China will surpass the US becoming the largest economy by 2028, five years before previous forecasts, the report said.
The UK-based Centre for Economics and Business Research (CEBR) said China’s “competent” management of Covid-19 would improve its growth compared to the US and Europe in the coming years.
Meanwhile India is considered to be the third largest economy by 2030.
CEBR Economic Sector Table
CEBR releases its economic sector table every year on December 26th.
Although China was the first country to be hit by Covid-19, it controlled the disease by taking the fastest and most severe measures, which meant it did not have to re-crash savings as European countries did.
As a result, unlike other major economies, it has protected the recession by 2020 and is actually projected to see 2% growth this year.
The US economy, on the other hand, has been hit hard by the world’s worst coronavirus in terms of numbers. More than 330,000 people have died in the United States and an estimated 18.5 million cases have been confirmed.
Economic damage has been offset by monetary policy and massive financial incentives, but political disagreements over a new renewal package could leave nearly 14 million Americans without unemployment benefits in the new year.
“For a long time, the dominant theme of the global economy has been the economic and global power struggle between the United States and China,” the CEBR report said. “The Covid-19 epidemic and the accompanying economic collapse will surely put an end to this conflict in China’s favor.”
The report says that after the “strong post-epidemic recession in 2021”, the US economy will grow by about 1.9% a year from 2022-24 and fall to 1.6% in the years following that.
In contrast, China’s economy is projected to grow by 5.7% annually until 2025, with 4.5% annually from 2026-2030.
China’s share in the global economy has risen from just 3.6% in 2000 to 17.8% now and the country will become a “high-income economy” by 2023, the report said.
China’s economy benefits not only from the early regulation of Covid-19, but also from aggresively-driven policies such as advanced production, said CEBR vice-chairman Douglas McWilliams.
“It looks like they are trying to control one area at one level, but they have a free economy elsewhere,” he told the BBC. “And it’s the free markets that help them move forward, especially in places like tech.”
But the average Chinese person will always be poorer financially than the average American even if China becomes the world’s largest economy, given China’s population growth fourfold.
The post-Brexit UK economy will grow by 4% annually from 2021-25 and 1.8% per annum from 2026-30 (after the 2020 decline)
India had overtaken the UK as the fifth largest economy in 2019 but has since relocated due to the impact of the epidemic. It will not take over until 2024, CEBR said
The Indian economy will continue to surpass Germany by 2027 and Japan by 2030