Bloomberg: China overtook the US last year as the world’s biggest economy when measured in terms of purchasing power, according to Arvind Subramanian, senior fellow at the Peterson Institute for International Economics in Washington.
The size of China’s economy in 2010 was $14.8 trillion, compared with the US’s $14.6 trillion, when accounting for the countries’ differing costs of living; Subramanian wrote in a note published Thursday, a week before President Hu Jintao visits Washington. So-called purchasing power parity calculates a gross domestic product using exchange rate that adjusts for price differences of the same goods between nations.
Growth in the world’s most populous nation has averaged 10.3% a year over the past decade, nearly six times faster than the US. China was the biggest auto market for the second year running, created the world’s fastest supercomputer and was ranked the biggest user of energy in 2010.
A poll of Americans ahead of a summit of Hu and President Barack Obama found some 47% said China is the leading economic power with 31% naming the US, according to the Washington-based Pew Research Centre for the People and the Press.
A February 2008 Pew Poll found 41% of Americans considered the US the top economic power, with 30% naming China. w
Subramanian said his calculations are based on new estimates of GDP that will soon be published by the Penn World Tables, which correct biases in previous estimates by the International Comparison of Prices project and the World Bank that underestimated China’s purchasing power.
Adjustments have also been made to take account of a different estimate for appreciation in China’s currency compared with that made by the International Monetary Fund, Subramanian said.
China’s GDP per capita, which reflects the average standard of living, would increase to $11,047 from the $7,518 estimated by the IMF in its World Economic Outlook, according to Subramanian’s calculations. That would still leave the US’s GDP per capita 4.3 times higher than China’s, he said.
In nominal terms, China’s output in 2009 was 34 trillion yuan, or $5 trillion, at average exchange rates that year, trailing the US’s $12.9 trillion.