Could China ever surpass the United States as the world's largest economy?
Yes. For sure.
If we measure the economy by PPP, China has surpassed the US as the world’s largest economy since 2016.
The United States and China are the two largest economies globally in both Nominal and PPP methods. US is at the top in nominal, whereas China is at the top in PPP since 2017 after overtaking the US. As of 2021 , both countries together share 41.89% and 34.75% of the entire world's GDP in nominal and PPP terms, respectively. The GDP of both countries is higher than the 3rd ranked country Japan (nominal) and India (PPP) by a huge margin. Therefore, only these two compete to become first. As per projections by IMF for 2021, United States is leading by $6,033 bn or 1.36 times on an exchange rate basis. The economy of China is Int. $3,982 billion or 1.18x of the US on purchasing power parity basis. According to estimates by World Bank, China's gdp was approx 11% of the US in 1960, but in 2019 it is 67%. Due to the vast population of China, more than four times of US's population, the difference between these two countries is very high in terms of per capita income. The Per capita income of the United States is 5.78 and 3.61 times higher than that of China in nominal and PPP terms, respectively. The US is the 5th richest country in the world, whereas China comes at 63rd rank. On a PPP basis, The United States is in 8th position, and China is at 76th. China attains a maximum gdp growth rate of 19.30% in 1970 and a minimum of -27.27% in 1961. During the period 1961 to 2019, China grew by more than 10% in 22 years. The United States reached an all-time high of 7.24% in 1984 and a record low of -2.54% in 2009. GDP growth rate was negative in eight years for the US. China showed negative growth in four years. According to World Factbook, China is ahead of the US in Agriculture and Industry sector . Agriculture Output of United States is only 17.58% of China and 77.58% for the Industry sector. The services sector of the US is more than double of China.
If we measure the economy by manufactures, China has surpassed the US as the economy in the world since 2011.
If we measure the economy by trade, China has surpassed the US in dominating world trade since 2018.
Some would argue that China has surpassed the US in dominating world trade since 2008.
Who dominates global trade? It is well recognised that China has become the world’s largest trading nation. Less appreciated is the effect this has had in displacing the United States from its traditional dominance as a trading partner for other countries around the world. We examined this using data from the IMF’s Direction of Trade Statistics database , which provides a repository of bilateral trade flows for most countries. We focus on gross trade flows (i.e. exports plus imports) which serves as a measure of the degree of trade integration between two economies and ask for each country whether the US or China is the larger trading partner. China’s rise since the turn of the century has been swift. In 2001, the year China acceded to the World Trade Organisation, over 80% of countries with data available had a larger volume of trade with America than China. By 2018, that figure was down to a little over 30% – with two-thirds of countries (128 out of 190) trading more with China than the United States. Equally important, 90 countries (almost half) traded more than twice as much with China as with America (these are shown in dark red in the chart). Driving this picture is that China’s economy is far more export driven than the US, it is deeply enmeshed in global supply chains, and has been growing much faster. In terms of policy drivers, many factors have been at play. But China’s 2001 accession to the World Trade Organisation has clearly been central, with the number of countries trading more with China than with the United States increasing rapidly thereafter. This was aided by an under-valued exchange rate during this period that helped make Chinese exports especially competitive. The turning point for global trade was the 2008-09 financial crisis, with China overtaking the United States as the larger trading partner for more than half of all countries. In recent years the trend in China’s favour has petered out as its economy has slowed while America’s has picked up. China’s exchange is also no longer under-valued by most accounts. Regardless, the global trade landscape has already been substantially reshaped. By Roland Rajah and Alyssa Leng for the Global Economic Futures project at the Lowy Institute
If we compare the structure of the economies, China has an economy that creates wealth while the US has an economy to exploit the world. The US has a larger economy because of its financial hegemony that enables it to exploit the world.
So most countries in the world would like China to surpass the US as much as possible because connecting the economy with China is a win-win cooperation relationship while connecting to the US is to be exploited by the US.
China should surpass, will surpass, and has been surpassing the US as a dominating economy in the world. It is a blessing for the world and for the future of mankind.
