China Becomes the Worlds largest Economy in 2013
World Economics - December 2013
By most estimates, in 1990 China’s GDP was about one quarter of the size of the United States. By 2006, China’s GDP was about half that of America. By 2011, the gap was minor.
In 2012, the title of Worlds’ largest country as measured by GDP no longer belonged to the United States, but was a shared crown as the GDP figures achieved rough parity. At the end of 2013, it is clear that the Chinese economy is bigger than that of the US. With China’s economy now back on track for what looks like another great leap forward. It seems inevitable that by the end of 2014 a significant gap will have emerged.
As the chart below shows, by the end of 2015 latest forecasts suggest a gap of more than 20% may have emerged.
Although China now has an economy that is larger than that of the United States, an examination of GDP per capita reveals the relative wealth of Americans as remaining much higher than the average Chinese consumer. GDP per capita in China estimated in 2012/3 at $10/11000, on par with low to middle ranking economies such as Romania ($11,000 - 2013 est.), Uruguay ($12,000 - 2013 est.) and Turkey ($13,000- 2013 est.).
In contrast, US GDP per capita in 2012/13 was $45-46,000. Whilst variations in the cost of living as explained by the World Price Index do account for some differences, there is little doubt that the average Chinese citizen is considerably poorer than their American counterparts.
Whilst this gap is closing, even if current growth rates continue, China is not expected to overtake the US in per capita terms for another two decades.
If growth rates drop from 7-8% to 5-6% over this period, it may not be until 2050 (or significantly further if rates fall to 4-5%) that China may take the per capita crown from the US.
Notes to editors
Please note these data are estimates, and may be subject to change and updates.
- PPP GDP is a practical way to derive the sum value of an economy in comparable format.
- The original PPP data (1990-2011) used in this paper is from the Penn World Tables (Real GDP derived from 2005 constant GDP, and National Accounts percentage increases).
- 2012 data for China is from the official National Bureau of Statistics. For the US the data is from the BEA.
- 2013-15 data (represented by the shaded area) are exclusively from IMF estimates of constant GDP growth.