China is expected to move ahead of the United States to become the world’s largest economy in 2028, five years sooner than previously predicted due to the two countries’ contrasting recovery from the COVID-19 pandemic.
The two largest economies in the world are on track to change places faster than predicted a year earlier.
What CEBR is saying
The Centre for Economics and Business Research in its report said, “For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China. The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favour.”
The CEBR said that China’s skillful management of the coronavirus pandemic, with its strict early lockdown, and the negative impact to long-term growth being experienced in the Western countries meant China’s relative economic performance had improved.
The Chinese President, Xi Jinping, had said last month that it was entirely possible for the Chinese economy to double in size by 2035 under his government’s new Five-Year Plan, which aims to achieve modern socialism in 15 years.
China is set for average economic growth of 5.7% a year from 2021-25 before slowing to 4.5% a year from 2026-30, while the United States was likely to have a strong post-pandemic rebound in 2021, its growth would slow to 1.9% a year between 2022 and 2024, and then to 1.6% after that.
Japan is expected to remain the world’s third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth, whereas the UK, currently the fifth-biggest economy by the CEBR’s measure, would slide down to sixth place from 2024.
The CEBR said that the pandemic’s impact on the global economy would most probably reflect in higher inflation, rather than slower growth.
What you should know
- China was the first country in the world to be hit by the coronavirus pandemic, after it was discovered in Wuhan, recording many casualties. They, however, were able to recover promptly, together with some other Asian countries.
- This is well ahead of the Western economies, some of which are seriously battling with the outbreak of the second wave of the pandemic at this moment.