Is China about to overtake United States economically?

Is China about to overtake United States economically?

The two largest economies of the world are United States and China. Both countries’ economy is better than any other country in both Nominal and PPP method. To make sure, one can look at the GDP of both countries. GDP of China and United States is higher than GDP of third ranked countries like Japan and India by a huge margin. That’s why, only China and United States are in competition to become first. If one looks at the population of both countries, China’s population is more than four times of the population of United States. Difference in the population of both countries makes a clear and high difference in economy of both countries regarding to per capital income.

Right now, United States is on the top of the list of countries growing economically. China is the second largest country whose economy is growing rapidly. Moreover with the progress and development in the technology in China shows that China’s economy is about to overtake the economy of United States. According to a comparison between the growth rate of China and growth rate of United States over last two decades, economists perceive that China will be overtaking United States economically somewhere around 2030. It also depends on the exchange rate of Yuan to Dollar. The exchange rate of 6 yuan to 1 dollar may bring China at the top of the list of countries’ growth rate somewhere around 2025. And on the other side, China may have to wait until 2031 to become the largest country on the list of economic growth rate.

According to another research in 2019, United States could lose its position as the world's biggest economy as soon as in 2020 and once this happens, it will be very difficult for United States to regain the top spot as developing Asian economies power ahead. According to the research released by Standard Chartered Bank, China is about to become the world's biggest economy and overtake other countries economy at some point in 2020, when measured by a combination of PPP exchange rates and nominal gross domestic product. If we look at the PPP, China is already considered world’s number 1 country but on a nominal basis the United States is still in the lead.

United States has been the number 1 country in the world according to its economic growth. But annual growth rate of United States’ economy has hovered around three percent over the past decade. On the other hand, China’s annual growth rate is two to three times higher than United States’. This also shows that China’s economy will overtake United States along with every other country’s economy and will get the crown soon. First reason of China’s economic growth can be the development in China’s economy. On the other hand, decline in United States’ economy can also become a good reason for China to overtake United States economically.

Development in China’s economy

Following are two main reasons that show how China has been developing its growth rate and by following these it will overtake economy of United States:

  • Large Scale Capital Investment

Historically China has managed a high rate of savings. If one sees the major economies, China's gross saving is highest as a percentage of GDP. Chinas has large level of domestic savings that makes China able to support a high level of investment. In fact, gross domestic saving of China’s levels exceeds its domestic investment levels. It has also made China a large net global lender.

  • Rapid Productivity Growth

Several economists have terminated that another major factor in China's rapid economic growth is productivity gains that is basically increase in efficiency. The developments to productivity were caused largely by re-issuance of assets to more fertile uses, specifically in parts that were previously deliberately managed by the central government, like trade, agriculture etc. For instance, agricultural development improved production, emancipating workers to follow employment in the more productive sector. 

Decline in the growth rate of the United States’ economy

The basic cause of the Great decline in the United States’ economy in past years was decrease in spending, which led to a decline in production as producers noticed an unplanned ascend in inventories. The origins of the contraction in spending in the United States diversified the course of this decline. They gathered together in a huge decline in aggregate demand. The decline in America’s economy then transferred to the rest of the world mainly through the gold standard. Nonetheless, many other factors also influence the decline in growth rate of economy in United States.

By keeping all these points in view, one can say that China is about to overtake United States economically.



Huang, C. (2019). If China thinks it’s overtaking US any time soon, here’s a wake-up call. Retrieved 28 July 2020, from

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Martin, W. (2019). The US could lose its crown as the world's most powerful economy as soon as next year, and it's unlikely to ever get it back. Retrieved 28 July 2020, from