After Virus, China to Pass US Economy Sooner

Nations' handling of the pandemic is the difference, British forecast says
By Bob Cronin,  Newser Staff
Posted Dec 26, 2020 3:00 PM CST
After Virus, China to Pass US Economy Sooner
A case of surgical gloves encased in plastic wrap waits for distribution in May as part of a shipment of personal protective equipment from China to help Connecticut fight against COVID-19 in New Britain.   (AP Photo/Chris Ehrmann)

(Newser) – China is now on track to pass the US five years sooner than previously forecast, becoming the world's largest economy by 2028. The two nations' handling of the pandemic has changed the trajectory, Britain's Center for Economics and Business Research said in an analysis released Saturday. It called China's response to the coronavirus outbreak, which hit it first, skillful, the BBC reports. US actions, on the other hand, will hurt long-term economic growth. "For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China," the report said. "The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China's favor." By 2030, the report says, India will become the world's third-largest economy.

Because of its quick actions, per the Hill, China is expected to post 2% growth in GDP for 2020, while the report says "other major economies are expected to have negative growth for the year." The organization's forecasts for the US include "a strong post-pandemic rebound in 2021," then annual growth of about 1.9% through 2024. After that, the report predicts, US growth will drop to 1.6%. China can expect growth of 5.7% per year through 2025, then a 4.5% rate through 2030. Effective policies in certain industries, such as advanced manufacturing, have helped China, a CEBR official said. China appears "to be trying to have centralized control at one level, but quite a free market economy in other areas," he said, and it's the free market sectors that are driving much of the growth. Still, the report says, the Chinese people will remain much poorer on average than Americans. (Read more Chinese economy stories.)

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