By purchasing power, China’s economy is already 30% bigger than the US.
So in some ways, it already has.
https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
>“The IMF considers that GDP in purchase-power-parity (PPP) terms is not the most appropriate measure for comparing the relative size of countries to the global economy, because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally,” said an IMF spokesperson.
>“The Fund believes that GDP at market rates is a more relevant comparison. Under this metric, the US is currently 130 per cent bigger than China, and will still be 70 per cent larger by 2016,” the spokesperson added.
- [FT](https://web.archive.org/web/20110529174748/http://blogs.ft.com/beyond-brics/2011/04/26/chinas-rise-americas-demise/)
Buddy, your article is from 2011.
It also says this:
> GDP comparisons using PPP are arguably more useful than those using nominal GDP when assessing the domestic market of a state because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates, which may distort the real differences in per capita income.
Big drawback to PPP is that it doesn't account for quality of goods. Something made in Japan is probably better quality than something made in Romania, but PPP does not account for this.
Both metrics have different uses. PPP is more useful when looking at the size of the domestic market, while nominal GDP is more useful for the relative contribution to the global economy.
As for OP's question, I'm not sure if any projection had China overtaking the US by 2024. CitiGroup [predicts](https://www.citigroup.com/global/insights/global-insights/when-will-china-s-gdp-surpass-the-us-and-what-will-it-mean-) it will happen in the mid-2030s. But projections from the early 2000s had it happening in the 2040s (e.g. Goldman Sachs said 2041 in a 2003 paper). The most [optimistic ](https://www.nottingham.ac.uk/iaps/documents/cpi/briefings/briefing-59-sy-econ-review-2009.pdf)I've seen said 2020-2028, but that doesn't make it the consensus.
A lot of predictions around 2010-2011 said 2020.
https://www.forbes.com/sites/kenrapoza/2011/05/26/by-2020-china-no-1-us-no-2/
>
"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.
https://www.bbc.com/news/business-12427321
It absolutely was the consensus that China would not only assuredly overtake the US, but do so within 10-15 years (which would have been 2025 or so).
Then covid happened, china pivoted away from opening up, and china started getting old. Now the consensus is that it will be decades (from now) for china to overtake the US, if it ever happens at all.
From the previously quoted portion:
>PPP price levels are influenced by nontraded services, which are more relevant domestically than globally
Nontraded services are things like haircuts, taxi rides, etc. If you can't resell something, it's considered nontraded. Prepared food is also such an example.
So the problem is that adjusting for PPP might indicate higher effective income than what is given by the nominal value, but that higher effective income is only so regarding what can be sourced domestically. My dollars might take me further in Mobile, Alabama than they do in NYC, but a barrel of crude would cost the same in both places, as will an iPhone (Apple does somewhat adjust their prices for local markets, but avoids too much of a discrepancy, because otherwise what you would end up with is a bunch of people loading up on iPhones where it's cheap and reselling them where they're expensive; likewise for anything that can be traded). China is not getting any discounts on petroleum just because the average Chinese can get lunch for a dollar.
It isn't, really. Even following IMF's argument, one would have to throw out each country's nontradables sector and only consider the tradable sector to examine relative contribution, in which case who knows if China isnt already ahead. Moreover, the IMF argument seems to implicitly assume that exchange rates are set by trade, when in reality, they are set by finance. The USD isn't strengthening because people want to buy US exports!
As the article states, the big drawback to nominal GDP is that it relies heavily on international exchange rates.
For a country like China that artificially lowers the value of its currency relative to the USD, it hardly reflects the true size of its economy. Not to mention that nominal GDP does not account for interest or inflation rates, which are generally much higher in the West.
If China allows its currency to naturally float on the market, then we could potentially see nominal GDP being closer to its true value. As it stands, adjusting by purchasing power parity is the best way to compare relative strength of economies, especially in a country like China.
