America usurped: China becomes world’s largest economy

Last week the International Monetary Fund updated its data on the world economy. For the first time it ranks China’s economy as the world’s biggest in purchasing-power-parity terms.

Historians, though, point out that China is merely regaining a title that it has held for much of recorded history.

In 1820 it probably produced one-third of global economic output. The brief interlude in which America overshadowed it is now over.

The White House seemed oblivious on Wednesday, crowing that “the economic policies that this president put in place are the envy of the world”.

They seemed caught flat-footed by the news.

The latest IMF figures show the Chinese economy is worth $17.61 trillion compared with $17.4 trillion for the U.S.

The figure is controversial as it requires the comparison of a huge amount of goods and services, and is therefore a vast statistical undertaking that can only be conducted infrequently with estimates used during intervening periods. The methods used to collect the data have also led to controversy in the past.

When it comes the raw GDP data base on exchange rates, China will eventually also overtake the US if it carries on growing as it has, but that is still likely to take some years.