One of the most popular questions being asked is exactly when will China overtake the United States as the world’s largest economic power. For such a simple question, it’s amazing how economists, analysts and experts have very different opinions or methodologies to arrive at the answer. Some said it will never happen, while others said it had already happened.
While Americans want very much to maintain its No. 1 status, surprisingly, the Chinese were not so eager for the trophy. So when the IMF (International Monetary Fund) said the Chinese economy had overtaken the Americans in 2015, it immediately raised eyebrows. At the end of 2014, China’s economy was worth US$17.6 trillion, slightly more than America’s US$17.4 trillion.
The IMF’s calculation, using purchasing power parity (PPP), however, has attracted displeasure and disagreement from some economists, analysts and experts. They were not pleased that the U.S. has lost the title – world’s largest economy – after more than 140 years since the nation snatched the throne from the United Kingdom in 1872.
According to the IMF’s GDP (PPP), gross domestic product based on purchasing power parity, China’s economy for this year is estimated to hit US$24.1 trillion against America’s US$20.8 trillion. However, using GDP (nominal) measurement, the U.S. is still the undisputed champion with 2020’s estimated economy worth of US$20.8 trillion, ahead of China’s US$14.8 trillion.
So when UK-based Centre for Economics and Business Research (CEBR) released a report two days ago, announcing that China will overtake the United States to become the world’s biggest economy by 2028, it has again raised eyebrows. In recognition of the Chinese “skilful management of the Covid-19 pandemic”, the CEBR said China is to surpass the U.S. five years earlier than previously forecast.
Douglas McWilliams, the CEBR’s deputy chairman, said in its annual World Economic League Table released on Saturday – “The big news in this forecast is the speed of growth of the Chinese economy. We expect it to become an upper-income economy during the current five-year plan period (2020-25). And we expect it to overtake the U.S. a full five years earlier than we did a year ago.”
The British think-tank said in terms of global GDP, China has strongly increased its share from just 3.6% in 2000 to a jaw-dropping 17.8% in 2019, and will continue to grow. By 2023, the country would pass the per capita threshold of US$12,536 to become a high-income country. In fact, despite being the first country hit by Coronavirus, China would grow by 2% this year.
The Chinese economy is then expected to grow by an annual 5.7% between 2021 and 2025. From 2026 to 2030, its growth is projected to be 4.5% annually, before slowing to 3.9% the following 5 years. By contrast, the U.S. is estimated to have contracted by 5% over the last 12 months this year. Next year, the American economy would grow by 1.6% due to a “strong post-pandemic rebound”.
The U.S. economy is projected to grow by an annual 1.9% from 2022 to 2024, but will slow to just 1.6% thereafter. Still, according to the CEBR, the average Chinese citizens will remain poorer in financial terms than the average American even after China becomes the world’s biggest economy in 2028, primarily because China’s population is four times bigger.
In spite of the good news, however, it appears China is extremely cautious about the British think-tank latest reports. Coincidentally, prior to the CEBR’s flattering revelation, the Japan Center for Economic Research (JCER) had also made similar predictions on December 10. Beijing was suspicious that such reports are meant to rally other Western countries behind the U.S. against China.
In order to maintain superiority and preserve the supremacy of the U.S. as the world leader, the reports of China becoming the world’s new economic power could unite the West to support America to contain – even cripple – the Chinese economy through trade war, economic pressure and possibly sanctions. Under Trump administration, a trade war was waged in 2018 against China.
Unable to bring China to its knees in the trade war, the U.S. then proceeded to tech war. Tech giants like Huawei and ZTE Corp became the subjects of an investigation that looked into whether their equipment could pose a threat to U. The U.S. has warned its allies – Five Eyes
For years, the U.S. has claimed – without any evidence – that Chinese companies were involved in espionage, hacking and stealing secrets. Huawei retaliated last year, reminding 100,000 visitors at the Mobile World Congress (MWC) in Spain that it was Edward Snowden, a former National Security Agency (NSA) subcontractor, who leaked “PRISM” – a spy program under the NSA.
Huawei also revealed the real reason behind the U.S. aggressive attacks on the Chinese tech company – the refusal of Huawei to cooperate when the spy agency NSA failed to hack and spy on 170 countries that use Huawei equipments and servers. Huawei becomes an obstacle for the NSA to “collect it all”, hindering the US agency’s efforts to spy on whomever it wants, whenever it wants.
The second reason Trump had banned Huawei was because the Chinese company is ahead of American companies in the fifth-generation wireless, To keep Huawei out of the world’s 5G networks business and to buy some time for America to catch up, the Chinese companies were being painted as the bad guys whose work is to spy for the Chinese government.
The fact that President Donald Trump issued twin executive orders in September to shut down two Chinese apps – – goes to show the level of desperation of the U.S. in crippling the Chinese success in technology. It was funny that on one hand TikTok was accused as being a spy tool, but on the other hand the U.S. wants to own TikTok.
Through mouthpiece like the Global Times news media, Beijing refuses to acknowledge that China’s GDP will surpass the U.S.’ GDP faster than expected. The Chinese government has chosen to be prudent and humble, saying instead that the country’s economic growth is not a walk in the park and the economic risks must not be underestimated.
China maintains the importance to stay strategically humble and cautious. The “naughty reports” such as the one published by the UK-based CEBR and Japan-based JCER could be designed to create a direct confrontation between China and the U.S. under the new administration of Joe Biden, something that could jeopardise China’s growth and development.
After all, there’s nothing to be gained even after achieving the status as the world’s largest economy. So what if it’s true that China will overtake the U.S. in 2028? The jealousy or dissatisfaction could provoke the U.S., potentially with its allies, to recklessly declare new trade wars, or even a “Cold War”, with China. As far as Beijing is concerned, the U.S. can keep the trophy.
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December 29th, 2020 by financetwitter
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Comments
If the “naughty reports” do not work to turn countries against China, you can be assured there would be no end of other efforts to attack China.
The attacks on China are sure guarantees China is doing mighty fine.
And it is.
China is a country specifically blessed by Allah. What China is, and can be in the future are divine signs for now and evermore, Amen!
What Malaysia is not, and can never be, there’s China soon to be at the very top of the world!
In very much less time than Malaysia had since Merdeka, China has climbed rapidly into what it is today. Soon China will leave the US far behind in every endeavour, Praise Be!
Go China! Jiayou!
Ah Ya, why worry about China being the largest? Even so, nothing the West can do to unite themselves. The West is not one country lah. When Australiaa goes down, Canada and US were super happy loh because they can sell more to China. Nothing for China to worry about, OK? OK.