China’s Gross Domestic Product (GDP) will be bigger than that of the US as early as 2022 according to a report by Standard Chartered Bank that makes forecasts on countries’ economic outlook.
According to the report, China’s economy will sustain growth at over 7% annually for several years to come, before slowing down to an annual growth of about 5%. But it takes only about eight years of such a growth rate for the economy to overtake that of the US, which is predicted to grow at far more modest rates.
Driven by China’s reform momentum, the economy will grow at a rate of 7% between 2013 and 2020, the report says. Thereafter, until 2030, it will grow at 5.3%.
The report also says the emerging economies, which account for 38% of the world’s GDP, will become far more powerful with a 63% share in global GDP in 2030. It adds that the global trade volume will rise fourfold to $75 trillion by 2030.
Standard Chartered also has forecasts for the Renmimbi (china’s currency) If their predictions on the currency are correct then the Renmimbi should appreciate and China would pass the US economy on an exchange rate basis earlier in about 2018-2020.
* They expect 28% of China’s international trade to be denominated in Renminbi by 2020, some USD 3 trillion a year.
* China’s vast imports of commodities will gradually convert to CNY settlement.
* They expect a cross-border Renminbi interbank payment system (CIPS) to be fully operational by 2015.
* Daily Renminbi FX turnover should exceed USD 500bn by 2020
* They think the Renminbi will be a basically freely floating currency, the capital account will be more or less open, and SHIBOR (or a similar rate) will operate as China’s equivalent of the federal funds target rate.
* The expect China’s capital account to be basically open by 2020. Direct investment will flow much more easily than today, with only large deals subject to approval requirements
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