Thursday, August 19, 2010

The World's Second Largest Economy

"As the world looks on with astonishment, admiration and fear, Beijing, however, is not swollen with pride, there is no public chest-thumping," reports Francesco Sisci — No rush for China. More:
    Overtaking Japan in fact removes the last fig leaf for the true economic comparison - ongoing openly for years - between China and the United States. The natural question now is: What will happen next? When will China's GDP surpass that of the US?

    The answer primarily depends on the method of accounting that is adopted, with dozens of variants. If you consider purchasing power parity in overtaking the US, China could rise within 10 years. If the present value of their respective currencies is considered, it could happen in over 20 years. But if the Chinese yuan is revalued against the dollar, it will happen sooner.

    If the US economy recovers, it may be a matter of 40 years, if it crumbles, it could be tomorrow, and if the Chinese economy collapses, it may never be.

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