PARIS: China is advancing rapidly to overtake the US as the biggest economy in the world, new data shows, with the leader of the world economy since the 19th century possibly losing its top spot to the Asian giant from this year.
“The United States remained the world’s largest economy (in 2011), but it was closely followed by China” once data was adjusted for comparison on a standard basis, the World Bank said on Wednesday. “India is now the world’s third largest economy, moving ahead of Japan.”
In parallel, the Organisation for Economic Cooperation and Development (OECD) grouping 34 advanced economies and analysing the same data, said “the three largest economies in the world were the US with 17.1% (of global output), China 14.9% and India 6.4%”.
In 2011 “OECD countries accounted for 50% of the world’s gross domestic product [GDP]” on a comparable basis, down from about 60% in 2005.
“Large emerging economies, China, Brazil, India, Indonesia, Russian Federation and South Africa, accounted for about 30% of global GDP in 2011, up from about 20% in 2005”, the OECD said.
The World Bank published a vast study on the rankings of national wealth creation on the basis of 2011 figures.
The study was carried out with several international organisations to compare national production figures in nominal terms, and also after adjustment to reflect varying buying power, a method knows as purchasing power parities (PPP).
Comparisons of the size of various national economies can be skewed heavily by the exchange rates used and how these change. They can also be affected by the reliability of input data.
The OECD said that PPPs were “the relevant currency conversion rates to make international comparisons of economic activity” since they compensated for differences in price levels across countries.
GDP by the US in 2011 amounted to US$15.533 trillion, over twice of China’s US$7.321 trillion. But after a PPP-method adjustment, the figure for China rose to US$13.495 trillion, breathing down the neck of the US which has dominated the world economy for over a century.
China has been catching up for several years, since it became a player across the global economy.
It now looks possible that in the course of this year, the Asian behemoth will overtake the US in terms of output on a purchasing-power basis.
The director of French research and forecasting body Cepii, Sebastien Jean, said: “The latest data lead to the conclusion that this will probably happen from 2014, because Chinese GDP on a purchasing parity basis has been sharply revised upwards.” — AFP
This article first appeared in The Edge Financial Daily, on May 02, 2014.
Written by AFP
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