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posted by LaminatorX on Thursday October 09 2014, @02:35PM   Printer-friendly
from the well,-it-was-fun-while-it-lasted dept.

Common Dreams reports

The purchasing power of Chinese consumers has now surpassed that of American consumers and its overall economy, by some measures, is now the largest in the world. Despite those declarations, the deeply intertwined nature of the American consumer-based economy and China's role as the world's leading [manufacturer], means the narrative about overall financial strength is never straight-forward.

China has overtaken the United States to become the world's largest economy, according to new data and an analysis by the International Monetary Fund.

Calculated by looking at gross domestic product (GDP) alongside cost-of-living data, the IMF announced Tuesday that China is now larger economically than the U.S. for the first time in history with an adjusted GDP of $17.6 trillion compared to a U.S. GDP of $17.4 trillion.

The milestone has been forecast for some time, but the conclusion of the IMF--presented in its 2014 World Economic Outlook report--comes as other economic indicators suggest a global shakeup in the world economy may be upon us. As the Financial Times reports, "the speed of [China's] transformation" is what's most" breathtaking" considering that "as recently as 2005, China's economy was less than half the size of America's." Additionally, the IMF now projects that "China's economy will be 20 percent bigger than that of the U.S. by 2019."

[...]Conn Hallinan, an analyst who writes for Foreign Policy In Focus,[...]concludes, "the days when the IMF, World Bank, and U.S. Treasury could essentially dictate international finances and intimidate or crush opponents" is swiftly "drawing to a close."

Related:
USA is No Longer Number 1 in Several Areas

Related Stories

USA is No Longer Number 1 in Several Areas 76 comments

Americans (especially the poorly educated and those without travel experience) like to thump their chests and shout "We're Number One" a lot - despite their country ranking poorly in basic quality of life measures e.g. behind Costa Rica and Slovenia in life expectancy and behind Cuba and Croatia in infant mortality rates.

Well, another one has slipped their grasp. An article in Castanet references an analysis by NYTimes [paywalled] which notes that the country with the highest median income (the point where the area under the curve to the right and the area to the left are equal) used to be the USA but that Canada has now taken the lead.

Significant factors for this slip include US CxOs making bucketloads of money and US corporations being increasingly parsimonious with people who actually perform the labor.

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  • (Score: 4, Informative) by takyon on Thursday October 09 2014, @02:50PM

    by takyon (881) <reversethis-{gro ... s} {ta} {noykat}> on Thursday October 09 2014, @02:50PM (#104057) Journal

    Hold on China, U.S. Still World’s Top Economy by Main Benchmark [bloomberg.com]

    China’s gross domestic product will climb to $17.6 trillion this year, while the U.S. grows to $17.4 trillion, IMF projections showed yesterday. One major caveat: the comparison is based on purchasing power parity, which uses exchange rates that adjust for price differences of the same goods between nations.

    “The U.S. remains the biggest by the more common, more widely accepted and in our view, more useful measure,” said David Hensley, JPMorgan Chase & Co.’s director of global economic coordination in New York. As for PPP, “it’s not quite the real thing.”

    The PPP, used to differentiate how far money goes in each country, hardly reflects where the two nations currently stand vis-à-vis each other. Consider this: in 2013, U.S. GDP was at $16.8 trillion, way ahead of China’s $9.24 trillion before adjusting for inflation, which is the more commonly known measure of an economy’s size, World Bank figures show.

    Adjusted for population, China falls way behind even using the PPP data, and the U.S. is also no longer the king of the world. China ranks 86th in PPP GDP per capita, up 29 spots from a decade ago, while the U.S. slips one notch to 10th, according to Bloomberg calculations based on IMF data. The top three by this metric are Qatar, Luxembourg and Singapore.

    China's been accused of fudging certain numbers including GDP before, although most experts agree that China overtaking the U.S. as the top economy is simply a matter of time, and mostly due to China's much larger population.

    China also has to watch out for a housing crisis. Prices are too high, too many units go unused. Construction is done for construction's sake.

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    • (Score: 1) by Ethanol-fueled on Thursday October 09 2014, @03:47PM

      by Ethanol-fueled (2792) on Thursday October 09 2014, @03:47PM (#104078) Homepage

      Well, still, no reserve currency stays that way [zerohedge.com] forever. Maybe it's about time for the dollar to cede its reserve status.

      Not to mention that China isn't out to destabilize and blow up the world on the scale that the U.S. is.

