China GDP to surpass US around 2035, years later than previously expected, Goldman Sachs predicts
- World’s second-largest economy is expected to have ‘significantly higher’ GDP growth potential than the United States in the coming years
- But demographic factors such as its rapidly ageing population could keep China’s potential growth rate below that of its Asian peers such as India and the Philippines
Although the pace of China’s economic rise has slowed in recent years, it appears on track to end the United States’ lengthy run as the world’s largest economy by around 2035, according to the latest projection by economists at Goldman Sachs.
The new estimate is 10 years later than the investment bank had predicted in 2011. But economists Kevin Daly and Tadas Gedminas said that potential growth in China still remains significantly higher than in the US.
“China has already closed most of the gap with US GDP,” they said in a report published on Tuesday, adding that China’s gross domestic product has risen from 12 per cent of the US’ in 2000 to a little under 80 per cent.
China’s annual economic growth will be around 4 per cent from 2024 to 2029, compared with 1.9 per cent in the US, according to the report, which projects what the global economy will look like through 2075.
Factors for predicting GDP growth potential include the number of people in the workforce, the amount of capital they have to work with, and technical progress, according to the report.
“Growth is projected to slow over time in most economies, owing to a smaller contribution from labour force growth, but this decline is expected to be particularly marked in China,” the economists said.