* GDP in Purchasing Power Parity terms with added estimates for the size of the informal economy and adjustments for out-of-date GDP base year data.

But this is not the whole picture. World Economics has reviewed differences in the calculations used. A second factor is that the Base Year used in calculation of Chinese GDP is 2015, some 8 years out of date (compared with the equivalent American calculation using a more modern system that is right up to date). An out of date base year suggests undervaluation. Much has changed over the period. World Economics estimates revaluing the Chinese economy to take account of the out of date base year would add roughly 12% to the size of China's GDP.

Finally, there is a third factor also likely to make a significant difference (data suggests about 5%) to the measured size of economic activity: the difference in size of the largely unmeasured Informal economy (or Shadow economy) between the two countries. No prizes for guessing which country is likely to gain the most from the addition of its informal economy.

Making allowances for these three factors, World Economics estimates that the Chinese economy is approximately 38% larger than of the United States, as of today.

So much for relative size. What about relative GDP growth in the past, IMF data shows Growth in the Chinese economy over the past decade, the past 5 years, and the past 3 years, to have been consistently 2.5% - 3% higher in China than in the USA. On another measure, China's Share of Global GDP growth over the past decade has been no less than 31.2%, as opposed to America's 9.6%. On these measures, even a significant slowdown in China's growth will be unlikely to lead to parity with US GDP growth.

A final thought relates to the claim that China's economy is likely to slow down. The March/April 2023 issue of Foreign Affairs contained a very convincing paper (China's Hidden Tech Revolution, How Beijing Threatens US Dominance) by Dan Wang of Gavekal Dragonomics, emphasising the extraordinary progress made in China:


Anyone reading this detailed look at China's strategy and capabilities is likely to be unconvinced the great motor of global economic growth of the last four decades is likely to stop growing faster than America, any time soon.

It is quite possible, on relatively modest assumptions, that China's economy will be approximately 45% bigger than that of America by 2030. There are after all, as Elon Musk remarked, "a lot of smart, hardworking people [in China]". And in all probability over four times more of them than in America.

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