Jakarta. China could overtake the United States as the world’s largest economy by 2045, according to Prof. Justin Yifu Lin, a leading economist known for his accurate forecasts on China’s growth, in his keynote address at the Investor Daily Summit (IDS) 2025.

Speaking at the second plenary session, Justin, who is the dean of Peking University’s Institute of New Structural Economics, explained that the global economic order has shifted dramatically since the dominance of the Group of Eight (G8) countries, comprising the United States, United Kingdom, Germany, Italy, Russia, Japan, Canada, and France, which once held nearly half of the world’s GDP. Russia was suspended from the group in 2014 after it annexed Crimea, leading the forum to revert to the Group of Seven (G7) format.  

“In 2000, the G8 controlled around 47 percent of global GDP, but by 2018, their share dropped to 34.7 percent,” Justin said, attributing the decline to the rapid rise of emerging economies such as China, Indonesia, and others.

Justin said China’s economic contribution grew from just 6.9 percent of global GDP in 2000 to over 16 percent by 2018, an increase of 9.8 percentage points in less than two decades. “Eighty percent of the G8’s decline was offset by China’s growth,” Lin added.

By purchasing power parity (PPP), China overtook the US in 2014, marking the first time in 150 years that the US fell behind another economy in this measure. Since then, Washington has responded with various policies to slow China’s ascent, from President Obama’s “Pivot to Asia,” to the US-China trade war under Donald Trump, and more recent decoupling efforts under President Joe Biden.

Justin argued that China’s growth momentum remains strong, driven by what he called the “latecomer advantage”, a pattern observed in post-war Germany, Japan, and South Korea. He projected that China could sustain growth above 4 percent per year until 2045.

“China has three major comparative advantages in the ongoing industrial revolution; talent, market size, and manufacturing capacity,” he said. China produces more than six million STEM graduates annually, boasts the largest domestic market in the world, and remains the global hub for manufacturing.

He cited Tesla as an example: “When Tesla moved its production to China in 2019, output reached half a million units in one year, helping it become the world’s most valuable EV car company.”

Looking ahead, Justin projected that if China maintains an average annual growth rate of 4.5 percent while the US grows at around 1.6 percent, the Chinese economy could become 2.5 times larger than the US by 2045.

“By then, a new global economic order will have taken shape,” he concluded. “Peace and stability will follow as economic power becomes more balanced.”

He also emphasized that China’s continued expansion presents opportunities for global businesses, noting that the country has already contributed 30 percent of the world’s GDP growth since 2008.

“China’s rise is not a threat, it is a chance for the world to grow together,” he said.