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It’s official: America is now No. 2

Hang on to your hats, America.

And throw away that big, fat styrofoam finger while you’re about it.

There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.

It just happened — and almost nobody noticed.

The International Monetary Fund recently released the latest numbers 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 U.S.A.


As recently as 2000, we produced nearly three times as much as the Chinese.

To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

I reported on this looming development over two years ago, but the moment came sooner than I or anyone else had predicted. China’s recent decision to bring gross domestic product calculations in line with international standards has revealed activity that had previously gone uncounted.

These calculations are based on a well-established and widely used economic measure known as purchasing-power parity (or PPP), which measures the actual output as opposed to fluctuations in exchange rates. So a Starbucks venti Frappucino served in Beijing counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders.

Make no mistake. This is a geopolitical earthquake with a high reading on the Richter scale.
PPP is the real way of comparing economies. It is one reported by the IMF and was, for example, the one used by McKinsey & Co. consultants back in the 1990s when they undertook a study of economic productivity on behalf of the British government.

Yes, when you look at mere international exchange rates, the U.S. economy remains bigger than that of China, allegedly by almost 70%. But such measures, although they are widely followed, are largely meaningless. Does the U.S. economy really shrink if the dollar falls 10% on international currency markets? Does the recent plunge in the yen mean the Japanese economy is vanishing before our eyes?

Back in 2012, when I first reported on these figures, the IMF tried to challenge the importance of PPP. I was not surprised. It is not in anyone’s interest at the IMF that people in the Western world start focusing too much on the sheer extent of China’s power. But the PPP data come from the IMF, not from me. And it is noteworthy that when the IMF’s official World Economic Outlook compares countries by their share of world output, it does so using PPP.

Yes, all statistics are open to various quibbles. It is perfectly possible China’s latest numbers overstate output — or understate them. That may also be true of U.S. GDP figures. But the IMF data are the best we have.

Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power. Britain was the workshop of the world before she ruled the waves. And it was Britain’s relative economic decline that preceded the collapse of her power. And it was a similar story with previous hegemonic powers such as France and Spain.

This will not change anything tomorrow or next week, but it will change almost everything in the longer term. We have lived in a world dominated by the U.S. since at least 1945 and, in many ways, since the late 19th century. And we have lived for 200 years — since the Battle of Waterloo in 1815 — in a world dominated by two reasonably democratic, constitutional countries in Great Britain and the U.S.A. For all their flaws, the two countries have been in the vanguard worldwide in terms of civil liberties, democratic processes and constitutional rights.

It’s official: America is now No. 2 - MarketWatch
My fellow Chinese members, why hold back? Come on, stop being a puzzy and let's celebrate!

Look we have no freedom, we only copy and steal. Nominal GDP or not, what accomplished by us 1.3 billion slaves in just 30 years is still something to be very proud of :cheers:
Its PPP don't celebrate to early brothers. Work harder and less talk.
 
Congrats China

PPP is meaningless. It shows how China is still a developing country - developed nations don't need PPP because they don't need to "compare" to anything in the way that poor nations do as they are already at the top of the economic food chain.

Also, this thread is a microcosm of exactly why the Chinese government didn't want its PPP rankings published. It draws unwanted attention to China, which is still very much a developing nation.

For instance, see how some American flag wavers piled onto this thread with their "we're #1" type posts. And that's indisputable - America is still very much number one and China is still far away from that. Which is why you notice that no Chinese people in this thread are celebrating.
 
PPP is meaningless. It shows how China is still a developing country - developed nations don't need PPP because they don't need to "compare" to anything in the way that poor nations do as they are already at the top of the economic food chain.

The reason America likes to use PPP in China's case, is because they think we are massively understating the true size of our economy, by holding down the value of the Yuan, and even by manipulating the numbers (the sum total of China's provinces is higher than the official GDP number).

America wants to put us off balance, before we have actually achieved the goal.
 
The reason America likes to use PPP in China's case, is because they think we are massively understating the true size of our economy, by holding down the value of the Yuan, and even by manipulating the numbers (the sum total of China's provinces is higher than the official GDP number).

America wants to put us off balance, before we have actually achieved the goal.

Agreed. Either way, publishing meaningless PPP rankings is a way for China bashers to promote their "China threat" agendas.
 
Agreed. Either way, publishing meaningless PPP rankings is a way for China bashers to promote their "China threat" agendas.

PPP as a measure does have some use.

For example, a barber in China and one in America give 6 haircuts a day. They have the same actual level of productivity, but the American barber adds FAR more to nominal GDP because their services are much more expensive. But is an American barber really that much more productive than a Chinese barber?

However the reason nominal GDP really matters, is because currency matters. Currency has power, look at how the American federal reserve has been printing money like no tomorrow. They can do that because they have the world's main reserve currency, which gives them an advantage called the "exorbitant privilege".

Exorbitant privilege - Wikipedia, the free encyclopedia

That's why the dollar is so strong. But China is making big moves to internationalize the Yuan, so maybe they will end up losing that privilege in the future.
 
Nothing to celebrate. The ascribed No1 position is meaningless. People here do not even pay attention or nor do they care.

I would rather read Atawolf and Boq77's posts although both are craps.
 
yes, we , chinese , still have a lots of work to do before we get the number one,

however, the ppp still has some meaning.

this morning, i have a set of 小笼包Steamed Buns, and a 皮蛋粥 porridge as a breakfast, cost me 5 yuan, about 0. 8usd , less than 1$, this is real life.
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My fellow Chinese members, why hold back? Come on, stop being a puzzy and let's celebrate!

Look we have no freedom, we only copy and steal. Nominal GDP or not, what accomplished by us 1.3 billion slaves in just 30 years is still something to be very proud of :cheers:

"行百里者半九十。" no time to celebrate.
 
DGP is still delusional by exchange rate, someone suspect that the usd/rmb exchange rate will be 1:1 in the next decade, would you believe?

take a example of Japanese yuan exchenge rate against Chinese rmb, you will see how China so quickly passed the Japane on GDP, now, Japane GDP is only half of the Chinese.
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anyway , we must work hard;
骚年们,我们的目标不是米国,我们的目标是星辰大海……
 
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China needs to show it is strong enough to defend herself against any attack, but not so much that anyone gets complacent ...

This is the most uncertain and dangerous time in decades, all Chinese in the world need to work even harder and smarter.
 
My fellow Chinese members, why hold back? Come on, stop being a puzzy and let's celebrate!

Look we have no freedom, we only copy and steal. Nominal GDP or not, what accomplished by us 1.3 billion slaves in just 30 years is still something to be very proud of :cheers:

It's exactly what the west controlled IMF want Chinese to do--premature celebration. Don't be like Indians. Celebrate when it's worth celebrating.
 

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