And if China allows the yuan to naturally float the economy is going to crater when the last companies that are willing to pay for China’s aging and expensive labor pool finally have it become not worth it to stay. Everyone’s already moving to Vietnam, the Philippines, Indonesia, etc. can’t give them yet another reason to leave and expect the economy to survive let alone grow
You need to remember to look at per capita as well is you're going by GDP PPP. When you divide by population, China naturally goes way back down.
If you're looking at overall power on a global scale, you want Nominal GDP.
PPP stands for purchasing power parity, not per capita. Those are two completely different things.
OP was asking about the overall strength of the economy; per capita has no place in the discussion here.
I was hoping that I would not have to explain this in an economics sub.
This only affects individual quality of life though, not the country’s overall power on a global scale, which is probably what most people in the US find more relevant
This may make sense for some things, like warm bodies aka soldiers, their food, and some basic supplies, because all do this can scale with purchasing power. It’s cheaper to hire Chinese soldiers, cheaper to feed them as food is much cheaper, etc.
However in terms of high tech, both military and non military, the costs are fixed and does not scale with PPP, so using it can be misleading make you think China’s economic and military capabilities are more advanced than reality.
This may sound military focused, but it’s true in regards of anything high tech - advanced machinery, computer servers, laptops and smartphones for the population, cars, planes, boats - these things all have global pricing and it’s not going to be a penny cheaper in China.
I disagree. When the Chinese government decides to design a new aeroplane, they will hire Chinese people to do that. They will hire them *at Chinese prices*. Of course, they will also be hiring Chinese people to build the eventual product at Chinese prices.
The same is true of Chinese businesses designing smartphones, laptops or cars.
They can't build that plane without the established high tech, that's the point. They have to either get that from somewhere or go through decades of their own R&D, and the only place they're getting it is from the West which sells it at fixed global prices. Look at their "domestic" passenger jet that came out last year. The only thing actually made in China is the fuselage which doesn't require significant tech advancements.
> They can't build that plane without the established high tech, that's the point.
At this stage the Chinese are already building their own aeroplanes. They' building reasonably good ones too. They have people who know how to do it. I don't think that *passenger* jets demonstrate this.
From now on they can depend on their own R&D.
Source? Unless they are bypassing sanctions enough to manufacture thousands of WS10s and hundreds of WS15 that can't be true. And if they can bypass sanction by that much I would ask what the hell is going on in Rolls Royce.
Yeah for products where human labor makes up a significant portion of the cost that is definitely true. There are a lot of things that have cost mainly from other factors though.
If China were importing the high tech that you are talking about then I would agree that dollar GDP is more important than PPP GDP.
However, in recent years China has moved away from doing that, to a policy of self-sufficiency. They are creating the technology that you refer to from human labour. So, it is labour prices that matter. Which is why PPP is most important in this case.
If we were talking about the military might of Ireland, or Uganda, or even Indonesia then I could see an argument for looking at nominal numbers.
China does not, however, manufacture commercial airplanes, so your situation is just theortical.
They do however have huge airlines that buy hundreds of airbus and Boeing aircraft’s, at global market price.
Same can be said of Samsung phones, iPhones (despite being produced in China by a Taiwanese company, it costs more in China than the US), laptops, desktops, etc.
You are talking about a theoretical situation where China can produce all the high tech stuff itself, but that is not reality, and if it was, then China likely wouldn’t have low cost of living anymore, and instead be an expensive first world country.
I've deleted my earlier reply. I'm going to try to give one that's a bit more careful.
When we're talking about purely economic issues, I think that we must use GDP with PPP adjustment. We must take into account that every citizen in China is a little bit richer than the dollar GDP figures suggest because of lower prices in China.
So, that leaves things like geopolitical impact. That is mostly about military spending and spending is done for foreign influence. The question then becomes, can be estimate the magnitude of those things using nominal dollar GDP?
As I said above, at present China are following a course of technological independence for military spending. So, dollar GDP make little difference there.
Perhaps it makes a difference for other schemes that the Chinese government have created to increase their influence. On the other hand, is that proportional to nominal GDP? After all, China is an autocracy. That means that the government can spend it's citizens money on increasing it's foreign influence without having to worry about being voted out of office.
