And The Winner Of The Number One World's Economy Is?
By Ryan Velez
Statistics may be deceiving in this regard. The U.S. is still the top producer when measuring market exchange rates, but this doesn’t account for different costs in different countries. “If the same phone costs $400 in the U.S. but only $200 in China, China’s GDP is getting undercounted by 50 percent when we measure at market exchange rates. In general, less developed countries have lower prices, which means their GDP gets systematically undercounted,” Bloomberg explains.
A measure called purchasing power parity tries to account for this, and while it is imperfect, some believe it gives a more accurate picture, and in this picture, China has already surpassed the U.S. In other areas, China has an even larger lead. These include exports and manufacturing. China has had the edge in manufacturing for almost a decade at this point.
China’s population is far from the world’s richest,–a title held by smaller countries like Qatar, Luxembourg, Singapore, Brunei and the United Arab Emirates. But a modest per-person income allows for plenty of potential to grow. Economists have recently wrote a paper comparing the histories of Japan and South Korea —both of which climbed out of poverty to achieve rich-country status—with the recent rise of China. At the current rate of growth, China’s economy could double the U.S. in less than two decades.
Of course, what if China and the U.S. were to go head-to-head? The U.S. has the bigger military, and recent combat means they are more seasoned as well. However, if a protracted struggle was to ever come to pass, China’s weight of numbers and manufacturing prowess would win out. A comparable situation was the war in the Pacific in WWII. Japan had more aircraft carriers and seasoned combatants. But a major part of the U.S.’s victory was its manpower and manufacturing ability.
Some compare current China to the U.S. at the turn of the century. This means it is a formidable superpower that hasn’t felt the need to leverage its dominance yet. Will China ever do so? Maybe, following the U.S.’s example. In any event, the world will be watching.