China is set to overtake the U.S. as the world's largest economy in U.S. dollar terms over the next decade, according to a new report by IHS Economics.
IHS measured the size of China's economy in U.S. dollar terms, rather than using purchasing power parity - a technique used to determine the relative value of different currencies - which other research houses have used in the past.
Last month, the International Comparison Program - backed by the World Bank and the United Nations - forecast China could overtake the U.S. as soon as this year, based on the PPP measure. The research puts China's gross domestic product (GDP) at 87 percent of the U.S. in 2011, compared to 43 percent in 2005.
Those who use the PPP measure argue that it is a more accurate measure of the cost of living. IHS told CNBC it chose to evaluate the size of China's economy in dollar terms because it was a more definitive measure.
"Over the next 10 years, China's economy is expected to re-balance towards more rapid growth in consumption, which will help the structure of the domestic economy as well as growth for the Asia Pacific (APAC)as a region," said Rajiv Biswas, chief Asia economist for IHS Economics.
This surge in consumer spending will see China's nominal gross domestic product hit $28.25 trillion by 2024 from its current $10 trillion, larger than the $27.31 trillion projected for the U.S., the research firm said.U.S. nominal GDP currently stands at $17.4 trillion.