LONDON: China will overtake the United States to become the world’s biggest economy in 2028, five years earlier than previously estimated due to the contrasting recoveries of the two countries from the Covid-19 pandemic, a think tank said.
“For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China,” the Centre for Economics and Business Research said in an annual report published on Saturday.
“The Covid-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favour.”
The CEBR said China’s “skilful management of the pandemic”, with its strict early lockdown, and hits to long-term growth in the West meant China’s relative economic performance had improved.
China looked set for average economic growth of 5.7 percent a year from 2021-25 before slowing to 4.5pc a year from 2026-30.
While the United States was likely to have a strong post-pandemic rebound in 2021, its growth would slow to 1.9pc a year between 2022 and 2024, and then to 1.6pc after that.
Japan would remain the world’s third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth.
The United Kingdom, currently the fifth-biggest economy by the CEBR’s measure, would slip to sixth place from 2024.
However, despite a hit in 2021 from its exit from the European Union’s single market, British GDP in dollars was forecast to be 23pc higher than France’s by 2035, helped by Britain’s lead in the increasingly important digital economy.
Europe accounted for 19pc of output in the top 10 global economies in 2020 but that will fall to 12pc by 2035, or lower if there is an acrimonious split between the EU and Britain, the CEBR said.
It also said the pandemic’s impact on the global economy was likely to show up in higher inflation, not slower growth.
“We see an economic cycle with rising interest rates in the mid-2020s,” it said, posing a challenge for governments which have borrowed massively to fund their response to the Covid-19 crisis.
“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.”
Meanwhile, China lowered the age of criminal responsibility to 12 years old for “abominable” crimes such as murder or causing injury that leads to death or severe disabilities by extremely cruel means, the China Daily said.
The revision was passed by the National People’s Congress Standing Committee on Saturday after a third review and will be effective from March 1. It applies to children aged between 12 and 14, the state-backed newspaper said.
Children in China aged 14-16 can be held criminally liable if they intentionally commit serious violent crimes such as murder and rape. For most other offences, the age of criminal liability is 16.
Published in Dawn, December 27th, 2020