The new round of data survey for the International Comparison Project (ICP) has been basically completed, and it is expected that we will have a new exchange rate of currencies such as the renminbi, euro, pound sterling, Japanese yen, ruble, and rupee against the US dollar early next year. This "new exchange rate" refers to the measure of differences in the price level of countries by the amount of currency that needs to be paid for the purchase of goods and services within each country, regardless of the effect of exchange rate fluctuations on the relative price. This international statistical activity is jointly implemented by authoritative international organizations such as the United Nations Statistical Commission and the World Bank. China has been participating in the survey since 1993, and this round of ICP is China's seventh participation. Through the International Comparison Project, we can reassess the size of countries' economies by obtaining new ratios based on purchasing power.
According to the latest data, the purchasing power conversion factor between the Chinese and the US dollar in 2022 is 399。This means that within the territory of China, 3The purchasing power of 99 RMB is equivalent to the purchasing power of 1 US dollar in the United States. In comparison, according to 2017 data, the exchange factor of the yuan against the US dollar is 418, indicating that China's purchasing power has increased slightly relative to that of the United States. The World Bank calculates the difference between inflation levels in China and the United States to calculate the exchange factor from 2018 to 2022. The exchange factor for 2022 is 399, which means that the purchasing power exchange ratio between the renminbi and the U.S. dollar has fallen below 4, further confirming that the real reduction of the purchasing power of the U.S. dollar due to high inflation in the United States. With the completion of the new round of work on the International Comparison Project, the World Bank is expected to fine-tune the ratio between the renminbi and the U.S. dollar. According to expectations, the new exchange ratio will be around 4 to 1, which could further increase the size of China's economy.
This data has an important impact on the changes in the international economic landscape. The Financial Times published an article titled "I'm sorry for the US, China's economy is bigger than yours" just as the results of the survey were about to be announced. The article points out that the current exchange rate tends to overestimate the real purchasing power of the US dollar, while underestimating the real purchasing power of developing country currencies, including the renminbi, ruble, and rupee. If the size of the U.S. and Chinese economies were recalculated using the conversion factor between the real purchasing power of currencies within each country, China would replace the United States as the world's largest economy.
A similar view is supported by Stephen Brooks, a professor at Dartmouth College in the United States. He said that China's nominal GDP is only about 70 percent of that of the United States in exchange rate terms, but if measured by purchasing power parity, China's GDP will surpass that of the United States. At present, the dollar's status as a strong currency keeps the United States at the top of the world, as demand from many countries pushes up the dollar's exchange rate. However, once the dollar loses this international status, the status and economy of the United States may also change.
All in all, the new ICP data survey will provide us with a new perspective on the size of countries' economies. According to the purchasing power parity calculation method, China's economy is expected to surpass that of the United States and become the world's largest economy. We should be cautious about this change and take corresponding measures to adapt and respond to the new economic landscape. After all, China's growing economic power also brings more responsibilities and challenges to China. We need to continue to promote reform and opening up, promote sustainable economic development, and make greater contributions to the world.