China could surpass the United States as the world’s largest economy as early as this year, according to some experts.
China is poised to overtake the U.S. as the world’s biggest economy earlier than expected, possibly as soon as this year, using calculations that take purchasing power into account.
China’s economy was 87 percent of the size of the U.S. in 2011, based on so-called purchasing power parity, the International Comparison Program said in a statement yesterday in Washington. The program, which involves organizations including the World Bank and United Nations, had put the figure at 43 percent in 2005.
The latest tally adds to the debate on how the world’s top two economic powers are progressing. Projecting growth rates from 2011 onwards suggests China’s size when measured in PPP may surpass the U.S. in 2014, which would be years earlier than many economists had previously estimated, according to Arvind Subramanian of the Peterson Institute for International Economics.
“There’s a symbolic element to this, to China overtaking the U.S., and that seems to be happening,” said Subramanian, a senior fellow at the Washington-based Peterson Institute. The latest data “plays to the idea that China is very big and getting bigger. It’s not to be underestimated.”
In a book published in September 2011, Subramanian estimated China became the world’s largest economy in 2010. While this was too early, the International Monetary Fund’s projections in its World Economic Outlook show China will move to the top in 2019, which is too late, he said today.
Fox Business Network’s Stuart Varney spoke with Martha MacCallum tonight about the report.
“The bottom line is they are growing very very fast, and we are not,” he said of China.
“Our failure to grow is a policy failure,” Varney said, adding that China will catch up with the U.S. very quickly in the absence of real policy changes.
Varney says the U.S. should cut taxes, cut regulation, stop spending so much money, and explore the energy resources we have.