
Chinese economy overtakes the U.S.’s to become the largest - prostoalex
http://www.marketwatch.com/story/its-official-america-is-now-no-2-2014-12-04?link=sfmw_fb
======
ternaryoperator
For comparison, using the more traditional measure of an economy's size,
nominal GDP, the US economy is about 2x the size of China's. [1]

[1]
[https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...](https://en.wikipedia.org/wiki/List_of_countries_by_GDP_\(nominal\))

~~~
kokey
Having moved between developing and developed countries recently, I was
reminded of what GDP in PPP misses. It's even cruder than how inflation is
measured through CPI or RPI. In one country it might be cheaper to get
services that depend on a lot of labour, like restaurant meals, cleaning and
tailoring, but in another country you can walk or take public transport to the
restaurant or tailor without the fear of being the victim of a crime. You can
buy ketchup for cheaper, but it is not necessarily as safe or hygienic, it
won't have seals under the cap in the store, you won't have as many options to
choose from, etc. I think in a globalised world and especially when you look
at commodidity prices, PPP is good to measure if people have 'enough' to live
on in a particular location but for comparison between countries it's pretty
meaningless.

~~~
duckingtest
>but in another country you can walk or take public transport to the
restaurant or tailor without the fear of being the victim of a crime

That's unrelated to the prices. 3 relatively poor countries are in fact much
safer than the US [0], and all safer ones are poorer than US.

>PPP is good to measure if people have 'enough' to live on in a particular
location but for comparison between countries it's pretty meaningless.

The overwhelming majority of living costs are local (especially food
production), so PPP is a very good measurement. Prices of electronics and oil
aren't that important for day-to-day living.

You seem to ignore the fact that, even in PPP, the average Chinese is really
poor. It's just that their standard of living is $12k poor, not $7k poor.

[0]
[http://www.oecdbetterlifeindex.org/topics/safety/](http://www.oecdbetterlifeindex.org/topics/safety/)

------
mrfusion
I predict this story is going to become another "voyager leaving the solar
system" type of thing. By one measure or another this is going happen once or
twice a year for the foreseeable future.

~~~
melling
Well, we've been watching for the last decade as the predictions were made.
Now they are coming true. Many people denied that it would happen and China
would be another Japan, for example.

We should be observing history at its slow and steady pace. As India and China
lead the world within a century, the United States will have to learn to fit
into its new role farther down the ladder. We could be the Great Britain of
the 22nd century.

~~~
ende
Hardly. China's growth is already sputtering. China will go the way of the
Asian Tiger. This is catch up. What's far more concerning is imagining a
country the size of China undergoing the current meltdown in Japan.

~~~
austinz
You mean Celtic Tiger?

China's growth is 'sputtering' because the government is starting to make the
sort of reforms that everyone said they needed to make to move growth away
from being driven by debt-funded infrastructure spending, but were too scared
of making because of the short-term costs. Now that that's happening, the
media narrative has shifted to "economic growth targets dropped 0.5%; economy
in imminent danger of collapse".

------
tomp
> 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.

> PPP is the real way of comparing economies.

So, it's not entirely clear if China is _really_ the biggest economy, or just
by using an accounting trick called PPP GDP. Sure, maybe a Chinese middle-
class person can buy more Beijing Frappucinos than a middle-class person in
Minneapolis, but the disparity in foreign exchange rates still means that an
American coming to China can buy more Frappucinos than a Chinese person coming
to the USA.

~~~
seanmcdirmid
Frappuccinos are more expensive in Beijing than Seattle (I know, I have a
habit...). Actually, many things in China are more expensive than in the
states: if you want the "lower cost of living", you have to be willing to
endure the "lower standard of living" that is possible in China without as
much stigma as in the US.

If you want a nice apartment, nice safe food, decent education for your kids,
a car, medical care, you've got to pay more dearly for it.

~~~
justincormack
Frappuccinos are sold as a luxury aspirational product though. Thats what the
PPP adjustment is supposed to adjust for, although the PPP calculation makes a
lot of assumptions, and could well not be that good a measure.

~~~
seanmcdirmid
Clean air and safe food are luxury aspirationsl products here and just
expected in western countries. What is cheap: maybe prepared food if you don't
mind gutter oil, taxis since you can't buy your own car without winning the
plate lottery, maids who don't really clean, fake alchohol that might kill
you. It seems to me that the assumptions are all bunk; rich people take
vacations to the states because things are so cheap there.

------
pmontra
This is a ranking about PPP. There are about five Chinese persons for every
American. The sum of their income will keep getting larger and so will their
economy. GDP and economic output don't automatically relate to how well people
live but they do relate to the influence a country has over the world.

