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China to be biggest economy by 2050

www.chinanews.cn 2006-05-22 09:27:20

(Source: Shanghai Daily)

May 22 - As a major player on everyone's lips, China, the world's
fastest-growing economy, is set to overtake the United States as the
biggest economy globally by 2050, according to a PricewaterhouseCoopers
report.
Although China's growth is expected to slow from the current high rate,
it will surpass the United States based on purchasing power parity by
2050 and lead seven other emerging countries to overtake the Group of
Seven, or G7, as the world's biggest economic bloc, the report said.
Purchasing Power Parity, or PPP, is a currency conversion measure that
uses a common currency and equalize the purchasing power of different
currencies. In other words, the PPP eliminates the differences in price
levels between countries in the process of conversion.
The Emerging Seven economies, or E7 as the PwC coined it, will by 2050 be
around 25 percent larger than the current G7 when measured in US dollar
terms at the market exchange rates or around 75 percent larger in PPP
terms.
The E7 includes "BRIC" - Brazil, Russia, India and China - plus
Indonesia, Mexico and Turkey.
In contrast, the E7 is currently only around 20 percent the size of the
G7 at market exchange rates and around 75 percent of its size in PPP
terms.
"China and India are the two important markets to drive up the E7
economies," said John Hawksworth, head of the macroeconomics unit of
PricewaterouseCoopers based in London, and the author of the report, in
Shanghai.
China, despite its projected slowdown in market growth, is forecast to be
around 95 percent the size of the United States at market exchange rates
by 2050 or about 40 percent larger in PPP terms.
China's economy expanded 10.2 percent in the first quarter after soaring
9.5 percent last year.
Growing rapidly as a major player, China is also burdened with some
problems which may hinder its growth.
The declining working age population, or those between 16 years and 50
years, will be one disadvantage for China while India, a relatively young
economy, will gain from its growing working population.
Better education, higher energy efficiency and the development of the
country's financial sectors are suggestions offered for a healthy
economic expansion.
"China needs to diversify its capital markets besides focusing on the
banking sector," he said, adding that the securities and corporate bond
sectors are areas where expansion is pending.

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