China is the second largest Asian country and for some time now, boasts the world's second largest economy, which has grown rapidly since the government reforms in 1978. China is one of the biggest exporters and importers of manufactured goods, and is a major player in global financial investment. Agriculture continues to be a major force on the country's economy, with China leading the world in the production of rice, soybeans, tea, and cotton.
However, China is primed to take the top spot as the biggest economy in the world, according to figures posted by the International Monetary Fund. The United States has held the primary position of power in economic numbers since overtaking Britain in 1872. However, statistics suggest that the Chinese economy has taken over, with 16.48% of purchasing power worth $17.6 trillion in comparison to the US 16.28%, or $17.4 trillion. The wealth of China may only be overtaking the U.S. by a hair, but economists within the country are hailing the information as a positive turn for the future of China.
But you still do not see Americans trying to move to China. In fact, you see the opposite. On top of this, Americans per capita make much more than Chinese per capita.
Understanding the Numbers
China's wealth has accelerated throughout the years as a result of rapid industrialization, and the country's lead is only expected to expand. The numbers that define China as the leading economy in the world have been calculated using 'purchasing power parity', which allows for adjustments considering that some goods are cheaper in certain countries in comparison to others.
The logic behind purchasing power parity is that prices are not the same throughout the world. Buying a shirt will be more expensive in San Francisco than it is in Shanghai, so it's not completely reasonable to compare countries without taking the cost of living into account. Although someone in China will typically earn a lot less than the average citizen in the US (as already stated), simply converting their salary to dollars would undermine their purchasing power. GDP reaches about $55,000 per capita per year in America, compared with under $8,000 in China, but that $8,000 goes a long way.
The purchasing power statistic actually shows the growth of China's middle class, which has hit numbers in the several hundreds of millions. One hundred million vacations were taken by Chinese people to places outside of the country last year, and many popular western products are owned by Chinese firms, including Weetabix and Volvo.
Facts to Consider
China's rise, however, is hiding some important realities within the country. The income of the average Chinese resident is still lower than the average American salary (yes, stated already but this point is vital). Furthermore, at least one hundred million Chinese people within rural areas are still living in poverty. There are also entire neighborhoods built in China that no one lives in as reported on 60 Minutes. That just seems strange.
Recently, the Chinese government has been tackling social unrest and environmental destruction that has arisen as a reaction to the energy needs of a rapidly growing population. Despite its strengths, China's prices for raw materials do not always reflect the world market value. Furthermore, China remains one of the largest producers of fossil fuel emissions, which has created concerns regarding economic sanctions. GDP growth is forecast to reach 7.4% for 2014, in China, followed by 7.2% in 2015.