If we care about how happy people are in their country then maybe we should
look at
[http://www.oecdbetterlifeindex.org/](http://www.oecdbetterlifeindex.org/)
There is no clear number 1.

~~~
Tyrannosaurs
Interestingly if you put in the cliche American free market priorities (jobs,
income high, safety, work life balance, environment low, everything else in
the middle) the US does come out top (as opposed to high but not top on a more
even measure).

The same things seems to happen if you put in the sort of priorities other
countries are generally believed to hold (so put in the environment,
satisfaction, work life balance and so on and the Scandinavian countries leap
to the top).

So if there is any truth in the cliches, countries do seem to optimise for
what is important to them. Which I guess is what you'd hope happened.

As an aside there doesn't seem to be too much you can do to stop Australia
being a great place to live - they don't have a slider for "Deadly animals".

~~~
vorg
> Australia being a great place to live - they don't have a slider for "Deadly
> animals"

Australia has poisonous snakes and America has grizzly bears -- only New
Zealand can claim no deadly animals.

~~~
danieltillett
Obviously you have never met a drunk kiwi.

~~~
seanmcdirmid
Kiwi fruit are actually from northern China and weren't introduced to New
Zealand until the 20th century.

~~~
lostcolony
Not sure if that's just compounding the joke, but if not -
[http://en.wikipedia.org/wiki/Kiwi](http://en.wikipedia.org/wiki/Kiwi)

~~~
seanmcdirmid
The submission was about China, not New Zealand, so forgive me for being a bit
bemused.

------
ArtDev
Based on local purchasing power, so the title is misleading.

"Yes, when you look at mere international exchange rates, the U.S. economy
remains bigger than that of China, allegedly by almost 70%."

------
jeroen94704
I don't really understand the fascination with nominal GDP, be it in US$ or
PPP. Those numbers are heavily influenced by the size of a country's
population, which according to wikipedia ranges from something like 100,000
all the way up to 1.3 billion. That's four orders of magnitude!

That's like comparing a Formula 1 car and a Peugeot 107, and then deciding the
guy in the Formula 1 car is a better driver because his lap times are faster.

~~~
austinz
Because each set of numbers measures a different set of things. Singapore and
Luxembourg may have a larger per capita GDP than the U.S. or China, but the
absolute size of their economies is far too small to allow them similar
amounts of military or diplomatic influence compared to the larger countries.
Likewise, a small country where everyone earns a lot of money is more
attractive a market for a company selling luxury goods than a country where
the total GDP is thinly spread across a large but destitute population.

------
FireRabbit
Whether it is or not doesn't really matter. The Chinese economy has been
doubling every 10 years or so since 1980. So if it isn't the world's #1 now,
it very soon will be.

~~~
kokey
The same was said about Japan when it was on the up.

~~~
davidw
China is 1 billion plus people. They have a large role to play in the world
economy unless they do something really stupid or terrible. They were the
largest economy in the world throughout much of history, if I recall
correctly.

~~~
vorg
From the Sui (late 500's) to the mid-Qing (around 1750) most historians seem
to say they were, though it's hard to say whether the Han (220bc-220ad) or the
Roman Empire was "larger".

~~~
seanmcdirmid
China goes up and down throughout history. Many Chinese seem to believe that
China can only go up now, just like Chinese real estate prices.....

~~~
vorg
Maybe you've seen the "China 2049" adverts that popped up everywhere around
China a few months ago promoting, among other things, an equal standard of
living with Western countries by the 100th anniversary of the republic's
founding. I guess they're designed to keep Chinese motivated to grow the
economy further.

------
known
About 100 million people in China are surviving on less than $1 a day

[http://www.chacha.com/gallery/6490/15-things-china-doesn-
t-w...](http://www.chacha.com/gallery/6490/15-things-china-doesn-t-want-you-
to-know)

~~~
_almosnow
Beware of China. They are not America. They must be evil. And while you're at
it, check out "The 10 Ugliest Celebs According To Amanda Bynes".

What a terrible choice for source.

------
desireco42
Regardless how you measure, they are HUGE. And getting bigger at rate we can't
match. I wish them all the best.

This doesn't diminish size of US economy. I think this opens up more
opportunities for all of us.

------
graycat
Apparently if count numbers of cups of coffee, okay. But if count number of
Cadillac cars or equivalent, number of three bedroom, two bath houses or
equivalent, etc. apparently not. If compare GDPs at the present exchange rate,
the US remains way ahead.

------
legitquest
Why does total GDP matter so much? China has over a billion people. A much
more accurate metric is GDP or even PPP GDP per capita.

Only when China has 3x larger economy than US economy will it be of the same
size per capita to the U.S.

~~~
muyuu
Because it's not a per capita thing how large a military you can afford, or
how strongly you can lobby.

On a per capita basis the US is world's #10.

The US is the most important country in the world because of its aggregate
power, of which the total GDP is an important factor.

~~~
crimsonalucard
"most important" is kind of arrogant.

~~~
muyuu
I'm not American though. You can hardly deny it is, or let's say the most
relevant.

China is getting there though.

------
arbuge
Those 200 years dominated by Britain and the USA as described in the last
paragraph are not yet over, if you add their economic output together again...

------
throwawayaway
Think the current dive in oil prices is only going to accelerate that trend
too!

------
andyidsinga
i think its a little childish that the first pic in the page is a pic of a
bank with a bunch of garbage in the front. not-so-subliminal msg...

