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China Just Overtook The US As The Worlds Largest Economy

You see “made in China” everywhere, but now you’ll see a whole lot more of it! China has officially took over the US as the world’s largest economy according to the IMF. The news may seem unreasonable for many, but once you understand how the mechanics at work, you’ll simply think: Damn!

The method of calculating the economy’s size is not based on a simple comparison of China and the US in terms of GDP. By that measure China is still below the US, actually $6.5 trillion below. But if you happen to understand a bit about economics, you’ll comprehend that things are not bought and sold at the same price in the US and China. A meal in the US might set you back $15, but in China that would cost you $5. A pair of sneakers in Shanghai may cost just above $10 but in the US a similar pair would trade at $50. Now what the IMF did is using the PPP (Purchasing Power Parity) to compare the two countries. Using salary levels, and products prices in China and the US, a quick computation gives you the final result: China is kicking butt!

China blew everyone out when they were racking up two digit growth performance for years, lifting hundreds of millions of people out of poverty and turning the sleeping dragon into an industrial machine that manufactures anything and everything. Now China is stepping up its game to become a post-industrial power, giving birth to the likes of Alibaba, Xiaomi and Tencent (If you don’t know about these Chinese Tech companies, then you should probably read the news more because they are multi-billion dollar tech empires larger than the largest US tech companies).

The winds are changing this time. Whether China will stand up to what is expected from it as a world leading giant is yet to unfold, but one thing is for sure: they worked hard, they went through hell to get where they are today and they fought tooth and nail to get the world to respect the chinese flag. China: well done!

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