Skip to main content
China and US US State Dept/Flickr

China’s Questionable Economic Power

The World Bank recently announced that China’s economy will surpass that of the US this year, measured according to purchasing power parity. But this is far from a holistic depiction of China's global economic standing.

TOKYO – The World Bank recently announced that China’s economy will surpass that of the United States this year, measured according to purchasing power parity (PPP). But this is far from a holistic depiction of China’s global economic standing.

Though PPP can serve some purpose in comparing welfare across countries, it is affected significantly by population size. India, the world’s tenth largest economy measured according to the market exchange rate of the US dollar and the Indian rupee, is the third largest in PPP terms. Moreover, power resources, such as the cost of imported oil or an advanced fighter aircraft engine, are better judged according to the exchange rates of the currencies that must be used to pay for them.

To be sure, total size is an important aspect of economic power. China has an attractive market and is many countries’ largest trading partner – important sources of leverage that China’s leaders are not afraid to wield.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/GFnj4dj;
  1. benami154_Yousef MasoudSOPA ImagesLightRocket via Getty Images_palestine Yousef Masoud/SOPA IMAGES/LightRocket via Getty Images

    Forgetting Palestine

    Shlomo Ben-Ami

    The two-state solution is virtually dead in the water, and the international community has largely abandoned the Palestinian cause. At this point, there is little to stop Israel from cementing the one-state reality that its right-wing government has long sought, regardless of whether that leads to a permanent civil war.

  2. sachs313_SebastionBozonAFPGettyImages_EUflagtrump Sebastion Bozon/AFP/Getty Images

    Europe Must Oppose Trump

    Jeffrey D. Sachs

    European leaders should recognize that a significant majority of Americans reject Trump’s malignant narcissism. By opposing Trump and defending the international rule of law, Europeans and Americans together can strengthen world peace and transatlantic amity for generations to come.

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions