14 DAY TRIAL // China has managed to overtake the United States and has become the largest economy in the world.
The data comes from the International Monetary Fund and has been a long time coming, reports the Financial Times.
The IMF adjusts the purchasing power parity in order to come to such conclusions. This makes sense, simply because prices aren’t the same in both countries. For instance, some things will cost more in New York than in Shanghai, so there are many things that need to be taken into account. Simply converting salaries from yen to dollars won’t do much good because it doesn’t necessarily correctly illustrate how much purchasing power the individual and, therefore, the country has.
The international financial body takes into account several things, such as the GDP in terms of market exchange power and purchasing power. When it comes to the latter, China is overtaking the United States, becoming the largest economy in the world.
More specifically, the IMF says that by the end of the year, China will account for 16.48 percent of the world’s purchasing-power adjusted GDP, calculated at over $17.632 trillion. In the same period, the US will only make up 16.28 percent of the same amount, about $17.416 trillion.
The pace China has been climbing at is quite impressive. In fact, back in 2005, the country’s economy was only half the size of the United States, but the IMB expects that by 2019 it will actually be some 20 percent bigger.
China isn’t the only one growing at a fast pace, but also other emerging markets, which now account for about 57 percent of the global output.