Share This

Saturday, 3 May 2014

China's economy close to overtaking USA in PPP measure this year but China don't read the ranking

China may be poised to overtake the United States as the world's top economy sooner than expected, according to one measure, but some underwhelmed Chinese would rather have clean air and political freedoms.

The World Bank on Wednesday published a vast study on the rankings of national wealth creation on the basis of 2011 figures.

It was carried out with several international organisations to compare national production figures in nominal terms, and also to reflect differences in buying power -- or purchasing power parity (PPP).

Gross domestic product (GDP) for the United States in 2011 amounted to $15.533 trillion, more than twice China's $7.321 trillion. As soon as this year.

But after adjusting for PPP, the figure for China rose to $13.495 trillion -- which means that the rapidly growing Asian giant could overtake the United States as soon as this year.

Thursday was a public holiday in China so official reaction was not immediately available. Communist authorities have in the past played down such talk, keen instead to stress that in per capita terms, their people remain a long way behind the world's richest nations.

But there was scepticism, and cynicism, among Chinese social media users.

"They are talking about PPP, not GDP," wrote one of them on Sina Weibo, China's version of Twitter.

"As long as GDP, China is still far behind US," continued the post, which was written in English and was echoed by several others.

Some weibo users suggested they were more interested in tangible indicators directly related to their quality of life.

"Low income, cannot breath freely, no freedom, why should I care even if it's No. 1 in the Universe? Not to mention No. 1 on Earth," wrote a user.

"Is this more important than blue sky and clear water?" posted another.

China's decades-long economic boom has brought rising environmental problems, with large parts of the country repeatedly blanketed in thick smog and both waterways and land polluted.

One user suggested that such rankings were more closely watched overseas than in China.

"No domestic reports about this, only foreign media always talk about it," the post said. - AFP

Don’t read too much into PPP ranking

The International Comparison Program, a project coordinated by the World Bank, released a new report with data suggesting that the size of the Chinese economy, by the measure of purchasing power parity (PPP), will surpass the US to become the biggest sometime this year.

The data, once released, drew keen attention from Western mainstream media, some of which even reported that China, which strongly questioned the accuracy of the report, had tried to stop the World Bank from announcing it for a long time.

PPP is usually employed by economists as a supplementary measure to evaluate the size of economies besides market exchange rate. The size of developing economies will be usually bigger when assessed in PPP terms instead of market exchange rate.

The statement that Chinese economy tops the world is not nonsense, but  such a vision is still too far away from what Chinese people can really feel. Although China has surpassed the US in certain economic spheres, the quality of the Chinese economy is far worse than that of the US.

It is a positive sign that the Chinese government has objected to the PPP-based conclusion, and the Chinese public cares much less than the Western countries about the top economic ranking. The mainstream society is aware of China's real economic conditions. China may lack confidence, but it won't sacrifice sense to acquire it.

The PPP-based statement, announced by Western economists and analysts, does not mean it is a conspiracy, as some alarmists think. What China should do is to keep calm, and know what exactly it means to the Chinese economy.

The report may serve as new catalyst for discussion in Western countries about China overtaking the US. It might be the start that they will discuss it in a serious way. The world will probably take new perspectives toward China's growth.

China also needs to adjust itself to avoid any false pride and self-centeredness. It has to keep a clear mind about what it really is, and minimize the impact caused by external forces.

For now, China cannot decide what image it has in the mind of the West, which still has a big say on this matter. But China has the initiative for its own actions. It doesn't have to wrestle with the West for image, but it must make sure the steps it takes for its own development are not dictated by the West.

China will become the No.1 economic power sooner or later, which is an irreversible trend. But China still needs foresight to guide its moves, and make sure the geopolitical changes in the Asia-Pacific area will generate more positive results.

China being the No.1 economic power is like a double-edged sword, which on the one hand will enhance the nation's confidence, but on the other hand pose great challenges to the improvement of people's wellbeing. Whether the crowning will produce more positive results instead of social problems will be a huge test for the Chinese society.

Source: Global Times Published: 2014-5-5 0:53:01

No comments:

Post a Comment