Monday, April 25, 2011

China to Become World’s Largest Economy by 2016 – So?

Brett Arends seems alarmed:

Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising. Just 10 years ago, the U.S. economy was three times the size of China’s.

He could have mentioned that China’s population is over 1.3 billion while ours is approximately 0.3 billion. The CIA World Factbook noted that in 2010 China’s per capita income was only $7400 per year (ranking #126) whereas ours was $47,000 per year (ranking #10). One would hope that China’s growth would be such that its per capita income would surely converge to that of richer nations.


Barkley Rosser said...

Do these projections take into account the recently announced Five Year Plan of China that is projecting a decline of annual GDP growth rates to around 7% from the current 11%?

rjs said...

barkley; i would assume they do, because when i first ran a projection based on CIA data & 2009estimated growth rates, i figured they'd pass us in 2014:

(quotes foreign policy, delong, & rodrik)

Also sprach Analyst said...

To me, the surprise is not that China 's economy will FINALLY be as large as the US's. The real surprise should be that the China's economy will ONLY be as large as the US's.

ProGrowthLiberal said...

Barkley - likely not. To get to $19 billion in just 5 years, one would have to assume 11% growth. If China's growth is 7% per annum, then it would take 8 years to reach $19 billion. The article could have been more specific on what it was assuming.

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