This is fake news, China's GDP has never overtaken the US. It's coming close though and may in the future, but that's not the same thing, and the future has yet to happen.
Not fake news fake, by PPP China easily beats the US based on IMF, World Bank, and CIA estimates. The US is ahead in nominal GDP, but currency controls distort those numbers so they aren’t particularly meaningful.
PPP is relevant when you want to look at say military budgets or the relative costs of infrastructure projects. Nominal GDP is more relevant for things like government debt.
PPP is a stupid metric, especially in a country like China, with tofu dreg buildings, gutter oil, fake food, gym membership that could expire overnight with business and gym equipments disappearing overnight, electric cars that catch on fire and explode, etc.
There are actual issues with comparing PPP numbers[1], but "tofu dreg buildings, gutter oil, fake food, [...]" isn't one of them.
[1] specifically that on the world market, it doesn't really matter what the value of your goods PPP adjusted is. In the end buyers only care about the absolute value of the goods. The fact that it was made in China (and therefore gets a PPP adjustment up) is irrelevant.
Ok, gdp by ppp is also googleable. So why are people saying its fake news. It's also quite a useful metric when you need to understand what, say, the Chinese military budget buys.
It's "fake news" insofar as playing fast and loose with definitions. "GDP" without any qualifiers means nominal GDP, not PPP adjusted GDP. It'd be like claiming the unemployment rate is 6.7% (U-6 rate) when most people agree that "unemployment" refers to the U-3 rate, which currently sits at 3.6%.
PPP doesn’t produce a different GDP number it’s a different approximation of the same thing. Few people complain about historic GDP in constant dollars which is really a PPP adjustment.
Not really when people talk about GDP abstractly they generally mean PPP or some equivalent of it. It’s just we are often talking in our own currency so it only applies for inflation adjustments.
If you take year X * growth rate you don’t get next years number. IE: 20,460.47 in 2020 * 1.0595 = 21,677.87 but 2021 actually shows 23,315.08 showing a growth rate is calculated in constant dollars not nominal ones.
Nowhere do they say they aren’t directly using the GDP figures on the page to calculate growth rates, it’s just assumed because that’s the way they are generally calculated.
US Produces 1,000 pounds of butter, sells at $1/unit
China Produces 1,300 pounds of butter, sells at $0.7/unit
Nominal: The US economy is bigger, because they produce more US dollars.
PPP: The Chinese economy is bigger, because they produce more goods.
It's obvious to me that PPP is the more accurate metric.
PPP is the real metric of GDP. Nominal is the metric you get after you adjust for the market price in dollars.
If the US dollar lost half of its value internationally, yet the US economy still produced the same quantity and quality of goods, did the US economy shrink by half? I think not.
There are problems with PPP but it does try to address some real (no pun intended) issues with nominal GDP.
A US resident might be able to afford a lot of Chinese goods and services but can't get many of them. For a Chinese consumer, the average price of goods or services is less relevant than the price of the subset of goods and services that are actually accessible to them.
It attempts to address the very real problem that a Chinese resident can buy a Chang Li truck for around $2,000 but an American consumer spends over $9000 once the realities of international shipping are factored in.
A theoretical economist might abstract these differences away and just claim that arbitrage will eventually balance out these price differences but empirically we can see that's not what actually happens.
According to the OECD data, the US ranks #1 in mean PPP household disposable income at $62,300. China doesn't even crack the top 35.
For PPP Median dispoable income, US ranks #2 at $46,600 (barely below #1 luxembourg), China ranks 42 at $4,900. So in median terms an American somehow has 9.5X more disposable income than vs a Chinese person.
I don't really see the GDP PPP per capita as relevant, it's based on so many assumptions. The average American has way, way more money to burn when they travel for example vs the average Chinese person.
The US dollar is the world's reserve currency. There's 0 chance of China taking over the US in this role (population may shrink by half by 2060), I don't see the party that values control over all else ever allowing a free floating currency, and the concept of a bric currency is a joke, like expecting China and India to put aside their differences and make a common currency with an independent central bank... yeah right.
