|JCER: China to overtake US economy by 2028-29|
|Author: CSEBA / Seebiz|
|12th December 2020|
|TOKYO - The Chinese economy is likely to surpass that of the U.S. in either 2028 or 2029, as the Asian giant emerges from the coronavirus pandemic in a position of strength, a new study by the Japan Center for Economic Research shows.|
The nonprofit organization's sixth annual report on medium-term forecasts -- released on Thursday and titled "Asia in the coronavirus disaster: Which countries are emerging?" -- looks at the impact of COVID-19 across 15 Asia-Pacific economies through 2035.
It covers two main scenarios: a "baseline" or standard scenario, in which the crisis is a transient event like an earthquake, and an "aggravated" scenario that wreaks havoc on structural trends such as globalization, urbanization and innovation. Either way, China's quick success at containing the virus is expected to help it top the U.S. by the end of this decade.
"Due to the impact of the novel coronavirus, many countries are expected to suffer deeply negative growth rates for 2020. But while COVID-19 infections have spread to nearly every country worldwide, not all of them have been affected to the same dgree," the report notes. "The differences seen now will make a considerable difference to countries' economic scale 15 years from now."
In 2020, only China, Vietnam and Taiwan are on track to maintain positive year-on-year growth rates. India's rate is likely to be negative by more than 10%, while the Philippines is expected to see a contraction of more than 8%. Hong Kong, Thailand, Canada, Malaysia and Singapore are all facing gross domestic product shrinkage of more than 6%.
But JCER's baseline scenario assumes that in four to five years, key economic variables return to trends seen before the global health crisis.
Despite China's economic slowdown in recent years, due to demographic challenges and declining investment, its economy is still forecast to be growing at a roughly 3% clip in 2035. In the U.S., sluggish productivity is seen holding the growth rate to about 1% in 2035.
JCER's standard scenario envisions China overtaking America in 2029. And by 2035, China's economic scale, including Hong Kong, would reach $41.8 trillion -- only slightly less than the combined scale of the U.S. and Japan at that point, at $42.3 trillion.
China is poised to become a high-income country even earlier, in 2023, and its income per capita should reach $28,000 in 2035 -- comparable to Taiwan's figure today but still shy of the Chinese government's assumed target of $30,000.
The baseline scenario also paints a bright picture for Vietnam, which is seen maintaining a growth rate of about 6% in 2035, thanks to strong exports. This would propel the Vietnamese economy past Taiwan's in 2035 in terms of scale, and make it the second-largest economy in Southeast Asia after Indonesia. Vietnam is poised to achieve upper middle-income status in 2023, with income per capita approaching $11,000 in 2035.