By 2024, it is estimated that China will have the world’s largest economy – according to global information provider IHS Economics. Earlier this week in a blog post titled “China’s Impact on the Global Economy”, Nitish spoke of China’s rebalancing trend, which is signaled by an increase in consumer imports and a decrease in imports for investment purposes. Although rebalancing may limit other countries’ investment opportunities in China, it will spur growth in China’s economy, the Asia-Pacific regional economy, and possibly even the global economy. It is predicted that a drastic increase in consumer spending will propel China past the United States to become the world’s largest economy.
IHS Economics predicts that in 2024, China’s nominal GDP will be $28.25 trillion and the United States’ nominal GDP will be $27.31 billion. Currently the US has a significant edge in nominal GDP, but a forecasted annual average growth rate of 7.7% in Chinese consumer spending could quickly close this gap. China’s rapid increase in consumer spending has already been seen in the tourism sector, where tourism spending has increased by 26% in the last year. In 2013, the Chinese spent $129 billion on tourism, making China the largest source of international tourism spending in the world.
China’s predicted increase in consumer spending will provide more export opportunities for countries in the Asia-Pacific region and for countries overseas like the United States. The demand for consumer products in China is clearly increasing, and it will be interesting to see which countries respond to this trend and increase their supply of exports to China.
Do you agree with the bold prediction that by 2024 China will overtake the United States as the world’s largest economy? Feel free to leave a comment below!