China is already the largest economy in the world.
PPP GDP is more relevant
for China for estimating military/space/R&D capacity, since China is nearly self-sufficient in terms of technical and manufacturing capability. Most of the costs for equipment and personnel are local in nature.
Even if you buy a loaf of bread in China, the cost of the wheat and the crude that makes the gasoline for the transportation is pretty much the only thing that China doesn't produce. It's cost is minimal relative to the total value of all parts domestically produced. That is what China is importing.
Natural resources, food, and a dwindling amount of high tech items (planes, engines, semiconductors) are the few things that you might want to use nominal GDP to calculate for China. While on the other hand nations like India, who don't source most of the items, parts, techniques, etc. from the domestic market, but rather internationally, their nominal GDP is far closer to the truth.
According to consensus, the IMF never actually gets in this war of 'who is the biggest economy' and usually just releases their nominal and PPP figures/estimates and lets everyone decide for themselves, but that's actually not exactly true. In one of the supplemental appendices, the IMF implies the true relative measure of an economy is: 40% of nominal GDP + 60% of PPP GDP (might be 60% nominal + 40% PPP I honestly can't remember).
I would say this isn't entirely accurate and is a simple one size fits all measure, and China's should lean more towards PPP relative to whatever measure the IMF uses for the baseline country, but even if you use the baseline country calculation then China and the US are already close to the same economic size.
Does anyone find this surprising?
It isn't when you consider some facts about the relative differences in other metrics (which are highly correlated with economic size):
As of end-2019, total assets for all SOEs in China was $78 trillion, more than the combined non-financial assets of all US households, nonprofits, small businesses, corporate businesses, financial businesses, local governments, state governments, and the US federal government,
combined. This is despite the fact that SOEs only contribute 40% of all Chinese income (a different metric but still impressive). (
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China has four of the top ten most competitive financial centers (Shanghai, Hong Kong, Beijing, and Shenzhen), more than any other country (USA has 2). This is according to the GFCI which is widely considered the top source by international organizations and institutions for ranking financial centers. (
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According to the only bank that compiles global national wealth data, China is either the richest country in the world or is about to be within the next year or two. (
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The 2020 numbers listed by Credit Suisse above show the net national household worth of China is $81.4 trillion compared to $114.9 trillion in the USA. This does not account for government net wealth, which was $17.4 trillion for China as of end-2016 and over -$21.5 trillion for the USA as of beginning-2019 (yes negative $21.5 trillion!), with the discrepancy likely being even worse as of 2020. (
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From the same source but for last years issue, China already surpassed the United States in the total number of people within the top 10% of global wealth. China had 100 million wealthy people (each owning a net wealth of over USD 110,000) compared to the US with 99 million. (
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China also has the world's largest total banking sector assets of $45.838 trillion (309.41 trillion CNY) with $42.063 trillion in total deposits and other liabilities (
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China has more Fortune 500 companies than anyone else in the world,
in nominal value not PPP. China has over 25% of the worlds largest companies. (
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While Forbes ranks China as having the 2nd largest number of billionaires, Hurun Global Rich List, which is actually located in China and may know more about local business operations lists 799 billionaires for China (I'm sure excluding many relatives of certain officials) to the USA's 626 billionaires. (
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China manufactures $3.896 trillion of goods every year compared to $2.317 trillion for the USA, or about 68% more. (
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Hell, even when the US shows off how much it buys from everyone else, China buys just about as much as the US does. While US imports were $2.568 trillion in 2019, China's was $2.069 trillion, or only about 25% more... (
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China has more 5G users than the rest of Humanity combined. In fact, it's not even close. By the end of July 2020, China's 5G users had already surpassed 88 million, accounting for
over 80% of users worldwide -- far ahead of the previously projected 70% share for the whole of 2020. (
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Our economic wunderkind Gordon Chang says that electricity consumption is actually the best indicator of Chinese growth. China consumes 6.31 trillion kilowatt-hours per year as of 2017, while the US consumes 3.91 trillion kW·h/yr as of 2015. Does someone want to tell him that
China consumes 63% more electricity than the United States every year? (
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I can go all day with these stats. China produces 12x as much agriculture value (adjusted for PPP), China produces significantly more food (contrary to popular belief), China produces over 2x as many cars every single year, China produces $7 trillion MORE industry than the US every single year (adjusted for PPP), and on and on and on. China outproduces and out-consumes the United States on 90%+ metrics that exist. See for yourself:
Also funny to note, many of these are outdated enough that a decent proportion that are listed as another country leading actually belong to China if you look a little bit deeper.
Let's not forget with most if not all of these numbers the differences will continue to
grow in China's favor with each passing year, and that some of these numbers are already slightly outdated so the actual reality is even more in China's favor than indicated. So how can a country which is only supposedly 70% of US GDP be this much bigger in every other metric? It doesn't make any sense.