------
tkubacki
obviously that's why so many Chinese multimillionaires relocate to US.

------
yarou
>Yes, when you look at mere international exchange rates, the U.S. economy
remains bigger than that of China, allegedly by almost 70%.

The irony is that the US has been running up debt for decades upon decades.
The US economy is equivalent to someone that has an unlimited credit line, who
pays absolutely nothing while continuing to spend lavishly.

This article does not bring any new information or shed any light on the truth
about our global economy, such as the creation of externalities that deprive
human beings of basic rights. All this article does is present an old
narrative (the financial news equivalent of race baiting). Grab the datasets
yourself, do your own analysis, and don't listen to yellow journalist rags
like this which are clearly promoting an agenda.

GDP, PPP, etc are metrics which have a low signal-to-noise ratio, because the
speed with which capital moves renders any units to measure economic output
meaningless. USD is still the reserve currency for most of the world (at least
for the countries who account for the lion's share global economic output).
Even if that were to change to RMB or [insert fiat currency], the current
corrupted system will continue to exist and exploit. Do yourself a favor and
become educated about cryptocurrency. Learn why this current global economic
system is corrupt and a new form of enslavement. Then you'll realize that we
don't need central banks. You will realize that you are not a child that needs
to be constantly monitored by a nanny state. And so your enlightenment begins.

~~~
crdoconnor
>The irony is that the US has been running up debt for decades upon decades.
The US economy is equivalent to someone that has an unlimited credit line, who
pays absolutely nothing while continuing to spend lavishly.

There is no sensible equivalence or even comparison to be made at all since
insolvency is impossible for the US government. Government debt is simply a
different thing to consumer debt. Period.

>GDP, PPP, etc are metrics which have a high signal-to-noise ratio

Ironic that you should say this since GDP, PPP, inflation and the _rate_ of
government spending are all far more relevant than the overall level of
government debt.

~~~
vorg
> insolvency is impossible for the US government

But the exchange rate for the US dollar crashing by 50% against the pound,
euro, rmb, and yen in a single day is possible for the US government's federal
reserve.

~~~
crdoconnor
Yes it is. The exchange rate gradually falling is possible too. Or staying the
same.

Also the exchange rate may rise, as actually happened last time US government
spending spiked (post crisis).

------
throwaway1592
I read a lot of comments about the "Calculation" It really doesn't matter how
you calculate it. China is the number one economy and American is on its way
to becoming Japan or worse Greece.

Having a been in China a lot its easy to see why. China is really striving to
be number 1. They are setting a goal and accomplishing it. American on the
other hand is mired in Bureaucracy and lack of vision for what we want to do.
Therefore we can not make progress. When we have goals we accomplish them.
What to end foreign dependence on fossil fuels. We are making good progress
towards that end.

American needs to think bigger and accomplish hard near term goals. We need to
stop saying by year 2030,2040,2050 and think we want to do this in the next 4
years. China as many advantages of US. The things that people say are a
disadvantage (Population & Government) are an advantage over the US.

If i was able to be president this would be my stance:

\- Immigration.

    
    
       - Pay tuition to a 4 year college and graduate. Greencard. Increases intellectual horsepower
    
       - 3 million Mexicans. Greencard. Increases manpower
     - Energy
    
       - by 2020 50% of all electric will be generated by non-fossil fuels. 2025 80%.
    
       - 2025 be the #1 export of oil and coal
    
     - Budget. balanced by 2020.
    
     - Military. halved.
    
     - Education. Spending doubled.
    
     - Healthcare. free
    
     - Taxes. flat
    
     - Infrastructure 7% GDP
    
    

What will be the big goals be:

\- Moon by 2030 a sustainable colony.

\- Mars by 2040 a sustainable colony.

\- Mars by 2050 100,000 people

\- Population 500,000 by 2040

~~~
userulluipeste

      "- by 2020 50% of all electric will be generated by non-fossil fuels. 2025 80%."
    
      "- 2025 be the #1 export of oil and coal"
    

That's interesting, especially seeing these goals being put together!

    
    
      "- Infrastructure 7% GDP"
    

How did you come to this number? Keep in mind that infrastructure costs depend
on a lot of factors, like expropriation of private property, building new
infrastructure and up-keeping the existent one in a number of more or less
accessible places, development of new infrastructure technology and a lot
more. China got a lot of these for almost free: it can afford to expropriate
at ridiculous prices, it builds infrastructure with cheap labor and materials
(bought at home market prices), it got its hands on new technology cheaply
from abroad through various tricks (versus developing it from scratch), and so
on. There's a lot to talk about infrastructure and resources allocated to it,
and 7% may or may not be the answer.

    
    
      "- Moon by 2030 a sustainable colony."
    
      "- Mars by 2040 a sustainable colony."
    
      "- Mars by 2050 100,000 people"
    

Moon and Mars are not fit to be inhabited by humans (for their gravitation
being inappropriate, if nothing else).

    
    
      "- Population 500,000 by 2040"
    

You wanted to say 500,000,000 maybe?

