According to IMF and World Bank data, China has surpassed the US in terms of GDP based on purchasing power parity (PPP). In 2014 China reached $17.6 trillion or 16.48 percent of the world’s purchasing-power-adjusted GDP, while the US made slightly less, 16.28 percent or $17.4 trillion, the FT reported citing IMF data.
PPP is recognized as the best way to compare the size of economies rather than using volatile exchange rates, which rarely reflect the true cost of goods and services. Thus a trillion US dollars are worth a lot more in China than in the US.
Well, China can produce high tech products with a very cheap price. A laser pointer from US that cost US$ 25, in China only cost US$ 0.5. Many US companies such as Nike, Reebok, HP, etc. move their factory to China because of low operational cost there. They could produce products a lot cheaper in China.
US aggression in some Islamic Countries such as Afghanistan and Iraq and US continuing support to Israel that attack Gaza has made many Muslims (1.3 billion people) boycotting US products and buy somewhere else such as from Japan, Korea, or China.
According to the International Comparison Program (ICP), under the authority of the United Nations and hosted by the World Bank, new assessments put China's economy at 87% of the size of the US in 2011.
That was three years ago. And in 2005, the same organisation put China at only 43%.
But, the latest figures from the International Monetary Fund (IMF) in 2012 put China's economic output at about half the size of the US.
China's gross domestic product (GDP) in 2012 was $8.2tn (£4.9tn) while the US was $16.2tn.
The difference is that these are nominal GDP figures, so they are based on exchange rates.
If based on PPP, then China has surpassed US as world's largest economy. But if it based on US$ currency, US is still number one.
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