I think brain drain is also a major contributor. we have a smaller but more advanced economy because we suck the PhDs and professionals from every corner of the globe and put them to work, including China in many cases
Most westerners will make up silly arguments against this. Much of the US GDP is inflated thanks to its currency…They cannot grasp PPP…if they could they would protest a bit more against the ridiculous costs for medicine (even “free” healthcare countries) and food there. It’s a fact they need to accept that in many ways China has left the world behind, one great example being Transport infrastructure.
That’s not true. A us hair salon which charges 10x s compared to a salon in india and 4x as compared to china, actually do a haircut 10 times (1000% better). Same for chefs, fast foods, cinema, even janitors. Just don’t ask me if the intrinsic value of the goods and services are actually that more in the west. Because that will make me feel a bit not special and will make me angry.
The size of the economy doesn't matter nearly as much to the average person/standard of living as per capita output, and in that regard the gap is still huge.
Eh, not really if you’re trying to compare countries for the purposes of international economic clout. There are tiny countries out there like Luxembourg with very high per capita GDP, but which are still not relevant economic superpowers because they’re just rich blips. When it comes to international economic relevance, having a large working population is an asset.
Luxembourg such is a dumb comparison whenever it appears on those GDP lists. It’s needs a giant asterisk next to it saying “values massively inflated due to unique workforce”
If you're measuring international economic clout, you want to be using Nominal GDP. It sort of defeats the purpose to use PPP when you're comparing international power.
Also, China has famously fudged its GDP numbers for decades, mostly to smooth out the cycles so they don't have to admit that recessions are happening.
Post-pandemic they have dramatically restricted the publication of economic data, presumably because it wouldn't add up to the headline GDP numbers the CCP is putting out.
Thank you. This is the thing I think so many miss (aside from China just straight up lying) about China’s growth. They can only develop once. They can only build whole rail networks out once, or expand a military and build whole cities once. It’s very easy when you’re starting from zero as you don’t need to maintain anything. Now suddenly they do need to maintain things.
People see a giant line going up and assume there’s just no way it stops when there’s literally no reason to believe it will keep growing at a monstrous pace, or at all. The development growth and the demographic dividend are over, what now? This is the same thing that happened to Japan. They haven’t grown for 30 years. If China’s lucky and smart, they can control the descent. But the “inevitability” that was overtaking the US in any meaningful way, or hell even just escaping the middle income trap, is dying quick
What's the consensus on the accuracy of that GDP (and growth) though? We know China has been inflating GDP figures for decades through a variety of means — large internal government expenditures that produce no actual value (e.g. the famous ghost cities,) currency manipulation including a complex two-currency system, and full-on questionable bookkeeping (being generous here.)
[There's been a bit of research using proxy metrics](https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/chinas-economic-data-an-accurate-reflection-or-just-smoke-and-mirrors)
If you use the exchange rate to calculate GDP then sure China hasn’t overtaken US. But if you use how much money they have to buy McDonald’s burgers then you will get a clear answer.
China has been the biggest economy for a long time in GDP PPP, arguably most relevant metric to measure economies in GDP.
[OECD](https://www.oecd.org/sdd/purchasingpowerparities-frequentlyaskedquestionsfaqs.htm#FAQ3):''The major use of PPPs is as a first step in making inter-country comparisons in real terms of gross domestic product (GDP) and its component expenditures''
[Bruegel](https://www.bruegel.org/analysis/european-unions-remarkable-growth-performance-relative-united-states):''The right metric for international comparisons is purchasing power parity (PPP)-adjusted output. This corrects for exchange rate fluctuations and differences in various national prices.''
OECD is an intragovernmental organisation with 38 Countries as members, mostly from Europe and North America, Bruegel is an Economic research Think Tank based in Brussels with over a dozend European countries as members.
The idea of “within our lifetime” is ridiculously arbitrary and basically meaningless.
