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- China could overtake the U.S. as the world’s largest economy earlier than expected
China could overtake the U.S. as the world’s largest economy earlier than expected
CNBC reports that analysts said that China is set to overtake the United States as the world’s largest economy a few years earlier than anticipated due to the coronavirus pandemic.
The U.S. reported last week that GDP in 2020 contracted by 2.3% to $20.93 trillion in current-dollar terms. In contrast, China said its GDP expanded by 2.3% last year to 101.6 trillion yuan. That’s about $14.7 trillion, based on an average exchange rate of 6.9 yuan per U.S. dollar.
That puts China’s economy at only $6.2 trillion behind the U.S., down from $7.1 trillion in 2019.
“This (divergence in growth) is consistent with our view that the pandemic has been a much larger blow to the US economy than China’s economy,” Rob Subbaraman of Nomura said. “We believe that on reasonable growth projections the size of China’s economy in USD terms will overtake the US in 2028.”
If the Chinese currency strengthens further to around 6 yuan per U.S. dollar, China could surpass the U.S. two years earlier than anticipated — in 2026, Subbaraman said.
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