China is now the World’s Leading Power!

International Monetary Fund (IMF) has just made the news official: China has surpassed the United States to become the largest economy in the world.

An economic growth and PPP higher than the USA

This result relies on the comparison of purchasing power of the two countries, and especially the GDP of the two countries in terms of market exchanges and purchasing power. With a 7.4% economic growth and a PPP which is higher than the USA, China has just become the world’s leading economic power; and the USA is now in second place for the first time in 142 years.

The World Bank had predicted it

International Comparison Program (ICP), an institution under the World Bank, was right, saying last Spring that China would become the world’s leading power in the world before the end of the year. In 2005, ICP’s calculations had demonstrated that the Chinese economy represented only 43% of the United States’ economy, so less than half of it. The Chinese economy had finally grown faster than expected: in 2011, it already represented 87% of the United States’ economy. Then, IMF estimated that China’s economy would still grow by 24% between 2011 and 2014, while only 7.6% for the United States during the same period, so the statistics agency had concluded that China could overtake the United States this year to become the largest economy in the world. It is ultimately what just happened.

According to estimates, China will represent 16.48% of the world’s GDP at the end of 2014, compared to 16.28% for the United States. And IMF says it will still earn 20% by 2019.
china world's leading power

Source: IMF

 

However, China has not caught up with the gross market value of the United States yet: it is still dominating, with a 6500 billion difference.

china world's leading power

 

Source: IMF

 

Since 2007, the weight of developing countries in the world’s GDP has exceeded that of developed countries, and now, the share of world’s income they produce is 57%. The results are impressive: between 2007 and 2014, emerging countries have experienced a growth nine times higher than in developed countries. “Pretty amazing,” said Chris Giles from the Financial Times.