China set to overtake US economy sooner than expected, but it is worried

A report released last week by UK think tank the Centre for Economics and Business Research (CEBR) has China worried.

The report boldly forecasts that the Chinese economy will overtake the US economy in 2028, five years earlier than previously forecast. The trend rate of growth for China is expected to be 5.7% annually from 2021 to 2025 and 4.5% annually from 2026 to 2030, while that of the US is expected to be 1.9% annually from 2022 to 2024 and 1.6% annually until 2035.

The report said China's "skilful management of the pandemic", with its strict early lockdown, and hits to long-term growth in the West meant China's relative economic performance had improved.

The report said: "For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China. The Covid-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China's favour."

Coincidentally, a Japan think tank also made similar forecasts this month. A medium-term forecast of 15 Asian economies by the Japan Center for Economic Research (JCER) concluded that China will overtake the US in terms of nominal GDP by 2028. JCER forecast last year that China would overtake the US to have the world's highest GDP only by 2036, but in its latest forecast, this has been brought forward by eight whole years.

These economic institutions make practically the same assessments in comparing the China and US economies, and they match the lament of New York Times columnist Thomas Friedman, who wrote in a commentary in October: "Covid-19 was supposed to be China's Chernobyl. It's ended up looking more like the West's Waterloo."

But despite Western media reports in past days that China's economy may overtake the US earlier than expected, China itself has not got excited or indulged in loud self-praise at the hastened advent of the "China era"; on the contrary, it has kept a low profile, and is even somewhat wary.

A Global Times commentary said the first reaction of many Chinese on hearing that China's GDP will overtake the US within eight years is to be on the alert against the phenomenon of too much praise leading to failure.

The commentary reckoned that the CEBR report was meant to alert the US and the West about China's accelerated rise, and to prod and encourage them to get moving.

The commentary also gave a reminder not to be hoodwinked by such forecasts, and that it is important to maintain a strategic humility and prudence, and avoid a strategic, duellist clash between China and the US.

The start of the year 2020 was terrible for China. With Wuhan at the epicentre of the Covid-19 outbreak, the entire nation was anxious and worried. Large-scale lockdowns and road blocks put the Chinese economy on pause, while the official handling of the coronavirus was also strongly questioned. Some even thought that the pandemic would lead to a political crisis in China.

Yet China's controversial Covid-19 containment measures have proven to be successful. While Europe and the US are still struggling to deal with the pandemic, China's economy is bouncing back. Moreover, China set its next Five-Year Plan in motion as planned, and even went ahead to set its "Long-Range Objectives Through the Year 2035".

As China has performed better than Western countries in containing Covid-19, it is an objective fact that China's economy will surpass that of the US ahead of schedule. It is perhaps a matter of time before the two major economies have their positions exchanged. When that day comes, a change in their respective geopolitical clout will not be immediate. Nonetheless, the reality of China's economy overtaking that of the US will have a psychological impact on both the West and China.

From the Western perspective, this would imply that at a certain level, it has become a reality that China has surpassed the US. Moreover, the fact that the commanding position that the West has long held in the current world order could be taken over by a country with an entirely different ideology would bring much uncertainties.

China would be equally concerned about the West's anxiety. Behind this concern is the fear that the West would contain and block China, and suppress its moves at every turn. In particular, the prospect of the incoming Biden administration joining forces with its allies to establish an anti-China alliance is even more worrying to China.

As such, as soon as Western think tanks predicted that China would catch up with the US at a much faster pace, China's public opinion had their guard up. They speculated that this could be a trap set for China and worried that these statistics would prove the "China threat" theory and be ammunition for the Western world to suppress China.

However, it is hard for China to avoid the spotlight now that it has taken centrestage, and higher-ups in China are well aware of this fact. The fifth plenary session of the 19th Central Committee of the Communist Party of China held in end October already made the judgement that "the international power balance is undergoing profound adjustment". Put plainly, China has already significantly narrowed the gap between itself and the US, the top superpower of the world.

How would a world where the power gap between China and the US is narrowed look like? How would China ease the anxiety of the external world? How would the Western world face a China that is about to be on par with the US? Having experienced the Covid-19 pandemic, the adaptation period for all parties involved is getting shorter and shorter.

Related: Why East Asia has performed well in containing Covid-19 | If the world needs a new ideology, can the Chinese model be accepted? | How China's dual circulation strategy will affect the world economy | China's 14th Five-Year Plan will be a game changer | Chinese academic: How the West's perception of China plummeted in 2020