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China GDP to top US in 2012: report - GlobalTimes
By Hao Zhou
China may overtake the US in 2012 in terms of the size of its economy, based on a comparison between the real purchasing power of the two countries' currencies, the Wall Street Journal said Wednesday, citing a report released by a New York-based research association.
In its annual Global Economic Outlook report, the Conference Board predicted China's economy would grow by 9.6 percent in 2011 after expanding by 10 percent this year.
The US economy is expected to expand by just 1.2 percent next year, down from 2.6 percent this year.
Average growth in developing economies in the coming decade, at 6.3 percent per year, will be more than three times faster than the average annual growth in advanced economies, forecasted at 1.9 percent, the group said.
According to the report, using the most common way to measure the gap between China's $5 trillion economy and the US nearly $15 trillion output, "it could take China more than a decade to match the US, even at the current very high growth rates, which will be hard to sustain for the Asian country."
The picture looks different when considering purchasing power parity (PPP), which takes into account the goods and services a country's currency actually buys at home, or the real purchasing power people have in each country, it added.
"As a result of the global crisis and very divergent growth rates, China may have a larger GDP, converted for differences in relative price levels using PPP, than the US by 2012," it concluded.
China's share in global output doubled from eight percent in 2000 to 16 percent in 2010 and will rise to 24 percent in 2020 based on PPP-converted figures, the group predicted
"It's not surprising for China to overtake the US by PPP-converted GDP in 2012," He Weiwen, managing director of the China Society for WTO Studies, told the Global Times. "However, the calculating measures do not hold water, which is why this measure is not widely applied around the world."
"The PPP measure takes the price of a specific basket of goods into account and then compares the real purchasing power between different currencies. But it overlooks many factors in the economy, such as differential land rent, price fluctuations and the quality of goods," he added.
"The emerging world's catch-up potential is unlikely to slacken before the end of the decade," said Bart van Ark, senior vice president and chief economist of the Conference Board. "Yet while emerging economies are clearly driving global growth, they also host its biggest downside risk."
By Hao Zhou
China may overtake the US in 2012 in terms of the size of its economy, based on a comparison between the real purchasing power of the two countries' currencies, the Wall Street Journal said Wednesday, citing a report released by a New York-based research association.
In its annual Global Economic Outlook report, the Conference Board predicted China's economy would grow by 9.6 percent in 2011 after expanding by 10 percent this year.
The US economy is expected to expand by just 1.2 percent next year, down from 2.6 percent this year.
Average growth in developing economies in the coming decade, at 6.3 percent per year, will be more than three times faster than the average annual growth in advanced economies, forecasted at 1.9 percent, the group said.
According to the report, using the most common way to measure the gap between China's $5 trillion economy and the US nearly $15 trillion output, "it could take China more than a decade to match the US, even at the current very high growth rates, which will be hard to sustain for the Asian country."
The picture looks different when considering purchasing power parity (PPP), which takes into account the goods and services a country's currency actually buys at home, or the real purchasing power people have in each country, it added.
"As a result of the global crisis and very divergent growth rates, China may have a larger GDP, converted for differences in relative price levels using PPP, than the US by 2012," it concluded.
China's share in global output doubled from eight percent in 2000 to 16 percent in 2010 and will rise to 24 percent in 2020 based on PPP-converted figures, the group predicted
"It's not surprising for China to overtake the US by PPP-converted GDP in 2012," He Weiwen, managing director of the China Society for WTO Studies, told the Global Times. "However, the calculating measures do not hold water, which is why this measure is not widely applied around the world."
"The PPP measure takes the price of a specific basket of goods into account and then compares the real purchasing power between different currencies. But it overlooks many factors in the economy, such as differential land rent, price fluctuations and the quality of goods," he added.
"The emerging world's catch-up potential is unlikely to slacken before the end of the decade," said Bart van Ark, senior vice president and chief economist of the Conference Board. "Yet while emerging economies are clearly driving global growth, they also host its biggest downside risk."
