It probably can’t be called a friendly rivalry, but at least this battle is only about money. China is gaining the upper hand on the U.S.
In an intriguing twist, the COVID-19 pandemic, which had its roots in China, is the primary reason the Chinese economy is expected to overtake that of the U.S. within a few years. A report said China’s decisive actions at the outset of the outbreak, combined with the disastrous effects on the American economy, are keys.
“The (skillful) management of the pandemic and the hits to long-term growth in the West mean that China’s relative economic performance has improved,” the Centre for Economics & Business Research (CEBR) said in an annual report published on Saturday.
“We now think that the Chinese economy in dollar terms will overtake the U.S. economy in 2028, a full five years earlier than we thought last year.”
Chinese President Xi Jinping said last month that a doubling of his country’s economy was “entirely possible” by 2035 under his five-year plan for an improved brand of socialism.
Japan would stay at No. 3 for another 10 years before India takes that spot. Germany would drop to No. 5.
The report sees U.S. growth slowing to 1.9% per year between 2022 and 2024, and then to 1.6%. The yearly expectation for China’s growth is 5.7% from 2021 to 2025 and 4.5% from 2026 to 2030, with the trend slowing to 3.9% from 2031 to 2035.
One of the main results of the COVID-19 effects, according to the report, is rising inflation.
“We see … rising interest rates in the mid-2020s. But the underlying trends that have been accelerated by this point to a greener and more tech-based world as we move into the 2030s.”