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Frontiers of Economics in China

Front. Econ. China    2015, Vol. 10 Issue (1) : 1-6     DOI: 10.3868/s060-004-015-0001-1
research-article |
China Is Not yet Number One
Jeffrey Frankel()
John F. Kennedy School of Government, Harvard University, Cambridge, MA 02138, USA
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Many claim that China will soon overtake the US. I argue that this claim is based on a misuse of statistics. The International Comparison Program (ICP) price data is necessary to compare living standards, since a dollar’s worth of yuan buys more in China than a dollar buys in the US. But the fact that rice and clothes are cheap in rural China does not make the Chinese economy larger. What matters for size in the world economy is how much a yuan can buy on world markets. Using the correct prices, the US remains the world’s largest economic power by a substantial margin.

Keywords China      US      PPP      GDP      exchange rate     
Issue Date: 23 March 2015
 Cite this article:   
Jeffrey Frankel. China Is Not yet Number One[J]. Front. Econ. China, 2015, 10(1): 1-6.
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