economy of $49.1 trillion, 35 percent bigger than the $36.2 trillion of the US. Its GDP will be more than three times its 2020 size of $14.8 trillion within 15 years at current prices. Using constant price measures, it will be 2.35 times bigger at $34.9 trillion, compared with $14.1 trillion in 2020.
The report said the economy was benefiting from measures to improve the ease of doing business, such as improved import declaration forms, greater ease in getting construction payments and strengthening creditors' rights.
It also ranks among the most competitive in the world in the technology sector, with high scores in technology governance, innovation and ease of access to tech funding, according to the report.
McWilliams said one of the main factors driving China's tech industry was the sheer scale of the domestic market.
"Scale is especially critical in tech. The US used to be the only country to have that and the European Union has tried to achieve with the Single Market, but with partial success," he said.
The report also predicts the UK will be among the better-performing European economies despite Brexit. By 2035, its economy is forecast to be 23 percent bigger than France's. It would also still be bigger if Scotland becomes independent from the UK.
McWilliams said one of the UK's strengths is its robust tech sector, particularly digital, but it will be boosted by strong consumer spending once the pandemic ends.
"The UK consumer is notoriously spendthrift, and we have calculated there is £200 billion ($267.8 billion) of savings waiting to be spent," he said.
The report also predicts the pandemic will result in a faster transition to a greener global economy. It said the past year has seen a dramatic decline in fossil fuel usage, and some governments have pushed forward the dates when sales of combustion-engine vehicles will be banned.
Pablo Shah, managing economist at the CEBR, said, "After the dust eventually settles on the COVID-19 pandemic, another defining feature of the 2020s will be the restructuring of economies towards greener production methods.
"While a political consensus on the need for intervention was already forming by the start of 2020, the pandemic will accelerate this transition, with green investments a cornerstone of many governments' economic stimulus packages," Shah added.
McWilliams, whose consultancy has been producing the annual report since 2009, said it is now clear how China and the rest of Asia were reshaping the global economy.
"One of my frustrations has been how the West has failed to understand how rapidly the Asian economies are catching up and overtaking their Western counterparts," he said.
andrewmoody@chinadaily.com.cn
