A new round of data surveys for the International Comparison Project (ICP) has been completed on a global scale. ICP is an important statistical activity jointly implemented by the United Nations Statistical Commission, the World Bank and other international organizations, aiming to measure the difference between currencies between different countries by using the purchasing power within each country, eliminating the impact of exchange rate fluctuations and comparing prices, so as to obtain more accurate international comparison data. This work can provide an important reference for international economic research and policy making.
With the deepening of globalization, the economic ties between countries are becoming increasingly close. However, the exchange rate of currencies between different countries is affected by a variety of factors, such as exchange rate fluctuations, inflation levels between countries, and differences in goods and services. As a result, it is often not accurate to use exchange rates alone to calculate the size of economies or gross national product (GDP) between countries when making international comparisons. By surveying the purchasing power of each country to weigh the amount of money required to pay for various goods and services, the ratio obtained by the ICP is more reflective of the actual purchasing power differences between countries, providing a more reliable data basis for cross-country comparisons.
According to the latest ICP survey, China's GDP is expected to surpass that of the United States to become the world's largest economy. According to data published by the World Bank, the purchasing power conversion factor between the Chinese RMB and the US dollar in 2022 is 399, that is to say, 3The purchasing power of 99 RMB in China is equivalent to the purchasing power of 1 US dollar in the United States. Based on the adoption of this new PPR ratio, China's GDP will reach 121 in 202202 trillion yuan, converted to 3025 trillion. The GDP of the United States is 25$46 trillion, which means that China's economy has surpassed the United States to become the world's largest economy.
Behind this result is the growing strength and influence of China's fast-growing economy. As a global manufacturing and leading country, China has become an important partner and market for all countries in the world. Not only is the domestic market large, but also the export strength is also strong. At the same time, China continues to deepen reforms, promote economic transformation and upgrading, continue to develop an innovative economy, and vigorously promote scientific and technological progress and innovation, all of which provide a strong endogenous driving force for China's economic growth.
Due to the dollar's status as a global reserve currency and a major international payment currency, its exchange rate is often overvalued, which has led to the dollar's real purchasing power being highly exaggerated. Conversely, the real purchasing power of developing country currencies, including the Chinese yuan, the Russian ruble, the Indian rupee, the Indonesian rupiah, the Vietnamese dong, and the Brazilian real, is underestimated. By reassessing the size of the U.S.-China economies using a conversion factor between countries' real purchasing power, China will no longer be the world's second-largest economy, but will overtake the United States as the number one.
This conclusion has important implications for the stability and equilibrium of the international economic system and the monetary system. On the one hand, the status of the US dollar as a global reserve currency gives the United States an important international currency status, but it also brings certain risks and challenges. The scarcity of the dollar and the size and influence of the U.S. economy depend in part on this international status. Once the dollar's international standing is shaken, the United States may also face an economic downturn and a weakening of its international competitiveness. On the other hand, the rise of China's economy and its overtaking of the United States will bring tremendous changes and opportunities to the global economy. China's market size and consumption potential will become an important driving force for global economic growth.
As the World Bank is about to release the results of a new round of ICP surveys, the Financial Times published an article titled "Sorry America, China's economy is bigger than yours". The article points out that there is a distorting effect in exchange rates, which tend to overestimate the real purchasing power of the dollar and underestimate the real purchasing power of the currencies of developing countries. If the U.S. and U.S. economies were re-evaluated using the conversion factor between real purchasing power within each country, China would overtake the United States as the world's largest economy. This has attracted a lot of attention and discussion.
This view has been supported and recognized by American scholars. Stephen Brooks, a professor at Dartmouth College in the United States, shared a similar view, noting that China's nominal GDP is only about 70% of that of the United States at exchange rates, but in purchasing power parity terms, China's GDP will surpass that of the United States. This suggests that the real size of China's economy far exceeds what traditional exchange rate calculations indicate. This also means that the economic status of the United States has been surpassed by China in the international economic structure.
After the completion of the new round of data surveys conducted by the International Comparison Program (ICP), China's GDP is expected to surpass that of the United States to become the world's largest economy, reflecting China's rapid economic growth and expanding international influence. ICP measures the difference in real purchasing power between different countries by surveying the purchasing power within countries, breaking the impact of exchange rate fluctuations on price comparisons, and providing a more accurate data basis for cross-country comparisons. At the same time, the actual phenomenon of the strong position of the US dollar and China's overtaking of the United States has aroused widespread attention and discussion. While the dollar's international status has given some support to the U.S. economy, its real purchasing power may be overestimated, while that of China and other developing countries is underestimated. By reassessing the size of the U.S.-China economies, the likelihood of China surpassing the U.S. as the world's largest economy comes to the fore. This change will have a significant impact on the global economic system, bringing new opportunities and challenges to China and the world economy.