The International Monetary Fund (IMF) recently released the latest results for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion – compared with $17.4 trillion for the US. The US had the world’s highest economy since 1872.
In 2000, the USA produced nearly three times as much as the Chinese. China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the US. China’s Gross Domestic Product (GDP) per-person is still less than one-quarter that of the US, so China is still far from being the world’s wealthiest nation. The IMF made the calculations by measuring purchasing-power parity (PPP). Similar goods cost the same in both Shanghai and New York, as far as PPP is concerned.
Experts have predicted this shift in economic power for years. It was never a question of if, but rather when. Nobel Prize-winning economist Joseph Stiglitz noted that the World Bank projected it would happen in 2014.
China is catching up in technology and innovation
Of course, GDP and PPP are not the only important economic indicator. The US are still ahead in other important areas such as technology and innovation, which can be measured by the number of patents awarded. But there are indications that China is catching up in technology and innovation as well.
For example the Alibaba Group, a giant Chinese e-commerce company that started as an online marketplace for businesses but quickly expanded to different segments and services, like consumer products and payments, went public on the New York Stock Exchange in September, in what was the largest IPO of a company in the United States. China has large Internet companies like Baidu and Tencent, active and aggressive all over the field, and today it’s strategic mistake to think that the Western world dominates the Internet.
The launch of the Orion spacecraft has been hailed as an important technology milestone, and rightly so. The tiny module is part of a future space transportation system that should take Americans to Mars, perhaps in the 2030s. But by that time, the Chinese may be there already. According to new data from the International Monetary Fund, which released a report in October comparing an adjusted GDP of various countries, China will produce $17.6 trillion this year, ahead of the $17.4 trillion made by the US.
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