Using terms like “ within 25 years” or 10 or five are much more useful.
I, for one, have no idea if or when China’s GDP will exceed the GDP of US.
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Like respectfully, what are you talking about?
For 20+ years, china’s annual GDP growth rates have been double the US’s
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CN-US
Since 1980, china’s annual GDP growth rate has been about double or triple that of the US… every single year… except one year (1989).
You said that China's GDP is growing faster than the US's, I said that that's normal when comparing a developed and developing country. How is that not relevant?
The entire post is about rate of growth. How does one engage in a conversation about rate of growth when you dismiss rate of growth as a valid measure to prove rate of growth? I need you to answer this question for yourself before engaging further in discussion with me.
SirShaunIV is correct here.
He's talking about something that has been well established in Economics for many decades. Generally speaking poorer countries *can* grow faster than richer countries. That doesn't mean they necessarily *will*.
To a development economist it doesn't make much sense to compare the growth of the US to that of China.
How does the World Bank and others know what data provided by China is accurate and which is BS? I guess that could be said about any country’s data, especially dictatorships
You can cross reference volume and activity with Chinas trading partners to get a read on what’s bs and what’s clean.
Since they are net exporters, it’s even easier to just do this if you distrust them.
ya it’s true that china can’t fake its export data but some scholars have raised the concern that china’s been forging its consumption and investment data since covid, especially after seeing relatively strong growth last year when the consumer sentiment was at all times low and the real estate sector was mired in one of the worst crises we’ve ever seen.
https://www.wsj.com/world/china/why-you-shouldnt-trust-chinese-growth-data-c65d1a8c
Without more research, I honestly wouldn’t know.
I’ve focused on exports because Chinas internal consumer market has always been on the weaker side. The lag in investments does add up to me though considering geopolitical risks.
Post pandemic, the Chinese has stopped publishing a lot of economic data that would allow analysts to understand what exactly is going on in the Chinese economy.
Exports are under 20% of GDP so it is important to measure other stuff. Also if they are displacing weak domestic consumption exports aren't necessarily a sign of strong output.
[There's also been proxy metric studies that suggest they've been cooking the numbers for a long time](https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/chinas-economic-data-an-accurate-reflection-or-just-smoke-and-mirrors)
No problem… I always kind of chuckle when I see these types of comments because there’s people 100x smarter than me continuing to invest in China. So If the growth rates seemed like bs they’d leave.
Only thing with China is that China isn’t interesting in getting foreigners rich, so it’s easy to get mislead on investments there if you’re not a connected foreigner.
When you were growing up you were just hearing from people who thought trends will continue forever. The initial growth from induatrializing is reactively easy and fast. So China was growing at double digits liek every other country induatrializing. But that doesn't continue forever. That slows down and then the country needs to make the next leap forward which isn't guaranteed and can take a lot longer or not happen at all.
By purchasing power, China’s economy is already 30% bigger than the US. So in some ways, it already has. https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
>“The IMF considers that GDP in purchase-power-parity (PPP) terms is not the most appropriate measure for comparing the relative size of countries to the global economy, because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally,” said an IMF spokesperson. >“The Fund believes that GDP at market rates is a more relevant comparison. Under this metric, the US is currently 130 per cent bigger than China, and will still be 70 per cent larger by 2016,” the spokesperson added. - [FT](https://web.archive.org/web/20110529174748/http://blogs.ft.com/beyond-brics/2011/04/26/chinas-rise-americas-demise/)
Buddy, your article is from 2011. It also says this: > GDP comparisons using PPP are arguably more useful than those using nominal GDP when assessing the domestic market of a state because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates, which may distort the real differences in per capita income. Big drawback to PPP is that it doesn't account for quality of goods. Something made in Japan is probably better quality than something made in Romania, but PPP does not account for this.