      • (Score: 2) by Hairyfeet on Thursday October 09 2014, @04:18PM

        by Hairyfeet (75) <{bassbeast1968} {at} {gmail.com}> on Thursday October 09 2014, @04:18PM (#104099) Journal

        The big question is "what happens after" and if one looks at history? Well I can think of another "militaristic jingoism happy country with fascist leanings" and what happened when their economy went to shit...only in this case it will be several times worse as they didn't have the huge stockpiles the USA has.

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        • (Score: 2) by tibman on Thursday October 09 2014, @04:45PM

          by tibman (134) Subscriber Badge on Thursday October 09 2014, @04:45PM (#104107)

          Isn't today already "after"? If the "after" you are referring too is having the largest Economy.

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          • (Score: 2) by Hairyfeet on Friday October 10 2014, @03:51AM

            by Hairyfeet (75) <{bassbeast1968} {at} {gmail.com}> on Friday October 10 2014, @03:51AM (#104310) Journal

            I'm talking about what happens after the world stops taking our endlessly printed money, which will likely happen after the financial bubble bursts [youtube.com]. Look at the graph at 3.30, even though I hate libertarians and think Stefan is a monarchy loving douche you can't argue with the figures, the government has pumped insane amounts of money into the market and blown a massive bubble...when that pops? The US dollar will be worth about the same as the Zimbabwe buck.

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        • (Score: 1) by typhoon on Thursday October 09 2014, @10:00PM

          by typhoon (1283) on Thursday October 09 2014, @10:00PM (#104221)

          Agreed - I'd like to know what some of the predicted outcomes of this will be in 5,10,20 years. Reading sci-fi tells me all sorts of strange changes, but an economist's view would be interesting.

          Is their buying power likely to marginalise the USA and Europe, or will we see a set of countries working ok with each other, or only initially. What happens when China's low wage workforce (only part of their whole, I know) desires the same lifestyles as their higher wage counterparts? What fallout will the shift have on middle income people around the world (I assume the rich will stay wealthy, and the poor won't get much benefit from this)?

          How long will it take for China's population to move away from primary production like Australia has, and many parts of the USA have? And given how fast their growth has changed, will we see that shift soon?

      • (Score: 1) by khallow on Thursday October 09 2014, @05:42PM

        by khallow (3766) Subscriber Badge on Thursday October 09 2014, @05:42PM (#104137) Journal

        Not to mention that China isn't out to destabilize and blow up the world on the scale that the U.S. is.

        There's an obvious problem with the above assertion. The US isn't destabilizing the world any more than China will when it takes the reigns.

        • (Score: 1) by khallow on Thursday October 09 2014, @05:44PM

          by khallow (3766) Subscriber Badge on Thursday October 09 2014, @05:44PM (#104140) Journal
          Ugh, typo. Reins not reigns. Damned English homophones.
          • (Score: 1) by Buck Feta on Thursday October 09 2014, @07:59PM

            by Buck Feta (958) on Thursday October 09 2014, @07:59PM (#104193) Journal

            > Damned English homophones.

            Oh leave the poufs alone.

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            - fractious political commentary goes here -
          • (Score: 0) by Anonymous Coward on Thursday October 09 2014, @11:27PM

            by Anonymous Coward on Thursday October 09 2014, @11:27PM (#104243)

            I say "bitch" and "pussy" but I really mean two of my pets!

            I'm teaching the world about homonyms [youtube.com].

    • (Score: 0) by Anonymous Coward on Thursday October 09 2014, @03:49PM

      by Anonymous Coward on Thursday October 09 2014, @03:49PM (#104079)

      From this POV it is hard to tell if Chinas growth is a house of cards illusion or the real deal.

      Huge swaths of unused cookie cutter homes/condos does not bode well for those who own them. Which many agree is where most of their growth is coming from.

      Slightly OT is tomorrow and North Korea. If he doesnt show. It could mean in the next month or two China and Russia moving in to prop them up.

    • (Score: 2) by bob_super on Thursday October 09 2014, @03:49PM

      by bob_super (1357) on Thursday October 09 2014, @03:49PM (#104080)

      Exact dates don't matter, and the people who argue about them are just trying to deal with their egos or insecurities...

      Should I ask when China will overtake the actual biggest economy in the world, the EU? (don't go telling me it's not a federal country).
      Nope, don't care. It will. A dangerously low growth for China is a dream growth for the EU.

