Despite growth fall, China will be biggest: analysis
Labelled a working paper and posted on the Treasury website with the annotation that its conclusions are “those of the authors and do not necessarily reflect those of the Australian Treasury” the study uses measures of labour productivity and long-term population growth to produce economic growth projections for six major regions of the world and six individual countries.
It finds China’s growth rate will fall from an average of 10.5 per cent in the first decade of the century to 8 per cent this decade, then to 4.3 per cent, 2.4 per cent and 2 per cent between 2040 and 2050.
India, whose growth rate had been expected to overtake China’s, will do so as its growth slows from 7.5 per cent last decade to 6.5 per cent this decade, then 6.1 per cent, 4.5 per cent and 3.3 per cent.
Growth among developed nations will slip from 2.1 per cent per annum to 1.6 per cent before settling at 1.7 per cent from 2040.
The authors, Wilson Au-Yeung, Nghi Luu and Dhruv Sharma from Treasury’s international division and Michael Kouparitsas from Treasury’s domestic division, say the projected slide in growth rates need not concern Australia because its potential trading partners will be quite big. “Our analysis suggests that the economy of the emerging and developing region is currently larger than the economy of the advanced region,” they write. “This reflects the rapidly shifting weight of global economic activity to fast-growing economies of Asia.”
“We project that Asia will become the world’s largest economic region by 2020. Underlying this is the expectation that the combined economies of China and India will become larger than the advanced economies by the middle of the 2030s.”
They expect China to overtake the US as the world’s largest economy by the start of the 2030s.
China’s economic growth rate will slow as its population growth rate slows.
Frequently Asked Questions about this Article…
China's economic growth is expected to slow down due to a decrease in its population growth rate and changes in labor productivity. These factors contribute to a gradual decline in the growth rate over the coming decades.
Yes, despite the slowdown in growth, China is projected to become the world's largest economy by the start of the 2030s, overtaking the United States.
While China's growth rate is expected to slow significantly, India's growth rate is also projected to decrease but at a slower pace. India is expected to overtake China's growth rate as both countries experience a gradual decline.
Developed nations are also expected to see a decline in growth rates, slipping from 2.1% per annum to 1.6%, before stabilizing at 1.7% from 2040 onwards.
The shift in global economic activity towards fast-growing Asian economies is not expected to negatively impact Australia. The potential trading partners in the emerging and developing regions will remain significant, providing opportunities for trade.
Asia becoming the world's largest economic region signifies a major shift in global economic power, driven by the rapid growth of economies like China and India. This shift is expected to occur by 2020, with the combined economies of China and India surpassing advanced economies by the mid-2030s.
China's economic growth rate is projected to fall from an average of 10.5% in the early 2000s to 8% this decade, and further down to 4.3%, 2.4%, and 2% between 2040 and 2050.
The Treasury analysis suggests that the global economic activity is rapidly shifting towards the fast-growing economies of Asia, with emerging and developing regions currently larger than advanced regions. This trend is expected to continue, making Asia the largest economic region by 2020.
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