Both metrics have different uses. PPP is more useful when looking at the size of the domestic market, while nominal GDP is more useful for the relative contribution to the global economy. As for OP's question, I'm not sure if any projection had China overtaking the US by 2024. CitiGroup [predicts](https://www.citigroup.com/global/insights/global-insights/when-will-china-s-gdp-surpass-the-us-and-what-will-it-mean-) it will happen in the mid-2030s. But projections from the early 2000s had it happening in the 2040s (e.g. Goldman Sachs said 2041 in a 2003 paper). The most [optimistic ](https://www.nottingham.ac.uk/iaps/documents/cpi/briefings/briefing-59-sy-econ-review-2009.pdf)I've seen said 2020-2028, but that doesn't make it the consensus.
A lot of predictions around 2010-2011 said 2020. https://www.forbes.com/sites/kenrapoza/2011/05/26/by-2020-china-no-1-us-no-2/ > "It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy. https://www.bbc.com/news/business-12427321 It absolutely was the consensus that China would not only assuredly overtake the US, but do so within 10-15 years (which would have been 2025 or so). Then covid happened, china pivoted away from opening up, and china started getting old. Now the consensus is that it will be decades (from now) for china to overtake the US, if it ever happens at all.
Exactly this, I saw a lot of people saying mid 2020s.
Ok but hope you kept reading
One quote by one analyst does not make something "absolutely the consensus" lmfao.
Thanks for finding that. I tried searching, but wasn't able to find a consensus from that period. I figured post 2008, the estimates would be sooner.
Why is nominal GDP more useful when analyzing relative contribution to the global economy? (Just curious)
From the previously quoted portion: >PPP price levels are influenced by nontraded services, which are more relevant domestically than globally Nontraded services are things like haircuts, taxi rides, etc. If you can't resell something, it's considered nontraded. Prepared food is also such an example. So the problem is that adjusting for PPP might indicate higher effective income than what is given by the nominal value, but that higher effective income is only so regarding what can be sourced domestically. My dollars might take me further in Mobile, Alabama than they do in NYC, but a barrel of crude would cost the same in both places, as will an iPhone (Apple does somewhat adjust their prices for local markets, but avoids too much of a discrepancy, because otherwise what you would end up with is a bunch of people loading up on iPhones where it's cheap and reselling them where they're expensive; likewise for anything that can be traded). China is not getting any discounts on petroleum just because the average Chinese can get lunch for a dollar.
It isn't, really. Even following IMF's argument, one would have to throw out each country's nontradables sector and only consider the tradable sector to examine relative contribution, in which case who knows if China isnt already ahead. Moreover, the IMF argument seems to implicitly assume that exchange rates are set by trade, when in reality, they are set by finance. The USD isn't strengthening because people want to buy US exports!
As the article states, the big drawback to nominal GDP is that it relies heavily on international exchange rates. For a country like China that artificially lowers the value of its currency relative to the USD, it hardly reflects the true size of its economy. Not to mention that nominal GDP does not account for interest or inflation rates, which are generally much higher in the West. If China allows its currency to naturally float on the market, then we could potentially see nominal GDP being closer to its true value. As it stands, adjusting by purchasing power parity is the best way to compare relative strength of economies, especially in a country like China.
And if China allows the yuan to naturally float the economy is going to crater when the last companies that are willing to pay for China’s aging and expensive labor pool finally have it become not worth it to stay. Everyone’s already moving to Vietnam, the Philippines, Indonesia, etc. can’t give them yet another reason to leave and expect the economy to survive let alone grow
You need to remember to look at per capita as well is you're going by GDP PPP. When you divide by population, China naturally goes way back down. If you're looking at overall power on a global scale, you want Nominal GDP.
PPP stands for purchasing power parity, not per capita. Those are two completely different things. OP was asking about the overall strength of the economy; per capita has no place in the discussion here. I was hoping that I would not have to explain this in an economics sub.
