Chris Blattman

Search
Close this search box.

Is China number one?

When the presidents of China and the United States meet next week in Washington, neither will likely be aware that, measured in terms of purchasing power, it is Hu Jintao not Barack Obama who represents the world’s largest economy. Some time in 2010, the Chinese economy overtook that of the United States.

That is Arvind Subramanian and his new GDP calculations.

2 Responses

  1. Some of Subramanian’s assertions in “Is China Already Number One? New GDP Estimates” are problematic. The evidence that he offers does not entirely support his argument(s) or the central assertion in his piece that China has surpassed the United States in purchasing power sometime around 2010. Firstly, it is unclear from his piece whether he means “purchasing power” in the macro or micro sense. The IMF figures he cites refer to GDP, he quickly dismisses these figures for the United States and China and argues for their substitution with his calculation of PPP when the two measures are, in fact, not the same. Purchasing Power Parity as i understand it is an adjustment to GDP and more clearly captures a micro sense of cost of living and consumption capacity across countries. In which sense, given the relatively larger percentages of downtrodden rural Chinese out of a population of over 1.4 billion people, the United States is still miles ahead in terms of economic prosperity. We should also caution the associated dangers of giving China any economic highground (articles such as Subramanian’s) to assume leadership in the world. Conceded that the United States did not always make conscionable decisions when it was the clear superpower, the prospect of a dominant China in the world is even more frigthening.

  2. But when comparing economies, surely PPP is not the relevant measure? Being the “world’s biggest economy” seems to me to be relevant in terms of global power and reach, in which case we would want to use actual GDP rather than PPP?

Why We Fight - Book Cover
Subscribe to Blog