China to overtake US as the world’s largest economy

WHAT YOU NEED TO KNOW:

• In its annual report, the British Centre for Economics and Business Research (CEBR) said that China will become the globe’s top economy by 2028 as it overtakes the United States.
• The CEBR attributed China’s growth to the successful handling of the COVID-19 pandemic while other nations suffered an economic downfall.
• The coronavirus pandemic has yielded higher inflation than delaying economic growth globally.

According to a report by the British Centre for Economics and Business Research (CEBR), China will supersede the United States as the biggest economy in the world by 2028, thanks to its quick response to the COVID-19 pandemic.

The annual report which was released on Saturday claimed that the economic downfall experienced by Western countries enabled China to overtake the US five years prior to its initial estimate.

“For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China,” the CEBR wrote per Reuters.

“The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favour.”

The strict restrictions imposed by the Communist Party have successfully mitigated the pandemic in the country. According to the tracking by John Hopkins University, China has recorded over 95,460 infections and 4,770 fatalities. Globally, though, more than 80 million COVID-19 cases were reported with over 1.7 million deaths which were largely attributed to the US and other neighboring countries.

The report suggested that in 2021-25, China is expected to grow its economy by 5.7 percent yearly and record a 4.5 percent annual growth from 2026 to 2030. The CEBR attributed the growth to Beijing’s “skill management of the pandemic.”

On the other hand, the US will have a robust economic recovery in 2021 before experiencing a flat growth from 2022 to 2024 with 1.9 percent. Growth will decline further to 1.6 percent in the succeeding years.

Worldwide, Japan will continue to be the third’s largest economy. India is set to take over that spot after a decade or so. From the fourth place, Germany then will go down to fifth. The UK will also go from fifth to the sixth spot by 2024 after Brexit.

Rather than halting the economic growth, the pandemic has paved the way for higher inflation, the CEBR reported.

“We see an economic cycle with rising interest rates in the mid-2020s,” the report said, suggesting that governments would face huge bills for borrowing massive financials to aid their economies due to the pandemic. 

“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.”

Being at the epicenter of the pandemic, the US has recorded almost 19 million cases and 330,000 deaths. Lockdown restrictions and health safety have crippled the nation’s economy, yielding massive unemployment figures. Beijing, on the other hand, has largely gone back to its normal life.

Source: Newsweek