IMF: China Just over took US as The World's Largest Economy

[vasco da gamma]

The IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world's biggest economy. In terms of the raw market value of China's currency, it still has a long way to go.


Using PPP it's China. But using market rates, the United States wins out (see chart)

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Based on BIG MAC index:



China just overtook the US to become the world's largest economy, according to the International Monetary Fund.
Chris Giles at the Financial Times flagged up the change. He also alerted us in April that it was all about to happen.

Basically, the method used by the IMF adjusts for purchasing power parity, explained here.

The simple logic is that prices aren't the same in each country: A shirt will cost you less in Shanghai than in San Francisco, so it's not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist's Big Mac Index is a great example of these disparities.

So the IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world's biggest economy.

We've just gone past that crossover on the chart below, according to the IMF. By the end of 2014, China will make up 16.48% of the world's purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion)




IMF, Google Public Data Explorer Adjusted for purchasing power, China's economy is now the world's largest. It's not all sour news for the US. It'll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US and isn't likely to overtake for quite some time:


IMF, Google Public Data Explorter But in terms of the raw market value of China's currency, it still has a long way to go.

SOURCE:finance.yahoo.com/economist.com

http://www.economist.com/content/big-mac-index

http://finance.yahoo.com/news/china-just-overtook-us-worlds-090801574.html

 

[Ishmael]

Soon you all will be speaking mandarin

 

[Mlaleo]

Source mwaka 2006?

 

[vasco da gamma]

Guys... Do ya'll see how these Red monsters are running while we're are creeping? What if we can put a red colour in our flag. May be we can be a little bit luckier this time.- May be we need a little bit contradictions than appeasement..?For many used to say Contradictions is is an engine of social change. May be we can have a good constitutional that can help us to advance economically...?!May be we can free ourselves from slavery of one political party dominance, and gain a true democracy. Can we see the Kenyans have crossed the lines, they are no longer a poor country like us.

 

[jozzeva]

Go china go....

 

[Extraterrestrial]

Good news for China anyway I was expecting such sweet news,it's true China has a long way to go in terms of its trading currency RMB because RMB is now trading 6th in the world but it's expected it will be trading 3rd in 2018.