    • (Score: 2) by arslan on Thursday October 09 2014, @09:48PM

      by arslan (3462) on Thursday October 09 2014, @09:48PM (#104216)

      Heh, actually even parts of Australia have to watch out for a housing crisis because of China. They like to come over here to buy houses and overbid in austions.. driving up the prices of the local market to insane levels, pretty soon most working aussies just have to rent from our Chinese overlords

  • (Score: 1) by Buck Feta on Thursday October 09 2014, @02:52PM

    by Buck Feta (958) on Thursday October 09 2014, @02:52PM (#104059) Journal

    I don't know what the latest numbers are, but in recent years China's per capita GDP has been at about 1/5th that of the US. This tells us something about their standard of living, but more interesting perhaps is just how massive their economic influence will be as they catch up to the US on this basis.

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    • (Score: 2) by Alfred on Thursday October 09 2014, @03:43PM

      by Alfred (4006) on Thursday October 09 2014, @03:43PM (#104075) Journal
      Yes, per capita is a good thing to remember. Standard of living too. Those poor city Chinese are arranged like lab rats in apartment blocks. If Americans were treated like the Chinese populous there would be revolts, and for good reason too.

      I think efficiency is an important metric that is missing. The 1/5 per capita GDP kinda fills that void. As long as communist countries insist on (for example) using shovels instead of bulldozers just to help the jobless rate instead of getting the project done they will lag behind in efficiency.
      • (Score: 2) by takyon on Thursday October 09 2014, @03:45PM

        by takyon (881) <reversethis-{gro ... s} {ta} {noykat}> on Thursday October 09 2014, @03:45PM (#104077) Journal

        Another good measure is PPB... aka parts per billion [google.com]!

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      • (Score: 2, Interesting) by takyon on Thursday October 09 2014, @03:51PM

        by takyon (881) <reversethis-{gro ... s} {ta} {noykat}> on Thursday October 09 2014, @03:51PM (#104082) Journal

        As long as communist countries insist on (for example) using shovels instead of bulldozers just to help the jobless rate instead of getting the project done they will lag behind in efficiency.

        One minor quibble:

        China builds things fast [cnn.com].

        But they end up with stuff like [businessinsider.com] this [cbsnews.com].

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        • (Score: 0) by Anonymous Coward on Friday October 10 2014, @11:36AM

          by Anonymous Coward on Friday October 10 2014, @11:36AM (#104397)

          I would regard excess housing production as being a good thing, like excess food production. Not everything has to be cut down to the wire just-in-time production of the exact amount predicted. If you're dealing with a critical need, it's useful to have a little more, to hedge against unexpected rises in demand.

          Houses should not be seen as an investment opportunity, they should be seen as something to live in.

      • (Score: 2) by BasilBrush on Thursday October 09 2014, @10:59PM

        by BasilBrush (3994) on Thursday October 09 2014, @10:59PM (#104239)

        Those poor city Chinese are arranged like lab rats in apartment blocks.

        That's how people in Manhattan choose to live.

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  • (Score: 0) by Anonymous Coward on Thursday October 09 2014, @02:55PM

    by Anonymous Coward on Thursday October 09 2014, @02:55PM (#104061)

    All these years, now they've finally knocked off the USA

    • (Score: 4, Insightful) by bob_super on Thursday October 09 2014, @03:53PM

      by bob_super (1357) on Thursday October 09 2014, @03:53PM (#104084)

      They haven't "knocked off" anyone. They politely offered cheap labor, no taxes, promises of a huge market, and more political stability than other cheap places.
      That was enough for the US CxOs to hand them everything that wasn't bolted to the US floor, and many things which were.

    • (Score: 1) by curunir_wolf on Thursday October 09 2014, @06:39PM

      by curunir_wolf (4772) on Thursday October 09 2014, @06:39PM (#104157)

      All these years, now they've finally knocked off the USA

      Not true. They've been making knock-offs of USA products for a long time!

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      • (Score: 2) by opinionated_science on Thursday October 09 2014, @06:57PM

        by opinionated_science (4031) on Thursday October 09 2014, @06:57PM (#104163)

        yes i suspect that is true. The "stolen IP" that makes china internally rich, will bite them in the behind if they try to export it independently...

        Besides, GDP isn't everything. The USA can make everything it needs...

  • (Score: 0) by Anonymous Coward on Thursday October 09 2014, @10:46PM

    by Anonymous Coward on Thursday October 09 2014, @10:46PM (#104235)

    What a load. They actually got this one past the "editors?" Seriously?! The editors comprehension is so low, they thought that what is described in the summary is that, "China Overtakes USA as the World's Largest Economy."

    Ugh.