An employee inspects cargo handling equipment at a container terminal in the China (Shandong) Pilot Free Trade Zone in Qingdao, Shandong province. [Photo by Zhang Jingang/For China Daily]

Nation set to overtake United States in economic ranking earlier than forecast

China could emerge from the coronavirus pandemic with a more dominant economy, replacing the United States as the world’s largest within the current decade, according to experts.

The world’s second-largest economy recorded 3.2 percent growth in the second quarter, according to the National Bureau of Statistics, and has the potential to lead the global economy out of recession in the months ahead.

Jeremy Stevens, chief China economist at Standard Bank, said China is the only major country to successfully balance containing the COVID-19 pandemic and reviving its economy.

“The Chinese economy will certainly outperform almost all others, probably by quite a wide margin,” said Stevens, who is based in Beijing.

“China’s response to the pandemic has been far more focused, forceful and effective than elsewhere. Policy has focused on keeping businesses afloat and people employed, and this has paved the foundation for the swift recovery.”

In the US, there have been more than 155,000 deaths from the virus, according to Johns Hopkins University. With the US economy contracting by a record 32.9 percent in the second quarter and on track for an 8 percent yearly slump, China’s economy may become bigger than that of the US sooner than previously anticipated.

The Centre for Economics and Business Research, a consultancy based in London, predicts this could happen as early as 2029, four years ahead of the forecast in its annual World Economic League Table published before the coronavirus crisis began.

Douglas McWilliams, the consultancy’s deputy chairman, said, “We will not have a definitive prediction until we update our table later this year, but our best guess at this stage is that China will overtake the US at least two years earlier than expected and possibly up to four years earlier.

READ ALSO  'Dual circulation' correct way forward

“China has managed the aftermath of coronavirus much more efficiently than Western economies and will therefore catch up with these economies rather more quickly,” he said.

Stevens said the gap between the growth rates in China and the US has not been as wide since the start of the past decade, when China was still enjoying double-digit economic growth.

“This is a deviation from the margin last seen in 2010, and China’s economy is likely to expand at a decade-high in 2021 owing to favorable base effects,” he said.

Kerry Brown, director of the Lau China Institute at King’s College London, said the crisis demonstrated the effectiveness of the Chinese governing system, helping it to bridge the gap with the US in terms of the size of its economy.

“The centralized nature of economic decision making in China means that in times of crisis like this, the Chinese government has more levers available to it to control things that might stimulate the economy and employment,” he said.

“China still has plenty of potential sources of domestic growth-consumption for instance-and it can now cultivate these further. That means it will be able to face the current issues with more flexibility and readiness than others, although the question is whether this will be sustainable.”

Via China Daily