China to Overtake U.S.A as Biggest Economy in Purchasing Power Parity

[EmoBorg]

http://www.bloomberg.com/news/2014-...u-s-as-biggest-economy-using-ppp-measure.html

Bloomberg is reporting that the People's Republic of China is set to take over from the U.S, as the world's largest economy in terms of Purchasing Power Parity, later this year.

In terms of market rate, USA will remain the world largest economy till 2024 based on current estimates.

The market rate or the atlas method uses the U.S dollar to measure the economy. The U.S dollar being the most traded currency in the world and is often used for monetary transactions between countries.

The purchasing power parity method takes into account, the price differences between goods and services offered in each country. Most countries also do not use the U.S dollar for domestic monetary transactions.

The purchasing power parity method is considered more accurate, measuring economic output, when compared to the atlas method.

The U.S was the world largest economy, having taken the top spot from the U.K in 1872.

http://www.mining.com/world-bank-china-to-overtake-us-as-biggest-economy-this-year-32539/


Congratulations to the People's Republic of China.

 

[2takesfrakes]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Yeah, well, no shit. Who do you think is buying up all of the debt in the U.S., so that this economy doesn't tank? China, that's right ... same old, same old.

 

[BillJ]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Makes sense since they have 3 times the people.

 

[2takesfrakes]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

There is a danger here, though. Once those sweatshops in China start coming up to the 21st Century Standard, in terms of treatment and pay, you can expect to start paying a lot more for everything from work clothes to knick knacks. If the effect of that is it returns manufacturing jobs to America, then I'm sure we can all be happier about that ...

 

[Pingfah]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Don't hold your breath on that, there's only two groups in a position to effect that sort of change, the Chinese government and Western consumers. Neither of them are going to do anything of the sort any time soon.

 

[Robert Maxwell]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Where is the US going to get the money to rebuild our industrial infrastructure?

China?

 

[Bisz]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Makes sense since they have 3 times the people.

Closer to 4.5 times.

 

[TedShatner10]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Makes sense since they have 3 times the people.

Closer to 4.5 times.

Also in absolute terms, most of the worker drones in autocratic, over polluted China still have an overall poor quality of life, in spite of its miraculous development in manufacturing and infrastructure in the past couple of decades:

A century of American economy is about to come to an end. China is on the point of overtaking the US as the world's biggest economy. If Washington called the shots in the 20th Century, Beijing will be doing the same in the 21st.
These are the bald conclusions from reports showing that China is hard on the heels of the US in terms of its share of global GDP and that it won't be long – given current trends in growth rates - before the positions at the top are reversed.
Not so fast, though. China, by virtue of its population, was the world's biggest economy at the dawn of the industrial revolution but lagged behind as countries in Europe and North America industrialised rapidly. As soon as China started its period of catch-up at the end of the 1970s, it was only a matter of time before its sheer size would make it number one. What has been surprising is the speed at which that transformation has taken place, with the date at which the US loses its top dog status constantly brought forward.

John Hawksworth, chief economist at PwC, estimates that the big moment will arrive in 2020; the latest data suggests it could be as soon as this year.

There are two other points to bear in mind. The first is that the calculations rely on using purchasing power parity to assess the comparative size of economies. This allows for the fact that prices tend to be a lot lower in poor countries than they are in rich countries, so incomes stretch further. But the PPP measure can never be 100% reliable given the problems of comparing prices across the world, so it is impossible to be precise about when China will actually become the world's biggest economy.
The second – more significant – point is that even with the use of the PPP method, real living standards in China remain well behind those in the US. Per capita incomes in China, according to the OECD, are 75% of the global average, whilst those in the US are 370%. China's sheer size and its rapid growth rate mean that it is now a global force to be reckoned with when it comes to talks about economic management, trade and climate change. But on the measure that really matters to people – living standards – it remains a poor country.

