China still on track to become the largest economy by 2035

Agencies and staff reporter

China could still surpass the United States to become the world's largest economy by 2035 despite its current downturn, eminent economist Justin Lin Yifu says.

Speaking at the Asian Financial Forum in Hong Kong yesterday, Lin said that although China's growth has slowed down to around 5 percent, the US economy's growth pace also dropped to 2.5 percent, and China's annual growth is still three percentage points higher than the US.

Lin, who was the chief economist and senior vice president of the World Bank from 2008 to 2012, believes that if this pace continues, under normal conditions, China's economy will surpass the US.

Besides, though trade-in policies can drive domestic consumption in the short term, long-term development of the economy should be led by investment, he said.

In other news, China's export growth picked up steam in December, while imports recovered, closing out the year on a positive note as the world's second-largest economy braces for mounting trade risks with the incoming US administration.

Outbound shipments in December rose 10.7 percent year-on-year, customs data showed yesterday, while imports surprised to the upside with a 1 percent growth. Economists had expected a 1.5 percent decline.

Meanwhile, China's trade surplus soared last year to a record as exporters rushed to make up for sluggish demand at home and get ahead of President-elect Donald Trump's return to the White House.

The surplus jumped to an unprecedented US$992 billion (HK$7.74 trillion) in 2024, according to a statement from the customs administration yesterday, 21 percent higher than the previous year.

That was the result of record exports but also the continued weakness of imports, which have been dragged down by sluggish domestic consumption and falling commodity prices.

"With rising external uncertainty over trade policies of the incoming Trump administration, China's export growth is likely to face severe challenges this year," Kelvin Lam, senior China economist at Pantheon Macroeconomics, wrote in a note. "All eyes are on January 20 - Trump's first day in office - to see whether he will follow through on his rhetoric and impose tariffs on Canada, Mexico, and China from day one."

Strong demand from overseas has helped provide growth for a domestic economy weighed down by a years-long housing crisis. Exports accounted for nearly a quarter of the economy's expansion in 2024, although that support now faces external challenges from the US and other trade partners.

The president-elect's tariff threats are partly why China's exports are surging. Trying to get ahead of any new levies, companies in the US are buying more from China in advance.

Exports to the US rose to the highest in more than two years in December, hitting almost US$49 billion and taking the total for the year to US$525 billion.