China’s retail sector will become the second biggest in the world by 2015, overtaking Japan and reaching a value of US$15.8trn by 2025, according to a new report.

'Mega Trends in China: Macro to Micro Implications of Mega Trends to 2025,' an analysis by Frost & Sullivan, has identified a number of trends that will drive China’s GDP growth rate to 16% by 2020.

The report estimates that China will become the world’s largest economy by 2025, with a nominal GDP value of $38trn, driven by a strong trend of urbanisation, a favourable corporate environment, huge infrastructure investment and the world’s largest working age population.

In the process, the report says, China will be transformed from the manufacturing site of the globe to one of the largest consumer markets.

Urbanisation will result in the creation of 13 “mega-cities”, four mega-regions and six mega-corridors by 2025, with the mega-cities contributing nearly $6.24trn to GDP.

“By 2025, an estimated 921m people or 65.4% of China’s population will live in cities, which is about 2.6 times the United States’ total population,” said Archana Amarnath, programme manager for Frost & Sullivan’s Visionary Innovation Research Group.

By 2025, China will have 922m people of working age – or 22% of the global workforce – and the “growing majority” of urban and young consumers will shape the demands of the future, influencing innovation and future product creation.