MercoPress. South Atlantic News Agency

China the leading economic power by 2040

China's sustained economic expansion will have overtaken United States as the world's leading economic power by mid century forecasted experts meeting in Rio do Janeiro for a seminar on the strategic and economic implications of China's ascension.

The Chinese political system, although not desirable, has been efficient in advancing economic expansion indicated Professor Jack Kugler from Claremont University and World Bank and IMF consultant.

Mr. Kugler predicts China will overtake the UK by the end of 2005; Germany in 2010; Japan in 2015 and the US in 2040.

"Per capita productivity in China by 2050 will be 26% below the US but given the enormous population difference, China's GDP will be 20% larger", said Mr. Kugler.

China together with India, Russia and Brazil belong to the so called BRIC group of new emerging countries.

According to Mr. Kugler, India will follow on China's steps overtaking Italy in 2016, UK in 2025 and France in 2026.

The BRIC group has the highest foreign investment growth rates comparable to those of the six wealthiest countries in the world, with China and Brazil concentrating most of those overseas funds.

In trade terms the vigorous soybean industry of Brazil and most of the incredible expansion of Brazilian farming can be explained by the ever growing Chinese demand, said Jose Luis Glaser from Cargill one of the world's leading food and agriculture corporations.

Chinese expansion based on an import/export model has distorted global relative prices for commodities, basic produce, infrastructure and freights, and to continue at the current rate "could cause serious bottlenecks, which is proving increasingly disturbing for the world market", added Mr. Glaser.

Availability of commodities, continuous investments and positioning in new markets helps to understand the impressive expansion of the Chinese economy since 1978 at an annual rate of 9,38%, and overseas trade at 15,3%.

Claudio Haddad, a former Brazilian Central Bank president stressed no country in history has managed to grow sustainably at such high rates and for so long.

However China still has 400 million of its population submerged, working under a subsistence economy which represents an enormous potential if they are incorporated to modern production systems. But there's also a political and expectations component to be taken into account if the Chinese economy ceases to expand at the current "normal" rate of almost double digit.

Nevertheless nothing of this is forecasted in the near future since according to the latest Central Bank figures, China will again overshoot its target growth this year reaching 9%, "or even more", instead of the 8% programmed at the end of 2004.

"Consumption, investment and exports continue to drive economic growth", said the Central Bank report.

Expansion rate in the nine months of 2005 reached 9,4% with an inflation target of 2%.