China's economy might be No 1 in 2030
Updated: 2013-06-07 07:52
A child takes a self-portrait near skyscrapers in Shanghai's Lujiazui area. Provided to China Daily
China's economy will become twice as big as that of the United States and larger than both the US and the EU combined within just 17 years, according to one of China's leading economists.
Hu Angang, dean of the Institute for Contemporary China Studies, one of China's leading think tanks, makes the prediction in his new book, China 2030.
The book, already out in Chinese and to be published in English next month, is likely to attract major interest around the world.
His forecast - which also sees China becoming the biggest economy by 2020 - is the boldest and most optimistic prediction yet about China's economic future.
It also comes at a time when there are concerns about China's short-term prospects with GDP growth slower than expected in the first quarter at 7.7 percent, down from 7.9 percent in the final quarter of last year.
China still has a hurdle to cross just to overtake the US, with China's $8.23 trillion nominal GDP being just over half (52 percent) of the US' $15.68 trillion in 2012, according to the International Monetary Fund.
However, the likelihood of matching the US sooner rather than later has certainly increased since Goldman Sachs made its forecast in 2006 that China will be the biggest economy by 2025.
That too was also considered optimistic at the time but the financial crisis has hit the US hard and might now even be considered a conservative estimate.
Since then, China has emerged in pole position when it overtook Japan to become the world's second-largest economy in February 2011.
Hu, who is a professor of economics at China's elite Tsinghua University and the author of no fewer than 60 books, is raising the stakes with his own prediction, going further than any forecast either in China or overseas.
He believes China will be driven forward by what he terms five engines: accelerating industrialization, its major role in a new globalized world, its dominance in information technology, the rapid modernization of its infrastructure in areas such as electricity supply and high-speed railways, and the growing internationalization of its own economy.
He points out that China's workforce of 780 million is five times larger than the US' 153 million and that it now devotes 3 million person-years to research and development, twice the deployment of the US, both adding to its growth momentum.
Goolam Ballim, group chief economist of Standard Bank Group based in Johannesburg, said it is not inconceivable the Chinese economy will be double the size of the US' by 2030. His own forecast is that it will achieve that position by at least 2040.
"To some extent it is like the old adage that it is easier to make your second million dollars than your first. Once China has caught up with the United States in terms of GDP, it will be easier for it to progress from there to become twice as big."
He said he expects the US to remain a dominant economy but that the world of 2050 could look very different.
"The United States is likely to retain a strong global influence, even if it does not have a podium place in the top three. By 2050, the three largest economies in the world could be China, India and Brazil and after the United States, the fifth spot might be taken by Nigeria, as bizarre as that might sound now."
Miranda Carr, head of China research at London-based investment research firm NSBO, is more conservative than Hu, predicting China will become the biggest economy between 2025 and 2030 and double the size of the US by 2050.
"In some sense, it is entirely plausible that China could become twice as big as the US by 2030," she said. "There is phenomenal room for growth in China, space for major industrial development, and once China gets its own world-class companies, they have a huge domestic market as well as an international market to serve."
She points out, however, that for China to make such progress, it will have to achieve near double-digit growth for a continuous period of nearly 40 years, which would be almost unprecedented in economic history.
"There are really few examples of that. You would expect some hiccups along the way."
George Magnus was one who forecast such a hiccup in his book Uprising: Will Emerging Markets Shape or Shake the World Economy? published two years ago.
He anticipated a so-called "Minsky moment", a phenomena named after the US economist Hyman Minsky who warned economies faced an investment bust if they became over-leveraged.