Centre for economics and business research (CEBR), a UK based Centre has released its report saying China will be overtaking America to be the world’s largest economy by the year 2028. This report is clearly a piece of big news. The previous report last year estimated the year to be 2032, so this seems to make it five years earlier. Every year on 26, December, the CEBR releases the economic league table which summarizes the yearly economic activity of all countries and gives some estimates. They have said that India can be said to top the third position of the largest economy by 2030. Why did they make such an estimate?
If we can recall what a year it has been, then we can clearly see how things have been in America and China. Apart from the constant rivalry between the countries, if we are to take pandemic under surveillance, then it clearly shows who is in better hands now. China, the epicenter of the coronavirus outbreak, was very badly hit. The economy literally came to a stop. They had a plan that worked best only on them. The imposing of strict lockdowns controlled the spread of the virus and china became the first country to reopen and give way for recovery. After it has calmed all pandemic crisis during May, and officially starting the country again. China began working in double fold. The economy started to fuel again and the recession was starting to be subsided. In fact, the only country in the world to have any growth in the GDP will be china. That too with a 2% increase.
While the other countries were beginning to crumble very badly. Especially countries like America, India, and Europe. With the imposing of lockdown and quarantine in the second quarter of the year, countries like America and Britain saw the greatest recession. And it’s in the second quarter of the year, that china resumed its factory workers and people emerged to the city once more. To state the numbers, China’s GDP contracted on a record 6.8%, but let’s not be fooled by it. Right at the beginning of the second quarter, china made the perfect unexpected U-turn and was seen with a 3.2% growth rate. And in the third quarter, they saw a 4.9% surge in GDP.
How did this happen? The need for pandemic related products set the market on fire. The exports of these products became a golden reason china has begun to see such a major economic growth. The exports of textiles, especially of masks jumped 32% while the medical device appliances saw a growth of 46% in demand during the course of the first six months of 2020. With all the pandemic and lockdown going on, the demand for electronic devices like notebook laptops and computers surge to date by 9.8% due to an increase in work from home duties and online education.
We cannot forget to include this, the ‘Urbanization 2.0’ or supercities. Cities like southern China’s greater bay area and their massive use of smart tech are going to help China’s developing economy a faster boost. As cities get bigger and more livable, the consumption rate will also be higher. There is also the factor of foreign direct investment which is set to drive the post-pandemic economy for China. For some years, the fight over soft power was going on between China and America. Even if china did face a lot of backlash and boycott calls, we cannot deny the fact that most of the things we are exported from China. This staggering tension between these two giants has now tripped one down and the other a push to the top.
We can’t exactly say it’s a victor because there is still a lot of time left and we do not know what more things we are bound to witness yet again. But this year clearly seems to be in China’s favor. The CEBR report also estimated that if there is a strong rebound in the year 2021 then this post-pandemic period will lead the US to grow 1.9% annually from 2022-2024 following to slow down a little and steady a pace of 1.6% in the following years. But the most surprising fact right now will be the news that these same estimates calculated China’s annual economic growth. And it’s nowhere compared to the US or UK. China, which is already in the post-pandemic stage will be seeing a growth of 5.7% annually until 2025 and with the pace steading to 4.5% from the following years.
With only a 3.6% share in the world economy during 2000, China has now risen to take about a share of 17.8% and by 2023, it is going to become the high-income economy. We all know how much china has advanced in terms of its technology. Such growth has put them at a high advantage. Many countries outside the world would still need china and its technology to develop. But as per the reports, in China, an average person, in terms of financial resources will be far poorer compared to an average man’s financial status in the US, even if china did steal the top spot of becoming the world-leading economy. Why so? Because the population in China is four times bigger than that of the US.
The CEBR has estimated that India did overtake the UK to become the 5th biggest economy in 2019, but pandemic hasn’t been on their side too. So CEBR suggests that it will take at least 2015 until any change in position to occur and until 2027 to overtake Germany and 2030 to overtake japan. With the sudden influx of new mutant virus in Britain. The post- Brexit UK is also not in any good condition to consider. On the contrary, the US has been the world hit by the coronavirus by far and still is. Without mutation itself the transmission there has been very vast. America has seen 333,000 deaths with 18.5 million confirmed cases. With the monetary policy and Hugh fiscal stimulus, the chance of 14 million America getting their unemployment benefit payment is seesaw. These estimates from the Center of economics and business research have shown us how each country has been affected differently by this pandemic. And it clearly shows how the economic situation has completely been overturned by on single virus.