(Yicai Global) April 29 -- China's total economic volume will be twice that of the US by 2030 if it maintains its 6 percent growth.

A more developed stock market can provide funding for enterprises to sustain the growth of the Chinese economy and maintain the country's lead in technology, Franklin Allen, professor of Finance and Economics at Imperial College London and past president of the American Finance Association, said recently in Shanghai.

A ceremony celebrating the 10th anniversary of the founding of the Advanced Institute of Finance at Shanghai Jiao Tong University was held on April 20, at which Allen gave a keynote speech in which he presented his projections for China's future via a series of data comparisons.

China has liberated hundreds of millions from poverty in mere few decades through a unique economic model that mixes both public and private ownership, which is an unprecedented achievement, he said.

The country has also established a very mature and advanced technological foundation, which has birthed many world leading tech firms.

China's economic volume totaled USD25 trillion last year in purchasing power parity, besting the US' USD20 trillion. The size of the country's PPP will be about 1.5 times that of the US in the mid-2020s and twice that of the US in the mid-2030s as long it maintains its current pace of growth, when China's economic volume will equal the sum of that of the US and Europe, Allen said.

China's per capita gross domestic product is now about 30 percent of that of the US in PPP. The growth of the country's gross domestic product has been 9.1 percent in the past decade, while those of the UK and the US have lagged at 2.1 percent and 2.6 percent, respectively. Based on this trend, China will overtake the UK in 2032 and surpass the US in 2039 and will overtake the UK in 2038 and surpass the US in 2048 if it holds to 7 percent GDP growth.

Finance is a key to China's economic miracle, Allen believes, and the country's economic growth has largely rested on bank financing. This, however, cannot support the new growth model led by domestic consumption and innovative new high technology industries.

The nation's financial system needs to shift from a back-based system to a more market-oriented one as stock markets are better at evaluating and financing high tech firms than banks. 

China's financial firms are known worldwide for their scope. Their international penetration is not wide, however. Chinese financial services firms need to become more globally oriented as China becomes the dominant economy and international projects such as the Belt and Road initiative develop, Allen said.

China has a great advantage in Fintech, which it should maintain, he concluded.

Editor: Ben Armour