China will likely become the world's largest economy by 2017, overtaking the economic powerhouse U.S., a report showed Sunday.

Professional services firm PricewaterhouseCoopers (PWC) said in a report that China's gross domestic product measured on a purchasing power parity (PPP) basis will be nearly US$20 trillion, surpassing the comparable figure for the U.S.

By 2030, the world's three largest economies on PPP basis will be China with $30.6 trillion, the U.S. with $23.4 trillion and India with $13.7 trillion.

The current No. 3 Japan was projected to fall to fourth place with $5.8 trillion.

China's growth rate is expected to meet the government's new 7 percent target for the current decade, but will cool down progressively during the 2012-2050 period as its economy matures, the firm said.

A rapidly aging population and rising real labor costs are expected to see China transition from being an export-oriented economy to more of a consumption driven economy, it said.

However, Chinese growth was expected to remain at around 3-4 percent per annum even in the 2040s, still above the levels projected for the U.S. and Europe.

PWC said Western companies are likely see a change in the way they do business in the region over time with rising costs pushing many of their production operations out of China for other cheaper economies such as Vietnam and Indonesia.

Chinese exporters will find themselves competing more on the basis of quality rather than price in their key U.S. and European export markets, it added.

(Yonhap News)