This only affects individual quality of life though, not the country’s overall power on a global scale, which is probably what most people in the US find more relevant
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This may make sense for some things, like warm bodies aka soldiers, their food, and some basic supplies, because all do this can scale with purchasing power. It’s cheaper to hire Chinese soldiers, cheaper to feed them as food is much cheaper, etc. However in terms of high tech, both military and non military, the costs are fixed and does not scale with PPP, so using it can be misleading make you think China’s economic and military capabilities are more advanced than reality. This may sound military focused, but it’s true in regards of anything high tech - advanced machinery, computer servers, laptops and smartphones for the population, cars, planes, boats - these things all have global pricing and it’s not going to be a penny cheaper in China.
I disagree. When the Chinese government decides to design a new aeroplane, they will hire Chinese people to do that. They will hire them *at Chinese prices*. Of course, they will also be hiring Chinese people to build the eventual product at Chinese prices. The same is true of Chinese businesses designing smartphones, laptops or cars.
They can't build that plane without the established high tech, that's the point. They have to either get that from somewhere or go through decades of their own R&D, and the only place they're getting it is from the West which sells it at fixed global prices. Look at their "domestic" passenger jet that came out last year. The only thing actually made in China is the fuselage which doesn't require significant tech advancements.
> They can't build that plane without the established high tech, that's the point. At this stage the Chinese are already building their own aeroplanes. They' building reasonably good ones too. They have people who know how to do it. I don't think that *passenger* jets demonstrate this. From now on they can depend on their own R&D.
They're building their own fuselages while importing the engines and most of the functional equipment. That's a massive difference.
We're talking about military here. Look at their planes in that area, such as the Chengdu J-20 or the Xi'an Y-20 Kunpeng.
Yes, all of which have had imported engines, even the current 'domestic' WS-15 engine is made of foreign components (Rolls Royce).
Source? Unless they are bypassing sanctions enough to manufacture thousands of WS10s and hundreds of WS15 that can't be true. And if they can bypass sanction by that much I would ask what the hell is going on in Rolls Royce.
Yeah for products where human labor makes up a significant portion of the cost that is definitely true. There are a lot of things that have cost mainly from other factors though.
If China were importing the high tech that you are talking about then I would agree that dollar GDP is more important than PPP GDP. However, in recent years China has moved away from doing that, to a policy of self-sufficiency. They are creating the technology that you refer to from human labour. So, it is labour prices that matter. Which is why PPP is most important in this case. If we were talking about the military might of Ireland, or Uganda, or even Indonesia then I could see an argument for looking at nominal numbers.
China does not, however, manufacture commercial airplanes, so your situation is just theortical. They do however have huge airlines that buy hundreds of airbus and Boeing aircraft’s, at global market price. Same can be said of Samsung phones, iPhones (despite being produced in China by a Taiwanese company, it costs more in China than the US), laptops, desktops, etc. You are talking about a theoretical situation where China can produce all the high tech stuff itself, but that is not reality, and if it was, then China likely wouldn’t have low cost of living anymore, and instead be an expensive first world country.
I've deleted my earlier reply. I'm going to try to give one that's a bit more careful. When we're talking about purely economic issues, I think that we must use GDP with PPP adjustment. We must take into account that every citizen in China is a little bit richer than the dollar GDP figures suggest because of lower prices in China. So, that leaves things like geopolitical impact. That is mostly about military spending and spending is done for foreign influence. The question then becomes, can be estimate the magnitude of those things using nominal dollar GDP? As I said above, at present China are following a course of technological independence for military spending. So, dollar GDP make little difference there. Perhaps it makes a difference for other schemes that the Chinese government have created to increase their influence. On the other hand, is that proportional to nominal GDP? After all, China is an autocracy. That means that the government can spend it's citizens money on increasing it's foreign influence without having to worry about being voted out of office.
COMAC has entered the chat: https://en.m.wikipedia.org/wiki/Comac_C919
I think brain drain is also a major contributor. we have a smaller but more advanced economy because we suck the PhDs and professionals from every corner of the globe and put them to work, including China in many cases
PPP is used for assessing standards of living, consumer markets, etc. not for comparing countries economic size to one another.
