The analysis from the Centre for Economics and Business Research (CEBR) projects a dynamic shift in global economic leadership among the United States, China, and India throughout this century. This projection implies that China might surpass the U.S. to become the world’s largest economy in gross domestic product (GDP) as soon as 2037. Furthermore, the CEBR foresees substantial economic growth in India, hinting at a possible shift in global economic leadership.

It is important to note that the assessment of the largest economy is not solely based on GDP; living standards play a pivotal role. Nina Skero, the Chief Executive of CEBR, emphasizes that China is still far from catching up with the U.S. in terms of living standards.

Economists frequently associate a sizable and swiftly expanding GDP with a country’s military prowess, economic sway, and global importance. However, Mariana Mazzucato, a professor of economics at the University College London, brings attention to the fact that while economic indicators matter, solving pressing global issues in health, climate, digitalization, and artificial intelligence is equally vital for overall societal health.

On a global scale, governments are allocating significant public funds to proactively address anticipated social and environmental challenges. This forward-looking strategy demonstrates a dedication to getting ready for the uncertainties that lie ahead.

President Joe Biden, in a September 2023 press conference, expressed a desire not to contain China but to create a positive relationship based on mutual understanding. Diplomatic ties between India, China, and the U.S. strengthened in 2023, with President Xi Jinping of China actively working to mend relations with Washington.

China, however, is facing challenges as business confidence weakens. In response, the government persists in augmenting stimulus spending. It’s noteworthy that the CEBR initially projected China’s economy to outpace that of the U.S. by 2028, but alterations in circumstances have prompted revisions to this forecast.

Yasheng Huang, a professor of global economics and management at the MIT Sloan School of Management, underscores a critical issue facing China – a deficiency in enduring confidence among the general populace, private sector, and investors regarding the Chinese economy.

While both China and the U.S. are experiencing slowed population growth in the 21st century, India stands out due to its potential “demographic dividend.” This refers to a scenario where the working-age population grows in a well-capitalized business environment, providing a significant advantage for economic growth. Rajiv Biswas, Asia-Pacific chief economist at S&P Global Market Intelligence, points out that India’s youthful demographics position it for rapid economic expansion compared to other large Asian economies like Japan, South Korea, or China. The demographic aspect, coupled with favorable economic conditions, offers India the opportunity for significant and enduring growth.