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CHINA TO SURPASS U.S. AS WORLD’S LARGEST ECONOMY IN 2014

Wednesday, April 30, 2014 | BY: ARMAND HOLMES

According to reports in both The Financial Times and The Economist, China is poised to become the biggest economy in the world by the end of the year. China would surpass the United States who has held the spot since 1890, the title being held by China before that. 

China is set to become the biggest economy based on the total GDP of the country as reflected in’purchasing power parity’. Purchasing power parity (PPP) is a measure used by economists to make all the different currencies in the world equal. 

While prices of goods and services differ all across the world, purchasing power parity is based on a comparable basket of goods and services across the globe. Purchasing power parity is commonly used by businesses in both the public and private sector.

The International Comparison Programme came up with these numbers by calculating the cost of living in 199 countries.  China’s purchasing power exchange rate is now 20 percent higher than what it was in 2005.

Between 2011 and 2014 China economy grew 24 percent, while the US increased by only 7.6 percent. Prior to these reports, China was projected to be the world’s biggest economy by 2019,  but will now surpass the United States by the end of this year according to the International Monetary Fund.

What are the implications for citizens of the United States?

What are the implications for citizens of countries throughout the world?

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