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Interesting piece.
Essentially, the theory of the piece is that due to current market exchange rates, China's GDP gets grossly undercounted when looked at nominally. However, when adjusted for Purchase Power Parity, it becomes apparent that China is now the number 1 world economy.
They have greater manufacturing output than the USA. China exports more as well.
http://www.inforum.com/news/4345482-commentary-who-has-worlds-no-1-economy-not-us
Article in spoilers
DaGawd's commentary:
Honestly, the article gets pretty ridiculous at time. It's a classic WaPo article meant to enrage nationalists who still firmly hold on to the concept of American Exceptionalism.
Further, there are some issues with judging GDP by Purchase Power Parity. Transportation costs usually are born by the retailer of a good, so inherently the end price borne by a consumer of a Chinese good is going to be more than the price borne by the consumer living in the country in which the good was made or a nearby market.
PPP also doesn't factor in how demand affects pricing. The WaPo article mentions a Big Mac costing 1.8 times more in the USA than in China, but makes no mention of the differing demand affecting pricing in each market.
What say you, Sherdoggers? Should you start teaching your kids Mandarin now so they have a hope of holding a job in the future?
Essentially, the theory of the piece is that due to current market exchange rates, China's GDP gets grossly undercounted when looked at nominally. However, when adjusted for Purchase Power Parity, it becomes apparent that China is now the number 1 world economy.
They have greater manufacturing output than the USA. China exports more as well.
http://www.inforum.com/news/4345482-commentary-who-has-worlds-no-1-economy-not-us
Article in spoilers
But there's good reason to think that China will overcome at least some of these obstacles. Economists Randall Morck and Bernard Yeung have a new 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. They find that China's institutions are, broadly speaking, developing along the same path followed by its successful neighbors.
In other words, not only is China already the world's largest economy, the gap between it and the U.S. can be expected to grow even wider. This continues to be borne out in the growth statistics -- though China has slowed in recent years, its economy continues to expand at a rate of more than 6 percent, while the U.S. is at just over 2 percent. If that disparity persists, China's economy will be double that of the U.S. in less than two decades.
So economically, China has surpassed the U.S., and is on track to zoom far ahead in the near future. But what about military power? Here, it still looks like the U.S. reigns supreme. It spends more money on its military than China, has a larger nuclear arsenal, and -- thanks to its recent wars in Afghanistan and Iraq -- has a more seasoned fighting force as well.
But that doesn't mean that the U.S. would win a war, if the two countries fought. A full nuclear exchange, of course, would have no winners. But in a protracted conventional struggle, there's a good chance that China's weight of numbers and manufacturing prowess would win out. As an analogy, consider the U.S. and Japan in World War II. At the beginning of the war, Japan's aircraft carrier force outnumbered that of the U.S., and its navy was far more seasoned (due to Japan's war in China). But when the war began, the U.S. greatly outproduced its opponent.
The U.S. also had a 2-to-1 manpower advantage. When two countries of similar technology levels fight, numbers tend to tell. China has a larger GDP, more manufacturing output and four times the population. And as its recent advances in stealth technology, directed energy weapons, hypersonic missiles and other areas demonstrate, its military technology isn't that far behind the U.S. In a drawn-out war, once the mighty Chinese steamroller got moving, it would be unstoppable.
In other words, China is now in a position similar to that of the U.S. at about the turn of the 20th century -- a formidable superpower that just hasn't yet felt any reason to exercise its dominance. Once the U.S. woke up to the need to throw its weight around, no one doubted its primacy.
China may never make the same decision. It may choose to remain restrained on the international stage, with a modest nuclear arsenal and a light footprint in global institutions. If so, its dominance will remain a lurking, looming potentiality instead of a real and present fact of life.
But I wouldn't count on that happening.
In other words, not only is China already the world's largest economy, the gap between it and the U.S. can be expected to grow even wider. This continues to be borne out in the growth statistics -- though China has slowed in recent years, its economy continues to expand at a rate of more than 6 percent, while the U.S. is at just over 2 percent. If that disparity persists, China's economy will be double that of the U.S. in less than two decades.
So economically, China has surpassed the U.S., and is on track to zoom far ahead in the near future. But what about military power? Here, it still looks like the U.S. reigns supreme. It spends more money on its military than China, has a larger nuclear arsenal, and -- thanks to its recent wars in Afghanistan and Iraq -- has a more seasoned fighting force as well.
But that doesn't mean that the U.S. would win a war, if the two countries fought. A full nuclear exchange, of course, would have no winners. But in a protracted conventional struggle, there's a good chance that China's weight of numbers and manufacturing prowess would win out. As an analogy, consider the U.S. and Japan in World War II. At the beginning of the war, Japan's aircraft carrier force outnumbered that of the U.S., and its navy was far more seasoned (due to Japan's war in China). But when the war began, the U.S. greatly outproduced its opponent.
The U.S. also had a 2-to-1 manpower advantage. When two countries of similar technology levels fight, numbers tend to tell. China has a larger GDP, more manufacturing output and four times the population. And as its recent advances in stealth technology, directed energy weapons, hypersonic missiles and other areas demonstrate, its military technology isn't that far behind the U.S. In a drawn-out war, once the mighty Chinese steamroller got moving, it would be unstoppable.
In other words, China is now in a position similar to that of the U.S. at about the turn of the 20th century -- a formidable superpower that just hasn't yet felt any reason to exercise its dominance. Once the U.S. woke up to the need to throw its weight around, no one doubted its primacy.
China may never make the same decision. It may choose to remain restrained on the international stage, with a modest nuclear arsenal and a light footprint in global institutions. If so, its dominance will remain a lurking, looming potentiality instead of a real and present fact of life.
But I wouldn't count on that happening.
DaGawd's commentary:
Honestly, the article gets pretty ridiculous at time. It's a classic WaPo article meant to enrage nationalists who still firmly hold on to the concept of American Exceptionalism.
Further, there are some issues with judging GDP by Purchase Power Parity. Transportation costs usually are born by the retailer of a good, so inherently the end price borne by a consumer of a Chinese good is going to be more than the price borne by the consumer living in the country in which the good was made or a nearby market.
PPP also doesn't factor in how demand affects pricing. The WaPo article mentions a Big Mac costing 1.8 times more in the USA than in China, but makes no mention of the differing demand affecting pricing in each market.
What say you, Sherdoggers? Should you start teaching your kids Mandarin now so they have a hope of holding a job in the future?
