China's economy is likely to surpass the United States in less than two decades while Asia will overtake North America and Europe combined in global power by 2030, a US intelligence report said on Monday.

"Meanwhile, the economies of Europe, Japan, and Russia are likely to continue their slow relative declines," it said.

The report, "Global Trends 2030: Alternative Worlds," was issued by the National Intelligence Council, an analytical arm of the US government's Office of the Director of National Intelligence. In addition to US intelligence analysts, the report includes the views of foreign and private experts.

It is the fifth report of a series - the previous one was released in 2008 - that aims to stimulate "strategic thinking" among decision makers and not to predict the future. The reports intentionally coincide with presidential election years to offer insights on global trends to new administrations.

Despite the economic power of China, the United States is expected to retain its superpower status because it still is the only country able to pull together coalitions and mobilise efforts to deal with global challenges, analysts said.

"China isn't going to replace the US on a global level," Mathew Burrows, counselor to the National Intelligence Council, said at a media briefing. "Being the largest economic power is important... (but) it isn't necessarily the largest economic power that always is going to be the superpower."

China recognises that it cannot play that role of organising across regions and across state-nonstate boundaries, he said.

The health of the global economy increasingly will be linked to progress in the developing world rather than the traditional West, the report said.

"As the world's largest economic power, China is expected to remain ahead of India, but the gap could begin to close by 2030," it said.

"India's rate of economic growth is likely to rise while China's slows. In 2030 India could be the rising economic powerhouse that China is seen to be today. China's current economic growth rate - 8 to 10 per cent - will probably be a distant memory by 2030."

TECHNOLOGY INNOVATION

Economic growth in emerging markets was expected to drive technological innovation and flows of companies, ideas, entrepreneurs and capital to developing countries will increase, the report said.

"During the next 15 to 20 years, more technological activity is likely to move to the developing world as multinationals focus on the fastest-growing emerging markets and as Chinese, Indian, Brazilian, and other emerging-economy corporations rapidly become internationally competitive," the report said.

"Technology will continue to be the great leveler. The future Internet 'moguls' - as with today's Google or Facebook -sit on mountains of data and have more real-time information at their fingertips than most governments."

That data will enable private companies to influence behavior on as large a scale as government entities.

The widespread use of new communications technologies will mean social networking will enable citizens to join together and challenge governments, as seen in Middle East, but will also provide governments "an unprecedented ability to monitor their citizens," the report said.

POST ARAB SPRING

In the Middle East, the youth who drove the Arab Spring will give way to a gradually aging population and with new technologies starting to provide the world with other sources of oil and gas, the Middle East economy will need to increasingly diversify, the report said.

But the key will be the political landscape.

"On the one hand, if the Islamic Republic maintains power in Iran and is able to develop nuclear weapons, the Middle East will face a highly unstable future," the report said. "On the other hand, the emergence of moderate, democratic governments or a breakthrough agreement to resolve the Israeli-Palestinian conflict could have enormously positive consequences."

Islamist terrorism might end by 2030, but terrorism is unlikely to disappear completely because states may use such groups due to a "strong sense of insecurity," the report said.

"With more widespread access to lethal and disruptive technologies, individuals who are experts in such niche areas as cyber systems might sell their services to the highest bidder, including terrorists, who would focus less on causing mass casualties and more on creating widespread economic and financial disruptions."

SPREAD OF LETHAL TECHNOLOGIES

The next two decades will see a spread of lethal technologies and a "wider spectrum of more accessible instruments of war" especially precision-strike, cyber and bioterror weapons, the report said.

"A cyber arms race is likely to occur" as states seek to defend infrastructure against cyber attacks and to incorporate cyber weapons in their arsenals.

"The degree to which cyber instruments will shape the future of warfare is unclear, however," it said.

War historians believe cyber power may end up similar to early 20th century projections of air power, which played a significant role but did not turn out to be the war-winning capability that some enthusiasts had predicted, the report said.

"The potential opened up by information technology is for future 'do-it-yourself' revolutions conducted by networked social movements that employ information technologies which communicate and collaborate with like-minded individuals," it said. – Reuters