The Chinese economy is set to overtake the United States in the coming decade by 2030. The world will significantly change when China dethrones America to become the largest economy. Despite the coronavirus pandemic, the Chinese economy has rebounded and grew by 8.1% in 2021, the fastest in over a decade.
According to a report, China’s GDP is expected to grow 5.7% per year till 2025 and then slow to 4.7% annually till 2030. The Chinese economy totalled $15.92 trillion in 2020 and reached over $18 trillion last year. The US economy has reached $23 trillion in 2021. At the current pace, several analysts are predicting that it will overtake the top-ranked US economy by 2030.
China is already known for its fast economic growth in the past 20 years as the state takes more control in several key sectors. Over the past decade, Chinese leaders have relied more on value-added services over traditional factory exports, although the US-China trade dispute added pressure on manufacturing. The state has an overreaching influence on investments and will prioritize tech as growth engine. This will provide a huge boost to its economy as it is also a key driver of the US economy. China’s population exceeds the United States by 3.5 times, though American consumers are wealthier on average.
China’s status as the largest economy could drastically change the world we are living in. This may not confer any automatic advantages but will provide the ability to influence things particularly in countries reliant on the Chinese economy. It would be better placed to advance the Belt and Road Initiative (BRI), which aims at developing land and sea routes in three continents. China’s conflicts with regional countries over maritime security have resulted in a standoff. It has been in a territorial standoff with India since 2017 which shows no signs of ending anytime soon.
The result of China surpassing the US economically suggests that it will influence foreign policy and assume global leadership. This could affect the current state of globalization – or the world as we know it. The contest between the US and China will certainly affect the structure and functioning of the global economy.