The Economist Magazine projects that China will shortly overtake the US as the world’s largest economy. China has transformed itself from a centrally-planned closed economy in the 1970s to a manufacturing and exporting hub over the years. Since it initiated market reforms in 1978, the Asian giant has achieved economic growth averaging 10% annually (though it’s slowed recently) and, in the process, lifted almost half of its 1.3 billion population out of poverty and become the undisputed second-largest economy on Earth.
As of 2016, the U.S. economy remains the largest in the world in terms of nominal GDP. The $19.42 trillion U.S. economy is 25% of the gross world product. However, the U.S. economy loses its spot as the number one economy to China when measured in terms of GDP based on PPP. In these terms, China’s GDP is $23.19 trillion exceeds the U.S. GDP of $19.42 trillion. PPP estimates of GDP adjust for price level differences across countries, providing a better measure of the volume of goods and services produced by an economy as compared to GDP at current market exchange rates, which is a measure of value.
LESS than two centuries ago, China was far and away the world’s biggest economy. Until the nineteenth century China was a much bigger and more powerful state than any in Europe or Asia. Its technology and well run bureaucracy gave it higher levels of income than Europe from the fifth to the fourteenth century Thereafter Europe slowly forged ahead in terms of per capita income, but Chinese population grew faster. Chinese GDP in 1820 was nearly 30 per cent higher than that of Western Europe and its Western Offshoots combined. Between the 1840s and 1940s, China’s economy collapsed. Per capita GDP in 1950 was less than three quarters of the 1820 level. Population growth was interrupted by major military conflict. In 1950, China’s GDP was less than a twelfth of that in Western Europe and the Western Offshoots.
The nominal GDP for the U.S. and China for the year 2022 is estimated at $23.76 trillion and $17.71 trillion respectively, while the GDP in terms of PPP is projected at $23.76 trillion for the U.S. and $34.31 trillion for China.
A new study by PricewaterhouseCooper (PwC) projects that emerging economies come to dominate the 21st century. By 2050 PwC projects China will be the largest economy in the world by a significant margin, while India could have edged past the US into second place and Indonesia have risen to fourth place. The EU27’s share of global GDP could have fallen to below 10%. PwC also projects that the world economy will more than double in size between now and 2050, far outstripping population growth.