The figures are adjusted for Purchasing Power Parity (PPP).
According to the IMF, the combined purchasing power of China’s citizens now outstrips that of America’s. By the end of 2014, China should make up 16.48& of the world’s purchasing-power adjusted GDP for a total of $17.632 trillion.
The US economy, by contrast, will make up 16.28%, or $17.416 trillion.
Purchasing power parity seeks to address the fact that while wages tend to be lower in “developing” countries than in mature economies like the US, the price of goods and servicing is also typically much lower.
The Economist’s Big Mac Index, for example, quotes the price of the McDonalds staple in July at $4.80 in the US, but just $2.73 in China.
PPP, therefore, bases economic output on what a country’s citizens can purchase, as opposed to an unadjusted GDP figure using market exchange rate, which is more often quoted.
Loading gallery
However, the figure is controversial. It requires the comparison of a huge amount of goods and services, and is therefore a vast statistical undertaking that can only be conducted infrequently with estimates used during intervening periods. The methods used to collect the data have also led to controversy in the past.
When it comes the raw GDP data base on exchange rates, China will eventually also overtake the US if it carries on growing as it has, but that is still likely to take many years.
NfC5EF2Kk9QAt least 158 people have died in Spain's worst flooding disaster in generations. On October…
Google has been fined two undecillion (a two followed by 36 zeroes) roubles by a…
Embarking on a home remodel is an exciting journey, promising enhanced comfort, increased property value,…
The US presidential candidates continued to campaign across key swing states on October 20. Footage…
Elon Musk has said he will give away $1 million a day to a registered…
India and Canada have decided to expel their top envoys along with other diplomats as…