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Analysts say China’s economy will increasingly rely on state investment, high-tech development and domestic consumption, and less on what was a key aspect of its economy, products for export, economically surpassing the United States. United in the next decade.
The British Center for Economic and Business Research Consulting (CEBR) predicts that China’s GDP will grow by 5.7% year-on-year until 2025 and then 4.7% each year, until 2030.
According to this forecast, China, currently the second largest economy in the world, will surpass the US economy, which ranks first, by 2030. The company that provides loans ‘Euler Hermes’ has made a similar forecast.
According to Chinese state media over the past decade Chinese leaders have pushed efforts to rely primarily on those services that offer added value to the economy rather than traditional exports.
The Beijing-Washington trade dispute and the closure of jobs in early 2020 due to COVID-19 have increased production pressure.
By reducing production in Chinese factories, multinational foreign companies have expanded outside China, targeting countries such as Vietnam with the aim of avoiding wage increases (for employees) and costs associated with complying with environmental regulations. By relocating to many countries, they hope to prevent problematic situations like the one fueled by Chinese government blockades due to COVID-19, which led to the closure of factories.
The Chinese economy reached $ 15.92 trillion in 2020. The market research firm ‘IHS Markit’ estimates that last year it grew to $ 18 trillion as a result of increased output for export as well as capital for new projects. The same company says the US economy reached about $ 23 trillion last year.
State investment
Economists say the country already known for rapid economic growth over the past 20 years will face an increase in state control over key sectors after intervening in some of them, including the internet in 2021.
“Beijing has unlimited domestic political funds and power to use the vast state treasury to make strategic investments in the service of national and global objectives to play a leading role,” said Denny Roy, one of the think tank’s key contributors. ‘East-West’ in Honolulu.
In 2018, China marked a threefold increase compared to the world average, the Index of Direct Control over Enterprises, which is calculated by the Organization for Economic Co-operation and Development.
This “reflects China’s growing emphasis on the role of the state in the economy under the leadership of Xi Jinping,” said an October report by the Atlantic Council.
Strengthening technology
Economists say Chinese leaders are likely to prioritize technology as an engine for economic growth.
State intervention on the Internet will not hinder the expansion of semiconductor manufacturing technology and software infrastructure, says Zennon Kapron, founder and director of Shanghai-based financial industry research firm Kapronasia.
“If the country becomes independent in terms of technology and then is able to sell and export those technology-based products and services, then that would be a big boost for its economy, because it is currently “The main driver of GDP in the US,” said Mr Kapron.
The US economy, he adds, will continue to grow until 2030, but without momentum.
China has a “large base of engineers,” though less creativity than it takes to drive the “crazy ideas” that drive new technology, says Douglas McWilliams, founder and executive vice president of CEBR.
What would happen if China outperformed the US economy?
The status of the world’s largest economy does not give you any automatic advantage over others economists say, but countries dependent on the Chinese economy would pay attention to such a thing.
“There is no gold medal or anything like that,” Mr McWilliams of the CEBR told VOA. “But when you have more money to spend, it means you have the ability to influence and China will have that ability,” he added.
China would be in a better position, he says, to advance its One Belt One Road initiative, a 9-year effort aimed at building land and sea trade corridors through Asia, Europe and Africa in the form of projects and investments in infrastructure.
Officials in Beijing are already using their economies in disputes with other countries, says Mr. Roy of the East-West Center. China has disputes with four Southeast Asian countries over maritime sovereignty, as well as with Japan over a group of islands, and has territorial problems with India since 2017.
“The result of this expectation is that China, which surpasses the United States economically, has been a bolder foreign policy of the People’s Republic of China aimed at resolving regional disputes in Beijing’s favor and delegitimizing the US regional and global leadership. “Under the assumption that it is China that should set the new rules in international relations and that this is inevitable,” said Mr Roy.
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