According to the International Monetary Fund, when looking at purchasing-power, China is right now overtaking the US to become the world’s largest economy.
By the end of this year, China will constitute 16.48% of the world’s purchasing-power and the US will make up 16.28%.
This is according to ‘adjusted purchasing power’:
The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than in San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.
So the IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world’s biggest economy.
We’ve just gone past that crossover on the chart below, according to the IMF. By the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion):
IMF, Google Public Data Explorer
It’s not all sour news for the US. It’ll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US and isn’t likely to overtake for quite some time:
IMF, Google Public Data Explorter
Thanks Obama your policys have pretty much destroyed this country
Its the whole system obama just gave us the belly flop finish
looks as if china is becoming what the USA was in the 50s,60s,and early 70s and the USA is becoming what china and even the soviet union was in the 50s,60s,70,and 80s.
Yep, we’re doomed.
Sad
Joshua ! Put down the Kool aid and snap out of it!
We could pay it off if we really wanted to. We have the GDP. The Chinese outnumber us and are more strictly controlled so it doesn’t surprise me that they’re more productive.
It’s Obamas fault!
not good
They may be the biggest but they are not free people!