There’s a lot of different measurements of that are useful on different contexts.
PPP is the same adjustment as listing historic GDP in constant dollars. If you want to living standards you might want:
Per capita GDP (nominal), Per capita GDP in constant dollars, Nominal per capita GDP PPP (nominal), Per capita GDP PPP in constant dollars.
Per capital GDP PPP in constant dollars is the most useful for living standards but nominal numbers are more appropriate when looking at debt loads etc etc.
This reminds of the Biden administration changing the definition of recession because it suddenly doesn't fit their narrative. Everyone here is getting upset at a metric for the exact same reason. It is a random metric but it is one and it is measuring something.
If it keeps going up. There’s a good chance it’s going to decline, and by 2030 China (probably sooner) will be in economic freefall. They just don’t have the demographics to sustain economic growth.
China has 1.4B people with a GDP per capita 1/6 as high as the US. There isn't any reason to think the average Chinese person will permanently keep producing 1/6th as much value as the average American. Chinese GDP growth is still about double the US at the moment.
By the 2030s the US national debt will reach about $50T. Interest payments could be up to $2T per year if rates stay high. That would be unsustainable. The US would have to either cut government expenses or increase inflation to deal with the debt, both of which would hurt GDP.
Both countries probably have negative outlooks in the short/medium term but I wouldn't bet against China simply due to their much larger population. Their population could start decreasing and aging but they will continue to have vastly more working age adults than the US for a long time to come.
>There isn't any reason to think the average Chinese person will permanently keep producing 1/6th as much value as the average American
It's entirely possible given how the current Chinese government has forsaken its previous commitment to economic liberalisation and is moving towards more and more state control of the economy. If it moved close enough to the approach of Maoist China (or current North Korea), it could go decades without seeing any meaningful growth in GDP per capita, much as North Korea doesn't see any significant GDP growth.
I agree with this. China outstripping the USA honestly seems inevitable to me barring state control of the economy crippling their development.
So somewhat ironically, if the USA/West wins their political battle to liberalise China, China would almost certainly become the dominant nation within the "Western/Modern" coalition.
Either having to balance a budget or a downward cycle where more and more interest is required for debt, leaving less and less for function of government.
To be clear: the consequence is that, the next time around, nobody will lend to us if we need it (which is why we would have to start balancing the budget)?
Yes we would need to immediately start running a balanced budget. It would probably be a long time before we could borrow again. If we ever did borrow money again, we would be paying a higher interest since we've shown lenders that we can default.
It would also mean $33T in assets disappearing from the economy. That's a massive amount that would bankrupt tons of individuals/companies that lent the money. $2.8T of that amount is the social security trust fund which means we need to also instantly cut social security too. $7T of the debt is held by other countries who wouldn't be happy with us either.
Over the past decade, Hacker News has predicted approximately 15 of the past 0 Chinese economic collapses. In any thread about China, you have people shouting about underproduction due to demographics, grousing about their high youth unemployment, and also talking about over-production, and pointing at their ghost cities.
Alas, as all three of those very simple narratives are mutually incompatible, we find that year after year, China keeps growing.
And yet, European and American funds have been pulling out of China in the last few years. European, American, Japanese, Taiwanese and Korean manufacturing have been leaving China. Evergrande has gone bankrupt. Country Garden is next to go bankrupt.
Maybe all these smart money know something you don't.
I have to think there's a fair amount of political pressure these days to not be all-in on China.
See: any cut-off-your-nose-to-spite-your-face trade rules. This isn't like dealing with the USSR, where the manufacturing infrastructure was admittedly a fair bit further back. We already taught them everything they know! Even if we can say "No new toys from ASML or nVidia", it just means it takes them a few years longer to develop comparable tech... and we don't get a cut of the deal.
I feel like the real interesting angle is what happens if the US loses its "aspirational" status, more so than any specific military or economic goal. How long will the world continue to look to Washington for leadership? I think they're already losing a lot of the developing world, with lack of a compelling alternative to Belt And Road and the BRICS-etc. organization.
