The 2011 World Bank International Comparison Program are the most authoritative estimates of what money can buy in different countries. In 2005, the ICP thought China’s economy was 43 per cent of the US GDP. Because of the new methodology – and the fact that China’s economy has grown much more quickly – the research placed China’s GDP at 87 per cent of the US in 2011. The IMF expecting China’s economy to have grown 24 per cent between 2011 and 2014 while the US is expected to expand only 7.6 per cent, China is likely to overtake the US this year. Also, Hong Kong and Macau were not included in China’s total and would add about $450 billion.
The 104 page Summary of the 2011 World Bank International Comparison program are here. The final report will be available in June, 2014.
India becomes the third-largest economy having previously been in tenth place. The size of its economy almost doubled from 19 per cent of the US in 2005 to 37 per cent in 2011.
Using the 2005 GDP purchasing power parity China had 75% of the GDP of the US in 2012 and about 70% in 2011. The 2011 PPP numbers are a 25% increase. The Telegraph UK Ambrose Evans-Pritchard and Clyde Prestowitz talked about China never catching the USA on GDP (even PPP GDP). They were wrong and wrong in articles in 2013.
Ben Chu wrote less than two months ago – checking the International Monetary Fund’s latest forecasts I [Ben Chu] noticed that the great oriental sorpasso [China passing the US on PPP GDP] has, apparently, been put on hold. What happened to China overtaking the US? It happens this year in 2014 with the 2011 ICP PPP GDP adjustments. The 2005 comparisons were wrong because they used the higher prices in major cities like Shanghai.
China’s IMF per capita GDP 2005 PPP was $10,695 in 2014 but will now be $13,300 GDP per capita with 2011 PPP. This is close to the level of Brazil’s adjusted per capita PPP GDP.
China would have about $20,000 per capita PPP GDP in 2019 which is about the level of Mexico.
China will also gets bumped into the World Banks high income country classification, when the World Bank updates the standard for per capita income. Economies are divided according to 2012 GNI per capita, calculated using the World Bank Atlas method. The groups are: low income, $1,035 or less; lower middle income, $1,036 – $4,085; upper middle income, $4,086 – $12,615; and high income,$12,616 or more.
A long and healthy life: Life expectancy at birth
Education index: Mean years of schooling and Expected years of schooling
A decent standard of living: GNI per capita (PPP US$)
The World Banks Purchasing power parity GDP is used in almost all academic studies and analysis.
The new figures means China leapfrogs out of the middle income trap.
This has been clear for a few years to those who recognized that the 2005 GDP PPP numbers were wrong. Now it will be officially recognized.
These figures effect things like foreign aid and various international programs.