China overtakes US as biggest economy

The size of China's economy in 2010 was 14.8 trillion USD compared with 14.6 trillion USD for the United States, when accounting for the countries' differing costs of living.

 
Beijing: A US economist has crowned China as the world's biggest economy in terms of purchasing power parity.
 
The "generous" No. 1 title given by Arvind Subramanian, senior fellow at the  Peterson Institute for International Economics in Washington, has drawn suspicion from Chinese scholars, who say such remarks are "pure fiction."

Chen Fengying, director of the World Economy Institute of China's Institute of Contemporary International Relations, said the title was an honor unfit for China.

The size of China's economy in 2010 was 14.8 trillion USD, compared with 14.6 trillion USD for the United States, when accounting for the countries' differing costs of living, Subramanian wrote in a note.  
 
Purchasing power parity calculates gross domestic product using exchange rates and takes into account price differences of the same goods between nations.
 
However, statistics from the International Monetary Fund  and the World Bank tell another story to that of Subramanian's.

The IMF, for instance, estimates gross domestic product, in PPP terms, in the United States was about 14.6 trillion USD in 2010, while China's was 10.1 trillion USD. The World Bank estimates a similar gap.

That's why David Leonhardt, an economics journalist with the New York Times, said on Jan. 14 in his article "On the size of China's Economy, a dissenter" that "I was careful to say that, by most measures, the United States still has by far the  largest economy in the world."

Ranjit Lall, the Financial Times' 2010 Peter Martin Fellow and also a senior statistician, said on Jan. 14 in his article "Has China already overtaken the US?" that "one might wonder, if this were the case, why Chinese policymakers have made no effort whatsoever to correct the IMF's statisticians."
 
Bureau Report
 
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