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When will China overtake America?
Terms in this set (6)
It was predicted that China could become the world's largest economy as soon as 2012 on a
Purchasing-power-parity (PPP) basis, which adjusts for the fact that prices are lower in China
If real GDP in China and America continued to grow at the same annual average pace as over the past 10 years (10.5% and 1.7%)
And nothing else changed, then in that situation China's GDP could overtake America's in the year 2022.
China's growth rate is bound to slow in coming years
As its working-age population starts to shrink and productivity growth declines.
The relative paths of dollar GDP in China and America depend not only on real growth rates
But also on inflation and the yuan's exchange rate against the dollar.
In an emerging economy with rapid productivity growth the real exchange rate
Should rise over time, through either higher inflation or a rise in the nominal exchange rate.
Americans would still be much richer
If China's GDP overtook America, with a GDP per head more than four times that in China. But don't expect that to dampen Chinese celebrations, whenever they come.
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