Tags: china | economy | pass | us

China Economy to Surpass US by 2020, Standard Chartered Says

Sunday, 14 Nov 2010 09:03 PM

 

China will overtake the U.S. to become the world’s largest economy by 2020, according to Standard Chartered Plc.

“We believe that the world is in a ‘super-cycle’ of sustained high growth,” economists led by Gerard Lyons said in a report published today. “The scale of change over the next 20 years will be enormous.”

China’s economy will be twice as large as the U.S.’s by 2030 and account for 24 percent of global output, from 9 percent today, Lyons said. India will surpass Japan to be the third- biggest economy in the next decade, according to the report.

The world may be experiencing its third “super-cycle,” which is defined as “a period of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanization and technological innovation, characterized by the emergence of large, new economies, first seen in high catch-up growth rates across the emerging world,” Standard Chartered said.

Previous growth super-cycles were characterized by stable currencies where there were exchange rates linked to gold or silver, monetary unions and the Bretton Woods agreement, Standard Chartered said. Current concerns over “currency wars” highlight the challenges with the present system, the bank said.

“The possibility of some formal move towards currency stability at a global level cannot be ruled out,” according to the report. “However, in the present context, it seems hard to predict. Greater currency intervention may be plausible, and over time, one should expect to see more countries managing their currencies against a basket of currencies of the countries with which they trade. Managed floats and currency baskets may become more of a norm for currency policy.”

The previous super-cycles were from 1870 to 1913, and after World War II until the early 1970s, Standard Chartered said. The current cycle began in 2000, it said.


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