Could China's GDP Top the Euro-Zone?
Did you know?
- China’s growth running at triple the rate of the 19 Euro nations*
- Total economy of Asia surpassed all of the Americas in 2016
- China is on course to overtake the euro area by economy size**
According to Bloomberg, China’s gross domestic product is forecast to reach about $13.2 trillion in 2018, beating the $12.8 trillion combined total of the 19 countries that use the euro. In 2017, the Eurozone edged China by less than $200 billion.
David Mann, who is a global chief economist for Standard Chartered Bank, offered some explanation to the phenomenon, saying: “It’s a function of the economic system, institutional infrastructure, education and hard infrastructure - all of which have been moving in Asia’s favor.”
Asia, which includes powerhouses Japan and India, as well fast-emerging nations such as the Philippines and Indonesia, has already crowded out the combined economies of North and South America in 2016.
China, the world’s second-biggest economy is weathering a gradual slowdown as Xi tries to manage a shift from the low-wage, high-exports model of the past to a more balanced mix where stronger domestic spending plays a greater role. To do so, China faces numerous challenges. It will have to manage ballooning debt, financial markets need to open to global investors, and the government will have to adjust to a rapidly aging population. The UN projects that a quarter of its residents will be over 60 by 2030.
Here’s how quickly China’s economy is catching up to the U.S.
While it’s tricky to compare the growth across large periods of time, the last time China’s economy overshadowed Western Europe was around the mid-1800s. At least that what we were told by the Maddison Project at the University of Groningen in the Netherlands, where people who know better than us actually took the time to compile the figures.
As China used to be the world’s largest economy in the 1800s, its re-emergence as an economic power has enormous implications, and could throttle the global economy forward.
The impact of China on global financial markets and commodities is no trivial matter. And its economic size also brings economic tensions in terms of market share competition in trade and investment.
In an age where the United States might be seen as drawing back from the global arena and the EU is inflicted with many internal challenges, will China emerge as the new economic superpower? It’s too soon to tell. For online CFD traders though, any change in the balance of power could mean risks, but also opportunities. Stay informed and make educated, informed trading decisions.
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