Chinese economy to overtake US later than thought
Updated: 2013-12-30 11:40
By Amy He in New York (China Daily USA)
Cheap energy, strong investment and innovation are seen as key
China might not overtake the United State as the world's largest economy until 2028, much later than what some analysts had predicted, according to a new report.
The Centre for Economics and Business Research (CEBR), a London-based economic research firm, said that China's march to first place will be delayed by the persistent strength of the US economy and the sluggish Chinese one.
CEBR analysts said that "although the increasing maturity of [China's] economy and relatively unfavorable demographics mean that growth will inevitably slow, we still expect China to overtake the US to become the world's largest economy in 2028 for the first time since 1890."
While the US will eventually lose its position to China, the analysts said, the US will remain the most successful economy "from most points of view" and will be the most successful Western economy. "Cheap energy and strong business investment and innovation are key," CEBR said in its report released on Dec 26.
In previous reports, which had been produced annually, CEBR estimates of GDP for the top 30 countries only included data for the year of and then projected 10 years ahead. In the 2013 compilation, there are estimates for 2018, 2023, and 2028.
CEBR's past data on China only looked out to year 2022 and while its analysts said they had long predicted China will overtake US as the largest economy, their latest forecast shows that it will not happen until 2028. "This is later than some analysts have suggested and reflects the continuing performance of the US as the West's strongest economy and the slowing down of the Chinese economy," they said in the report.
Japan, which had been the second-largest economy for a period of time before China overtook it, will be outranked by India by 2028, according to CEBR's predictions. Emerging market economies will inch up in ranking by then as well, CEBR said. The research firm's forecast for the top 10 countries in order by GDP in 2028 are: China, US, India, Japan, Brazil, Germany, the UK, Russia, Mexico and Canada.
An economic survey released in March by the Organisation for Economic Co-operation and Development had China overtaking the US as the world's biggest economy by 2016. The Paris-based organization predicted that China's economy will grow by 8.5 percent in 2013, and 8.9 percent next year.
As December winds down, new estimates announced by the head of China's economic planning authority put China's growth for 2013 at 7.6 percent. That rate is above the government's yearly 7.5 percent target, but still the country's lowest in more than a decade.
Alberto Ades, co-head of global economics research at Bank of America Merrill Lynch, told China Daily the bank predicts 7.6 percent growth next year for China, and then falling to 7.2 percent by 2015. "Our view is that Chinese growth will decline very gradually, probably converging to around 6 percent by the end of the decade," he said.
"In the case of China, [slowdown] is a natural phenomenon driven by demographics," Ades said, "but also the sort of declining growth that we've seen in other countries that had big developments at some point, like Japan or Korea."