It’s Official: China Dethrones America As Largest Economy

Under One Test

We reported in April 2012 that leading Chinese economic analyst (and American ex-pat) professor Michael Pettis argued in 2011 that China’s GDP might already higher than America’s in terms of purchasing power parity.

And we noted that Arvind Subramanian – former assistant director in the Research Department of the International Monetary Fund, and now senior fellow jointly at the Peterson Institute for International Economics – says that China passed up the USA in 2010.

Financial Times reported in April:

The US is on the brink of losing its status as the world’s largest economy, and is likely to slip behind China this year, sooner than widely anticipated, according to the world’s leading statistical agencies.

Now, it’s official …

As Huffington Post notes:

China’s gross domestic product is worth $17.6 trillion, adjusted for China’s relatively low cost of living, compared with $17.4 trillion for the U.S., the International Monetary Fund estimated as part of its latest World Economic Outlook. Here’s how that looks in chart form:

china gdp

Note the chart extends to 2018. The IMF expects this trend to continue indefinitely.


Here’s another way of looking at it — China’s share of the global economy is now slightly bigger than America’s, at 16.5 percent to 16.3 percent:

china share

It’s important to note that these figures are adjusted for the relative costs of living in both countries, known to fancy economists as “purchasing power parity.” It’s something economists do to try to make comparisons between countries more fair. It is crazy cheap to live in China and crazy expensive to live in the U.S., so a trillion U.S. dollars are worth a lot more in China than in the U.S.

And that has something to do with the fact that China is manipulating its currency to be worth much less than the dollar. It does this to help make Chinese stuff cheaper than U.S. stuff on the global market. American politicians regularly pretend to be super angry about this, but don’t much mind getting all the cheap Chinese stuff. And China’s booming factory sector has, in turn, helped make China’s economy rapidly get bigger and bigger.

In terms of sheer size, however — meaning, not adjusted for costs of living — the U.S. economy still dwarfs China’s, at $17.4 trillion to $10.4 trillion:

absolute dollars

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  • tate matson

    I disagree with the premise that China’s economy is bigger than the US’s no matter what form of analysis is used to determine that. And it is not expensive to live in the US compared to China, Japan, Europe, etc. It is cheaper here. Obviously certain cities are expensive. Housing prices in China’s city are crazy high–and they are more cheap apartments sold as high end condo’s it really is a housing bubble that will pop one day. Housing in China is not like here in the USA where most people live in single family homes–in a nation of over billion—and that billion is by government design clustered together. Anyway–the costs for say a private education for a child in China average around 40 to 60k a year in Begin–that is not the price for a University–that is primary, etc schools. It is outrageous. And that is why China is having troubles keeping Ex Pats in the Country–which for a developing nation is important…..I think that this entire story was mfg by the Chinese and their Allies here in the US to placate the angry poor Chinese who work their buts off while the government officials keep all the money. Basically they are telling them hey your now doing better then those capitalist pigs–I doubt they show them how the average person lives here in the USA otherwise there would be riots for sure over there since they literally work in factories with DORMS….and plus the Chinese and their allies here are trying to degrade the pride and determination of the American People. I also want to add my niece a single mother who works as a bartender makes enough to own her own house 3 bedroom with 1 bath big yard and she just paid off her 4 year old Honda. And her son goes to a private elementary which we all help pay the tuition. Compare her life to a similar position in China–I really doubt a single non-college educated woman raising a child would be able to own her own home and drive a nice sporty Honda……..

    • TruthTime

      China and its people will figure out their issues on their own, whether they dethrone their leaders or not. It is an ancient country with a unique history. As an outside observer, such as myself – I never been to China and I did not grow up there, I do not feel that my life is anyway exceptional as an American living the “Capitalist” dream.

      So please kindly shut your hole about the “Chinese and their allies” trying to degrade the wondrous, Ubermensch American people in the United States of Rome. Do you think all Chinese people are that clueless as to what their leaders are up to or if they are lied to? They are in the same boat us, merely controlled in a different way.

      Spot the difference:

      And great your family has leveled up in living the Capitalism All American Dream! Do you want a pat on the back? Both my parents are POVERTY level getting by paycheck to paycheck, can’t afford to buy a home, can’t afford new vehicles, and have large debts they have tried to get rid of for some time. I am more well off, luckily landing a job in my field of work and I often take care of them the best I can.

      Current Oligarchical-Fascistic Capitalist Corporatism in the U.S. is fed by the enormous war debt this country possesses, year after year, decade after decade, another country to invade, more people to assassinate, more “regime change,” more war debt, and more debt and poverty level for my relatives and everyone else not lucky enough to make it in the wondrous, morally bankrupt society.

      Meanwhile AMERICAN corporations KNOWING full well of the poor conditions for Chinese workers, don’t fucking care, its just cheap labor to them to exploit. Exploit third world nations abound as well. Bomb and torture millions since WW2, its all just business as usual for the United States of Rome. And the Fall of the United States of Rome happens, it will be oh so bitter sweet.

      • tate matson

        I am sorry, I did not intend to disrespect the Chinese People, I know very much about the rich and long history of China. I hope some day the Chinese will open the first Emperor’s tomb in China, it most likely will be the most amazing burials ever, the Terra Cotta Army guarding him into the afterlife has definite brought him immortality….I am not a fan of either of our governments, people in power tend to help themselves, which is understandable, we are all people and make mistakes. Sorry but my american trash talk was targeted at both the US and pretty much world Governments.


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