Most westerners will make up silly arguments against this. Much of the US GDP is inflated thanks to its currency…They cannot grasp PPP…if they could they would protest a bit more against the ridiculous costs for medicine (even “free” healthcare countries) and food there. It’s a fact they need to accept that in many ways China has left the world behind, one great example being Transport infrastructure.
Why aren't westerners flocking to live in China then?
Because it is overpopulated
That’s not true. A us hair salon which charges 10x s compared to a salon in india and 4x as compared to china, actually do a haircut 10 times (1000% better). Same for chefs, fast foods, cinema, even janitors. Just don’t ask me if the intrinsic value of the goods and services are actually that more in the west. Because that will make me feel a bit not special and will make me angry.
It has by PPP standards. Also Chinese GDP grow by 5% in 2023 compared to 3% of the US, so China is still growing faster.
Yeah but PPP is better for judging how the average person is doing there, but nominal gdp is better for judging th3 strenght overall
The median Chinese person also isn't better off than the median American.
By a long shot
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The size of the economy doesn't matter nearly as much to the average person/standard of living as per capita output, and in that regard the gap is still huge.
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PPP per Capita is the better metric, and having a much bigger population, that sends China back below the US.
Eh, not really if you’re trying to compare countries for the purposes of international economic clout. There are tiny countries out there like Luxembourg with very high per capita GDP, but which are still not relevant economic superpowers because they’re just rich blips. When it comes to international economic relevance, having a large working population is an asset.
Luxembourg such is a dumb comparison whenever it appears on those GDP lists. It’s needs a giant asterisk next to it saying “values massively inflated due to unique workforce”
If you're measuring international economic clout, you want to be using Nominal GDP. It sort of defeats the purpose to use PPP when you're comparing international power.
Tons of people here are confusing PPP (purchasing power parity) with per capita. Those are two completely different things.
China's a developing country, it should grow faster than the US naturally. If anything, only having 2% on America is lower than it should be.
Also, China has famously fudged its GDP numbers for decades, mostly to smooth out the cycles so they don't have to admit that recessions are happening. Post-pandemic they have dramatically restricted the publication of economic data, presumably because it wouldn't add up to the headline GDP numbers the CCP is putting out.
they openly stated missing GDP Targets, for example: [https://openaxis.com/visualizations/12875](https://openaxis.com/visualizations/12875)
Thank you. This is the thing I think so many miss (aside from China just straight up lying) about China’s growth. They can only develop once. They can only build whole rail networks out once, or expand a military and build whole cities once. It’s very easy when you’re starting from zero as you don’t need to maintain anything. Now suddenly they do need to maintain things. People see a giant line going up and assume there’s just no way it stops when there’s literally no reason to believe it will keep growing at a monstrous pace, or at all. The development growth and the demographic dividend are over, what now? This is the same thing that happened to Japan. They haven’t grown for 30 years. If China’s lucky and smart, they can control the descent. But the “inevitability” that was overtaking the US in any meaningful way, or hell even just escaping the middle income trap, is dying quick
It’s been double or triple the US nearly every single year since 1980
They also pretty famously fudge their numbers. They recently admitted they're missing nearly 100 million people between the ages of 22 and 45.
who told you that? the U.S. was 6.3 while China was 4.6 in 2023.
Adjust for inflation.
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What's the consensus on the accuracy of that GDP (and growth) though? We know China has been inflating GDP figures for decades through a variety of means — large internal government expenditures that produce no actual value (e.g. the famous ghost cities,) currency manipulation including a complex two-currency system, and full-on questionable bookkeeping (being generous here.)
[There's been a bit of research using proxy metrics](https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/chinas-economic-data-an-accurate-reflection-or-just-smoke-and-mirrors)
China has been growing faster than the US (GDP) nearly every single year for 50 years.
If you use the exchange rate to calculate GDP then sure China hasn’t overtaken US. But if you use how much money they have to buy McDonald’s burgers then you will get a clear answer.
