CHINA'S economy will overtake that of the United States by 2035 and be twice its size by mid-century, a new study by a US research organisation concluded.

The report by economist Albert Keidel of the Carnegie Endowment for International Peace said China's rapid growth is driven more by domestic demand than exports, which will be sustainable for decades.

'China's economic performance clearly is no flash in the pan,' writes Dr Keidel, who has worked as a World Bank economist and US Treasury official.

'Its growth this decade has averaged more than 10 per cent a year and is still going strong in the first half of 2008.

'Because its success in recent decades has not been export-led but driven by domestic demand, its rapid growth can continue well into the 21st century, unfettered by world market limitations,' he added.

Under current market-based estimates, China's gross domestic product is about US$3 trillion (S$4.09 trillion), compared to US$14 trillion for the United States.

Based on the more commonly accepted market method, the turning point will come by 2035. Dr Keidel estimated that by 2050, Chinese GDP will be worth some US$82 trillion, compared with US$44 trillion for the United States.

The dramatic economic change will help make China become a more important power in other areas including military and diplomatic affairs, according to Dr Keidel.

'China's financial clout will spill into every conceivable dimension of international relations,' he writes.

However, not everything will be rosy. Dr Keidel said poverty will remain a significant problem in China for decades despite considerable progress.