Compare Gdp And China's Economy

An economy is a system that manages the distribution of resources; it is also considered the wealth and resources of a region, in terms of the production and consumption of goods and services. The ranking of world economies is important in the sense that the nation with strongest economy hold stronger power in international affairs. The United States have been the number one economy since WWII. Currently, however, there are some disputes whether that is longer true. Many economists are arguing that China’s economy had either already surpasses the US’s or will be in the near future based on GDP and the PPP conversion system. Although, they present a pretty solid evidences, there are also other economists who pointed out the flaws in the PPP

Gross Domestic Product, measures the amount of goods/services produced within a border and translates it into monetary value. Each country has its own currency unit, so economists derived two methodologies in order to compare different GDPs. The first one is P.P.P. or Purchasing Power Parity; it compares GDP based on the national income in domestic market. Most goods in China are relatively cheap, so P.P.P boosts up China’s GDP. However, many experts are wary of this method; P.P.P estimates can be imprecise and misleading when comparing a developed country to a developing country (Forsythe). Consumer goods in a poor country tend to be cheap since its people don’t make a lot of money; if the goods are expensive, then the majority of the average Joe won’t be able to survive. The second, and more credible, method is the rate exchange method, which utilises the international market value. With this latter measure, “the United States’ economy remain nearly twice as big as China’s (Levi). Even if the rate exchange does show China’s GDP higher than the US’s, that alone does not prove that China is the better

When comparing GDP from different countries, the size of that country should be taken into consideration. There are countries with a huge population (ie. China), countries with medium population (ie. US), and countries with small population (ie. Singapore). Let hypothetically proposes that all 3 countries have the same GDP, then wouldn’t Singapore be the strongest economy since it produces the same amount of goods/services with less resources? Thus, just “tallying up gross domestic product [can]… yields a warped picture of China’s economic rises” (Levi). China population is more than four time the population of the US and technically, its GDP should be at least 3 time the US’s; yet it’s barely higher even after adjusting for P.P.P. By definition, China’s economy is still much weaker than the US’s economy. In addition, when dividing China’s GDP by its gigantic population size, the result is grim for a nation that boast of being the number one