China is set to overtake the US as the world’s biggest economy by 2028 after outperforming its major rival during the global Covid-19 pandemic, according to a report.
The Centre for Economics and Business Research (CEBR) said China's "skilful" management of Covid-19 would boost its relative growth compared to the US and Europe in coming years.
In its annual league table of the growth prospects of 193 countries, the UK-based consultancy group said China had bounced back quickly from the effects of Covid-19 and would grow by 2% in 2020, as the one major global economy to expand.
While China was the first country hit by the coronavirus crisis, it controlled the disease through swift and decisive action, meaning it did not need to repeat economically paralysing lockdowns as European countries have done.
With the US expected to contract by 5% this year, China will narrow the gap the CEBR said. Overall, global gross domestic product is forecast to decline by 4.4% this year, in the biggest one-year fall since the second world war.
The economic damage has been cushioned by monetary policy and a huge fiscal stimulus, but political disagreements over a new stimulus package could leave around 14 million Americans without unemployment benefit payments in the new year.
The report says that after "a strong post-pandemic rebound in 2021", the US economy will grow by about 1.9% annually from 2022-24 and then slow to 1.6% in the years after that.
The Chinese economy is predicted to grow by 5.7% annually until 2025, and 4.5% annually from 2026-2030.
China's share of the world economy has grown from just 3.6% in 2000 to 17.8% now and the country will become a "high-income economy" by 2023, the report says.
Douglas McWilliams, the CEBR’s deputy chairman, said: “The big news in this forecast is the speed of growth of the Chinese economy. We expect it to become an upper-income economy during the current five-year plan period (2020-25). And we expect it to overtake the US a full five years earlier than we did a year ago.
“Other Asian economies are also shooting up the league table. One lesson for western policymakers, who have performed relatively badly during the pandemic, is that they need to pay much more attention to what is happening in Asia rather than simply looking at each other.”
The CEBR said that the UK's departure from the EU would not prevent the nation – likely to be the world’s fifth biggest economy in 2020 – from being one of the better performing economies in the next 15 years.
“We expect the trend rate of growth for the UK to be 4.0% annually from 2021-25 and 1.8% annually from 2026-30 and 1.8% annually from 2031-35,” the consultancy said.
The report added that the UK is forecast to be overtaken by India in 2024 but will still hold its place in the league table to 2025. By 2035, UK GDP in dollars is forecast to be 40% more than that of France, its long-standing rival and neighbour.