The economic rise of China and India as major global players by the year 2020 will have as profound an effect on the business and geopolitical landscape as the “advent of a united Germany in the 19th century and a powerful United States in the 20th century,” according to a report by the National Intelligence Council.

The report, titled “Mapping the Global Future: Report of the National Intelligence Council’s 2020 Project,” predicts China and India will be upcoming leaders in the global economy – currently $35 trillion – as major participants in the “next revolution in high technology involving the convergence of nano-, bio, information and materials technology.”

This will play a pivotal role in bolstering their economies on a global scale. China’s gross domestic product, or GDP, of $1.4 trillion, is said to have the potential to “exceed that of individual Western economic powers except for the United States” by 2020. India’s GDP – now $675 billion – will be “on the threshold of overtaking European economies” as well. The figure already is almost double that of Russia.

The NIC is a center of strategic thinking within the American government, reporting to the director of the Central Intelligence Agency and providing the president and senior policymakers with analyses of foreign policy issues that have been reviewed and coordinated throughout the intelligence community. Its reports are keenly followed by governments around the world, and also by business and financial communities.

The latest report – issued over the weekend – is based on conferences held in five different continents with foreign experts on the prospects for their regions. The NIC has forecasted the future at a point of great fluctuation in world affairs, citing the development of current global trends and evaluating the major forces that will shape the world of 2020.

Participants at the NIC conferences agreed that China and India are in fact surpassing America in investing in technology and education, which will render them ahead of America in technology at least in the next decade. China and India are pouring money into research and innovative technologies, and investing in efforts to become increasingly competitive in global markets. The report says that China alone is graduating three times as many engineering majors as America since its peak in 1985, It also says that security in the period following September 11, 2001, has hindered the entry of foreign students and availability of visas for international engineers. Privately funded research and development in America is on the decline, and multinational corporations formerly based in America are establishing their research centers elsewhere.

The technological and thus economical strength of Asian powers will undoubtedly have implications on Chinese and Indian foreign policy in terms of bilateral trade and cooperation at the very least.

Although this will cause a dramatic shift in the global distribution of power in terms of technology economies alone, the NIC said that America will remain “the most important single country across all the dimensions of power.” However, the manner in which America responds to this shift in global command in technology sectors alone will be a determining factor in shaping global economies and the actions of state and private-sector actors.

The NIC and the California-based Rand Corporation have compiled a list of “risks to Chinese economic growth” which could stifle growth by up to 10 percentage points. China’s annual GDP growth has averaged between 10% and 11% in the last five years, and India has been clipping along at between 6% and 8%.

The risks to Chinese growth include, but are not limited to, insufficient domestic energy sources to support the increasing populations and economies, and domestic political unrest. And backlash from other Southeast Asian nations may limit the power of China and India, and influence their foreign policies. While India’s working-age population will continue to grow through 2020, China’s working-age population will decrease over time due to its one-child policy. India’s population is 1.2 billion, and growing at the rate of 18 million each year, while China’s population, around 1.3 billion, is growing at about 15 million annually. Additionally, the report suggests that there may be inadequate land, water, and energy supplies available to support the rapid expansion of Chinese and Indian economies. India may be less susceptible to political unrest due to its “well-entrenched democratic institutions” whereas China’s mainly authoritarian political system may not be conducive to satisfying the needs of the average working citizen.

The report also suggests that Southeast Asian nations – including Japan and Taiwan – may adversely react to China’s escalating influence and try to “appeal to each other and the U.S.” in an attempt to correct the shift in power that is predicted to occur as China and India rise in the global economic landscape.