China could surpass US and become world’s no.1 economy
According to Justin Lin, the World Bank’s chief economist, China has the potential to overtake the US and become the world’s largest economy.
Mr Lin’s comments come shortly after official data last month revealed China had become the world’s second largest economy – taking over from Japan, which slipped into the third place.
At the end of 2010, Japan’s economy was worth $5.474 trillion (£3.414 trillion), while the Chinese economy was worth $5.8 trillion at the end of last year.
Japan has been hit by a fall in exports and weak consumer demand, while China has benefited from a manufacturing boom.
If the current pace of growth continues in China, Mr Lin believes China will become the world’s largest economy in about 20 years time.
The Chinese economy has been the world’s fastest growing nation over the last two decades and is forecasting growth of 8% for 2011.
The economy grew by a staggering 10.3% in 2010 – much higher than expected but this fuelled fears of the economy overheating, which has stoked inflation pressures.
Inflation rose 4.9% in February on an annual basis – the same figure as January but is still well in excess of the 3% target set by the Government and was higher than analysts forecasts of 4.7%.
The People’s Bank of China has already lifted interest rates three times in four months in order to curb high inflation.
In related news, it was announced last February that China had overtaken Germany as the world’s biggest exporter. Germany had held the top spot since 2003.