According to the latest ICP survey results, China's GDP surpassed that of the United States to become the world's largest economy. This result not only shocked the world, but also called into question the economic status of the United States.
In the latest international comparison project, the purchasing power parity methodology was used, which eliminated the impact of exchange rate fluctuations on comparisons. According to data released by the World Bank, the purchasing power conversion factor between Chinese RMB and US dollar in 2022 is 399, which means 3The purchasing power of 99 yuan in China is equivalent to the purchasing power of 1 dollar in the United States. This compares to a conversion factor of 4 in 201718, indicating that China's purchasing power has increased over the past few years.
Behind this result is China's long-term rapid economic development and increasing purchasing power. China's industrial structure is constantly upgrading, its innovation and technological strength are constantly improving, and consumer demand is also being released. China's high growth rate and huge market size have prompted it to surpass the United States to become the world's largest economy.
The Financial Times article mentions that there is a distorting effect in exchange rates, often overestimating the real purchasing power of the US dollar while underestimating the purchasing power of the currencies of many developing countries. If the size of the economy is reassessed using a true purchasing power conversion factor, China will no longer be the world's second largest economy, but a far ahead of the rest of the world.
Professor Stephen Brooks shared a similar view, pointing out that China's nominal GDP is only 70% of that of the United States in exchange rate terms, but that it will surpass that of the United States in purchasing power parity terms. This shows that the reason why the United States can still maintain its position as the world's first is because the dollar is a strong currency, and the scarcity of international dollars brought about by the demand of many countries has pushed up the exchange rate.
However, if the dollar's international standing is shaken, the U.S. economic position will also be challenged. This result reminds us that the real strength of an economy should not be assessed solely by the exchange rate, but also by the consideration of purchasing power.
There are many reasons behind China's economic overtaking of the United States. First of all, China has a huge population base and market size, which provides a strong impetus for sustained and rapid economic development. Second, China's industrial structure is transforming and upgrading to high-end manufacturing and service industries, and its innovation capabilities and scientific and technological strength are constantly improving, promoting high-quality economic development.
The outlook for the future is also positive. China is accelerating economic restructuring and innovation-driven development strategies, increasing investment in science and technology, and cultivating new economic growth points. At the same time, China actively participates in global economic governance and promotes global economic cooperation and growth. These measures will further strengthen China's position as the world's largest economy.
Summary: China's GDP surpasses that of the United States, and this result is an accurate reflection of the ICP survey data. The distorting effect of the exchange rate has led to an overvaluation of the purchasing power of the United States, so the use of purchasing power parity for comparison is more reflective of the actual situation. The rise of China's economy is inseparable from long-term rapid development and increasing purchasing power, and it has also benefited from industrial upgrading and technological innovation. Looking ahead, China will continue to promote economic restructuring and innovation-driven development, consolidating its position as the world's largest economy.