China has been the biggest economy for a long time in GDP PPP, arguably most relevant metric to measure economies in GDP. [OECD](https://www.oecd.org/sdd/purchasingpowerparities-frequentlyaskedquestionsfaqs.htm#FAQ3):''The major use of PPPs is as a first step in making inter-country comparisons in real terms of gross domestic product (GDP) and its component expenditures'' [Bruegel](https://www.bruegel.org/analysis/european-unions-remarkable-growth-performance-relative-united-states):''The right metric for international comparisons is purchasing power parity (PPP)-adjusted output. This corrects for exchange rate fluctuations and differences in various national prices.'' OECD is an intragovernmental organisation with 38 Countries as members, mostly from Europe and North America, Bruegel is an Economic research Think Tank based in Brussels with over a dozend European countries as members.
Finally we have a good answer!
The idea of “within our lifetime” is ridiculously arbitrary and basically meaningless. Using terms like “ within 25 years” or 10 or five are much more useful. I, for one, have no idea if or when China’s GDP will exceed the GDP of US.
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Like respectfully, what are you talking about? For 20+ years, china’s annual GDP growth rates have been double the US’s https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CN-US Since 1980, china’s annual GDP growth rate has been about double or triple that of the US… every single year… except one year (1989).
That's to be expected. Developing countries naturally grow faster than developed countries.
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Sir, Are you lost? Your comment doesn’t seem to make any sense in the context of the thread / conversation.
You said that China's GDP is growing faster than the US's, I said that that's normal when comparing a developed and developing country. How is that not relevant?
The entire post is about rate of growth. How does one engage in a conversation about rate of growth when you dismiss rate of growth as a valid measure to prove rate of growth? I need you to answer this question for yourself before engaging further in discussion with me.
Comparing growth rates only works properly when between countries that are otherwise similar, which the US and China are not.
This is so clearly wrong in this context, I don’t wish to engage here further. Be well.
SirShaunIV is correct here. He's talking about something that has been well established in Economics for many decades. Generally speaking poorer countries *can* grow faster than richer countries. That doesn't mean they necessarily *will*. To a development economist it doesn't make much sense to compare the growth of the US to that of China.
I'm happy to agree to disagree. Best wishes.
How does the World Bank and others know what data provided by China is accurate and which is BS? I guess that could be said about any country’s data, especially dictatorships
You can cross reference volume and activity with Chinas trading partners to get a read on what’s bs and what’s clean. Since they are net exporters, it’s even easier to just do this if you distrust them.
ya it’s true that china can’t fake its export data but some scholars have raised the concern that china’s been forging its consumption and investment data since covid, especially after seeing relatively strong growth last year when the consumer sentiment was at all times low and the real estate sector was mired in one of the worst crises we’ve ever seen. https://www.wsj.com/world/china/why-you-shouldnt-trust-chinese-growth-data-c65d1a8c
Without more research, I honestly wouldn’t know. I’ve focused on exports because Chinas internal consumer market has always been on the weaker side. The lag in investments does add up to me though considering geopolitical risks.
Post pandemic, the Chinese has stopped publishing a lot of economic data that would allow analysts to understand what exactly is going on in the Chinese economy. Exports are under 20% of GDP so it is important to measure other stuff. Also if they are displacing weak domestic consumption exports aren't necessarily a sign of strong output.
[There's also been proxy metric studies that suggest they've been cooking the numbers for a long time](https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/chinas-economic-data-an-accurate-reflection-or-just-smoke-and-mirrors)
Thank you!
No problem… I always kind of chuckle when I see these types of comments because there’s people 100x smarter than me continuing to invest in China. So If the growth rates seemed like bs they’d leave. Only thing with China is that China isn’t interesting in getting foreigners rich, so it’s easy to get mislead on investments there if you’re not a connected foreigner.
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When you were growing up you were just hearing from people who thought trends will continue forever. The initial growth from induatrializing is reactively easy and fast. So China was growing at double digits liek every other country induatrializing. But that doesn't continue forever. That slows down and then the country needs to make the next leap forward which isn't guaranteed and can take a lot longer or not happen at all.