China Is Not yet Number One

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Many claim that China will soon overtake the US. I argue that this
claim is based on a misuse of statistics. The International Comparison Program
(ICP) price data is necessary to compare living standards, since a dollar’s worth
of yuan buys more in China than a dollar buys in the US. But the fact that rice
and clothes are cheap in rural China does not make the Chinese economy larger.
What matters for size in the world economy is how much a yuan can buy on
world markets. Using the correct prices, the US remains the world’s largest
economic power by a substantial margin.
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China Is Not yet Number One
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关键词：Number China HINA Ber Yet china exchange rate ppp