Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

OECD: China forecast to overtake U.S. by 2016

This photo taken on February 3, 2013 shows the US and Chinese flags flying outside an office building in the downtown area of Chongqing, China.

Story highlights

  • OECD: China will overtake U.S. as world's biggest economy by 2016
  • Report says will be top economy after accounting for price differences
  • China is on track for fourth consecutive decade of rapid growth
  • Growth would gradually ebb as China catches up to more advanced economies

China is on track for a fourth consecutive decade of rapid growth and will overtake the US as the world's biggest economy in 2016 after accounting for price differences, according to a new report by the OECD.

Having slouched to 7.8 per cent growth last year, its slowest in more than a decade, China's economy will rebound to 8.5 per cent growth this year and 8.9 per cent next, the OECD said.

It forecast that China would average 8 per cent growth in per capita terms during the current decade, provided Beijing can implement a series of economic, financial and regulatory reforms, many of which are already in train.

"There is significant scope for further catch-up in China; China has a strong record with respect to several of the key factors for sustaining growth and is well positioned to emulate the record of earlier stellar Asian performers," the OECD said in its survey of the world's second-biggest economy.

The OECD noted that growth would gradually ebb as China catches up to more advanced economies, but its forecast is well ahead of Beijing's official target of 7 per cent average growth in the five years to the end of 2015.

    Just Watched

    Chinese president visits Moscow

Chinese president visits Moscow 03:15
PLAY VIDEO

    Just Watched

    China's smog problem affects world

China's smog problem affects world 03:40
PLAY VIDEO

    Just Watched

    Achieving the 'Chinese dream'

Achieving the 'Chinese dream' 05:40
PLAY VIDEO

"This is the one country that always lowballs their growth [targets]. At the OECD we always say we're going to grow half a per cent more, one per cent more than we actually do," said Angel Gurria, head of the Paris-based club of 34 global economies.

    The Chinese economy is set to become as large as that of the US by around 2016 when assessed in purchasing power parity terms, which factor in price differences between countries, it added. The 2016 forecast is line with the OECD's previous estimates.

    The OECD highlighted multiple risks to its outlook: a weak global economy, rising inflation, a rickety financial system, inequality and an ageing population.

    But it noted that China already had made strides in cutting its reliance on external demand and that domestic rebalancing was also under way, with consumption a bigger driver of growth than investment since 2011.

    Among a broad range of recommended reforms, the OECD drew particular attention to China's urbanisation push, saying the government needed to focus on building larger, more productive cities.

    Although Chinese cities have expanded quickly, the country's urbanisation rate of 52.6 per cent is still below that of countries at similar levels of development. Transportation problems have also become severe. Average daily commuting times in Beijing -- which boasts one of the country's larger subway networks -- are 79 minutes, roughly double the OECD average.

    Li Keqiang, China's new premier, has vowed to make urbanisation a centrepiece of his agenda. Along with more investment in infrastructure, the OECD said Beijing should give migrants to cities better access to schooling and that fiscal reforms were needed to ensure lower levels of government can fund more social services.

    More controversially, the OECD also called for an overhaul of the Chinese land system. Farmers lack the right to sell their land, and the supply of land for residential development near urban areas is tightly controlled.

    "Continued urbanisation is hampered by the rigid central planning rules governing the conversion of designated cropland into construction land, which partly reflect misguided concerns about food security," it said.

        CNN Business

      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
      • A view of gloves and boots used by medical staff, drying in the sun, at a center for victims of the Ebola virus in Guekedou, on April 1, 2014. The viral haemorrhagic fever epidemic raging in Guinea is caused by several viruses which have similar symptoms -- the deadliest and most feared of which is Ebola. AFP PHOTO / SEYLLOU (Photo credit should read SEYLLOU/AFP/Getty Images)

        The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
      • People enter a casino in Las Vegas, Nevada, on April 18, 2009. Las Vegas is the most populus city in the US state of Nevada and internationally renowned major resort city for gambling, shopping, fine dining and entertainment. Las Vegas which bills itself as the �Entertainment Capital of the World� is famous for the number of casino resorts and associated entertainment. AFP PHOTO/Jewel SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

        Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
      • spc marketplace middle east ata atmar a_00010015.jpg

        Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
      • Vantablack designed by Surrey NanoSystems absorbs 99.96% of all light. It however will not be the solution to the creating the world's ultimate slimming black dress! A dress made out of this material would render the curves and contours of the human body invisible and would leave the wearer looking like 'two dimensional cardboard cut-out.'

        A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
      • Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
      • A picture taken on March 15, 2014 shows children playing at the sprawling desert Zaatari refugee camp in northern Jordan near the border with Syria which provides shelter to around 100,000 Syrian refugees. Syrian refugees in the seven-square-kilometre (2.8-square-mile) Zaatari camp in Jordan fear that President Bashar al-Assad's likely re-election this year will leave their dream of a return home as distant as ever. The brutal war in Syria between the regime and its foes shows no sign of abating and has killed at least 146,000 people since it erupted in mid-March 2011. And 2.5 million Syrians have fled abroad and another 6.5 million have been internally displaced. Jordan is home to more than 500,000 of the refugees.

        Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
      • SHEFFIELD, ENGLAND - NOVEMBER 18: Queen Elizabeth II wears 3 D glasses to watch a display and pilot a JCB digger, during a visit to the University of Sheffield Advanced Manufacturing Research centre, on November 18, 2010 in Sheffield, England. (Photo by John Giles - WPA Pool/Getty Images)

        At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
      • Valves of gas pipe-line are seen in the gas station not far from Kiev on March 4, 2014. The European Union will help Ukraine pay the $2.0 billion it owes to Russian gas giant Gazprom, a top official said Tuesday, as part of an aid package reportedly worth more than one billion euros. AFP PHOTO/ ANDREY SINITSIN (Photo credit should read ANDREY SINITSIN/AFP/Getty Images)

        The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.