China's Economy is Expected to Surpass the USA in 2040

Posted in China | 04-Jan-06 | Author: René Denzer

René Denzer isWSN Editor Germany.

A new study published by the investment bank Goldman Sachs indicates that the Chinese national economy could catch up with the U.S. economy faster than previously projected. Unlike indicated in older studies, China’s economy could surpass the USA in 2040 already.

The so-called BRIC countries, comprised of Brazil, Russia, India, and China, have grown so rapidly within the last couple of years that their share in the world trade and the number of foreign direct investments have doubled since 2000/2001.

The study explains that the BRIC countries have grown above previously forecasted trends because they were able to realize their economic area faster than was expected. Due to their demographic size, the BRIC countries play a key role in the world economy opposite other fast-developing countries.

Within the last years the BRIC countries have contributed substantially to the worldwide economic growth. However, the demand for raw materials did not only promote growth in the OPEC countries, but also industrial countries have profited from it as well. Therefore, economists believe that China could become the greatest national economy in 2040, followed by the USA, India, Japan, and Russia. Based on the Goldman Sachs study, the export world champion Germany will slip from today's third place to seventh. Only Korea and Mexico have similar growth potential as the BRIC countries, per the economists’ belief.

Despite the present success, the economists admonish to be careful: "this does not guarantee future development". The study indicates that the BRIC countries must continue to improve their political as well as macroeconomic stability to continue their current growth trends.