China will overtake the United States as the world’s largest economy before the end of the decade, after beating its rival during the global Covid-19 pandemic, according to a report.
The Center for Economic and Business Research said it now expected the value of China’s economy, measured in dollars, to surpass that of the United States by 2028, half a decade earlier than expected a year ago.
In the annual table of leagues with growth prospects for 193 countries, the UK advisory group said China has recovered quickly from the effects of Covid-19 and will grow by 2% in 2020, being the only major global economy to expand. .
Given that the US will contract by 5% this year, China will reduce the gap with its biggest rival, CEBR said. Overall, global gross domestic product is projected to fall by 4.4% this year, the biggest one-year drop since World War II.
Douglas McWilliams, vice president of CEBR, said: “The big news in this forecast is the speed of growth of the Chinese economy. We expect it to become a higher-income economy over the current five-year period (2020-25). And we expect it to overtake the US five years earlier than we did a year ago.
“Other Asian economies are also pulling up the league rankings. One lesson for Western policymakers, who have behaved relatively poorly during the pandemic, is that they need to pay much more attention to what is happening in Asia, rather than looking at each other. “
China’s share of global GDP has increased from 3.6% in 2000 to 17.8% in 2019 and will continue to grow, CEBR said. It would cross the per capita threshold of $ 12,536 (£ 9,215) to become a high-income country by 2023.
Even so, living standards in China will remain much lower than in the United States 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.
CEBR said leaving the EU will not stop Britain – arguably the fifth largest economy in the world in 2020 – from being one of the best performing economies in 15 years.
“We expect the growth trend for the UK to be 4.0% annually between 2021-25 and 1.8% annually in 2026-30 and 1.8% annually in 2031-35,” the consultancy said.
“Britain is expected to be overtaken by India in 2024, but otherwise it will retain its place in the league rankings until 2025. By 2035, it is estimated that the British GDP in dollars will be 40% higher than that of France , his long-time rival and neighbor. “
India, after overtaking France and the United Kingdom last year, has returned to the United Kingdom following a sharp decline in the value of the rupee. But the decline will be short-lived, with the second most populous country in the world being the third largest economy by 2035.
CEBR said environmental issues will begin to have a serious impact on the shape of the world economy in the next 15 years, after a period in which the effects of global warming became apparent faster than previously feared.
“Sea level is expected to rise by 45 cm from the base from 2000 to 2035. This compares with the rise of less than 20 cm by 2030 two years ago.”
As more countries plan to transition to a zero-carbon net economy in the coming decades, CEBR said there will be lower demand for fossil fuels and lower oil prices. The cost of a barrel of crude oil will fall below $ 30 by 2035, he said.