The Guardian

 

[Brolan]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

There is a danger here, though. Once those sweatshops in China start coming up to the 21st Century Standard, in terms of treatment and pay, you can expect to start paying a lot more for everything from work clothes to knick knacks. If the effect of that is it returns manufacturing jobs to America, then I'm sure we can all be happier about that ...

Nah, they will just move to another country with cheap wages.

 

[Brolan]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Where is the US going to get the money to rebuild our industrial infrastructure?

China?

Tax the rich.

 

[Mudd]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

As our hegemony diminishes maybe we can finally get over the notion that we have to set the world right. Let nations on the other side of the planet sort out their own shit. Spend what we currently spend on excess military capacity and some of our aid to other governments on our own people and infrastructure.

 

[Hound of UIster]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

Makes sense since they have 3 times the people.

Closer to 4.5 times.

Also in absolute terms, most of the worker drones in autocratic, over polluted China still have an overall poor quality of life, in spite of its miraculous development in manufacturing and infrastructure in the past couple of decades:

A century of American economy is about to come to an end. China is on the point of overtaking the US as the world's biggest economy. If Washington called the shots in the 20th Century, Beijing will be doing the same in the 21st.
These are the bald conclusions from reports showing that China is hard on the heels of the US in terms of its share of global GDP and that it won't be long – given current trends in growth rates - before the positions at the top are reversed.
Not so fast, though. China, by virtue of its population, was the world's biggest economy at the dawn of the industrial revolution but lagged behind as countries in Europe and North America industrialised rapidly. As soon as China started its period of catch-up at the end of the 1970s, it was only a matter of time before its sheer size would make it number one. What has been surprising is the speed at which that transformation has taken place, with the date at which the US loses its top dog status constantly brought forward.

John Hawksworth, chief economist at PwC, estimates that the big moment will arrive in 2020; the latest data suggests it could be as soon as this year.

There are two other points to bear in mind. The first is that the calculations rely on using purchasing power parity to assess the comparative size of economies. This allows for the fact that prices tend to be a lot lower in poor countries than they are in rich countries, so incomes stretch further. But the PPP measure can never be 100% reliable given the problems of comparing prices across the world, so it is impossible to be precise about when China will actually become the world's biggest economy.
The second – more significant – point is that even with the use of the PPP method, real living standards in China remain well behind those in the US. Per capita incomes in China, according to the OECD, are 75% of the global average, whilst those in the US are 370%. China's sheer size and its rapid growth rate mean that it is now a global force to be reckoned with when it comes to talks about economic management, trade and climate change. But on the measure that really matters to people – living standards – it remains a poor country.

The Guardian

Not so fast. America overtook the UK economically in 1870! It only became the global hegemon in 1945! The process will probably be similar for China.

 

[sidious618]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

As our hegemony diminishes maybe we can finally get over the notion that we have to set the world right. Let nations on the other side of the planet sort out their own shit. Spend what we currently spend on excess military capacity and some of our aid to other governments on our own people and infrastructure.

Very true. There's no reason America needs to be the world's biggest superpower; we can get along just as well, likely even better, without being one.

 

[Robert Maxwell]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

I can only assume Americans obsess so much over our place in the world because we have a tremendous inferiority complex we try to cover up with mindless cheerleading. "We're #1! We're #1!" But who are we trying to convince?

 

[Bisz]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

I can only assume Americans obsess so much over our place in the world because we have a tremendous inferiority complex we try to cover up with mindless cheerleading. "We're #1! We're #1!" But who are we trying to convince?

Who are "yourselves" Alex!

 

[Bashir Trikona]

Re: China to Overtake U.S.A as Biggest Economy in Purchasing Power Par

There is a danger here, though. Once those sweatshops in China start coming up to the 21st Century Standard, in terms of treatment and pay, you can expect to start paying a lot more for everything from work clothes to knick knacks. If the effect of that is it returns manufacturing jobs to America, then I'm sure we can all be happier about that ...

I wonder if the Chinese Communist Party would sabotage their won economy to stop that...