Nextbigfuture believes China will pass the USA on nominal GDP in 2019 or 2020 because of growth and an appreciation in currency. Also, the IHS forecasts are not including Hong Kong and Macau’s GDP but both cities are part of China and amount to about US$400 billion in GDP in 2020. The Economist magazine also predicts the earlier passing of the United States by China in 2021.
Chinese consumer spending is forecast to grow at an annual average rate of 7.7 percent per year in real terms over the next decade, becoming a key engine of global consumer demand and world growth, according to IHS. In 2024, China will overtake the United States in terms of nominal gross domestic product (GDP) measured in U.S. dollars (USD). In 2024, IHS forecasts that China’s nominal GDP will be $28.25 trillion (USD) to the US’s $27.31 trillion (USD).
“In 2025, if we were to take a global economic snapshot, China’s economy will play an even bigger role as a key driver of global trade and investment flows,” Biswas said. “IHS forecasts total Chinese consumer spending to grow from $3 trillion (USD) to $11 trillion (USD) by 2024 at an annual average rate of 7.7 percent per year. China’s share of world GDP is forecast to rise from around 12 percent in 2013 to 20 percent by 2025.”
IHS nominal GDP data points are (all in USD):
2010: US: $14.96 trillion; China: $5.93 trillion
2015: US: $18.24 trillion; China: $11.12 trillion
2020: US: $23.10 trillion; China: $19.24 trillion
2025: US: $28.57 trillion; China: $30.70 trillion
2030: US: $35.10 trillion; China: $44.23 trillion
Transformational impact on global economy
With total Chinese consumer spending having already exceeded $3 trillion (USD) in 2013, the impact of the rapid growth of Chinese consumer spending is already having a transformational impact on many segments of the global economy.
The projected future rapid growth of Chinese consumer spending over the next decade will propel the Chinese consumer market to become an $10.5 trillion (USD) consumer market by 2023, around three times larger than Japan, which is projected to be a $3.7 trillion (USD) consumer market.
India, which also is expected to be a fast-growing consumer market but starting from a much lower base, is expected to be broadly similar in size to the Japanese consumer market by 2023.
China’s impact on APAC
“The transmission effects of the strong growth in Chinese consumer demand are already being felt throughout the Asia-Pacific region,” Biswas said.
One notable impact has been through Chinese international tourism visits to other Asian countries, something that has surged over the past three years.
Total Chinese tourism spending abroad rose by 26 percent in 2013 to $129 billion (USD). That makes China the largest source market for international tourism spending globally, according to United Nations World Tourism Organisation estimates.
The impact of this rapid growth in Chinese tourism was felt in many Asian countries, most notably Thailand, where Chinese tourism visits rose by 68.8 percent in 2013 to a total of 4.7 million visitors. Chinese tourism visits to other ASEAN (Association of Southeast Asian Nations) countries also showed strong increases, albeit not as dramatic as for Thailand.
Data from IHS Global Consumer Markets on consumer spending growth (all in USD, nominal):
US: 2013: $11.48 trillion; 2023: $17.61 trillion
China: 2013: $3.45 trillion; 2023:$10.51 trillion
Japan: 2013 $3.00 trillion; 2023: $3.72 trillion
India: 2013: $1.11 trillion; 2023: $4.26 trillion
Boost to ASEAN exports and long-term growth
“The implications of an additional $7 trillion (USD) being added to annual Chinese consumption by 2023 have tremendous positive implications for APAC regional growth,” Biswas said. “Rapid growth in Chinese consumption drives demand for exports of commodities, manufactures and services from other APAC countries to China, with ASEAN countries expected to be major beneficiaries of the growth in Chinese consumption.”
ASEAN countries already have seen their regional exports to China growing at an average annual rate of 20 percent per year over the last decade.
The further rapid expansion of Chinese consumer demand will provide a significant boost to ASEAN exports and GDP growth over the long-term. Other APAC economies with strong trade ties to China, such as South Korea and Australia, also will be important beneficiaries from the rapid growth of Chinese consumer demand.
Using a measure based on so-called purchasing power parity (PPP), China is poised to overtake the US this year, according to a report backed by the World Bank.