Evn if they fall to 800mil people, that is still more than 2x more than USA. The level of education in China far exceed USA. Scientific output also exceed USA right now. Then just niched output in AI already surpassed USA just a week ago. You go to any mart in USA, easily 60% stuff come from China. You look in ANY American colleges, you will find "East Asians" a lot even more so in Ivy Leagues. By 2050, we will all acknowledge China is the new USA even if their population drop by half. Look at Japan, their 100m dwindling to 80m still so dominant. You multiply that by 10x and with added ruthlessness in business competition. Hard not to see China gdp NOT exceeding USA in 5-10yrs time. As for economic free fall, USA is due for a super motherload big one. Since it has bigger economy, the fall would be bigger as well. I put my money on China especially now since things it is way cheaper there. Even Tesla look like dwarf when you compare to BYD in China (and they havnt largely tackle market outside China).
>Evn if they fall to 800mil people, that is still more than 2x more than USA
In the time it takes for China's population to fall this low, the US population is expected to grow significantly, assuming the current rate of immigration continues.
>Look at Japan, their 100m dwindling to 80m still so dominant
Innovation and GDP growth has basically completely stopped in Japan due to the burden of the aging population. What's the last piece of innovative software or hardware you used that was made in Japan?
> You look in ANY American colleges, you will find "East Asians" a lot even more so in Ivy Leagues
uhh so? X% of those are American of East Asian descent, and, regardless, East Asian != Chinese
Granted, you see plenty of wealthy Chinese at the graduate level at Ivies because they have $$ and want the social currency, but that's not the substance of true educational domination.
I don't necessarily disagree with your overall thesis; I'm not qualified to say one way or the other. Just pointing out this alleged datum doesn't support it.
Also a lot of these Chinese fake their standardized tests (had a friend for whom this was his job in China) to get in and fake the academic work (I went to an ivy, this actually happened, chinese sending other people in for tests…). At least at the high end (second generation wealthy “fuerdai”) it’s a culture of shortcuts where only the outcome is important, not improving as a human.
because the US still has the reputation of better higher education. but also, many of the chinese students will go back to china and bring their experience with them. this will benefit china, but also the experience of living in a foreign country will promote a better understanding between china and the US and create a better future for the world
Not pointing a finger at you specifically, but I've heard some flavor of "China is going to fall over." for at least the last 20 or so years.
In that time they have overtaken Japan's former #2 GDP spot, secured the seas in their corner of the world, gotten most of the third world strangled with purse strings, and not give a single damn about economic and diplomatic sanctions.
So, excuse me while I file every single one of those "China is going to fall over." claims in my Bullshit folder while I witness the west and particularly the US continue to lose the cold war we westerners/Americans decided to wage.
Ironically, I've heard some flavors of "US is going to fall over", for at least the last 40 or so years.
If you're not going to pay attention to current events, you should at least see what the smart money is doing. And right now, the smart money is climbing over each other to get out of China.
And China gives precisely zero fucks. The economic sanctions driving some western monies out are only giving China more reason to become self-sufficient, which they are rapidly achieving. Evergrande went bankrupt? So? They're still kicking our ass like it's just Tuesday.
The west is in a lose-lose situation. Sanction China and they give no fucks and proceed to give even less fucks, if that's even possible, on the next round of sanctions. Cooperate with (read: sell out even harder to) China and they will eat us raw before selling the excrement back to us. Be so fucking stupid as to wage war and we violate the Age Old Rule(tm) of Never Fight a Land War in Asia; which we will lose by the way, the US hasn't won a single war in modern history despite being the most powerful military force ever known to mankind.
The fact we're even here discussing the eventuality of China overtaking America economically speaks for itself. Whether China will overtake and become #1 isn't being questioned, the question is simply when they will overtake. Could be in 5 years, or 10 years, or 20 years, or 50 years, but it's happening.
> They're still kicking our ass like it's just Tuesday.
Have you not be keeping track of how the Chinese economy is doing? A hair over 5% growth the next 2 years. That's terrible for a developing economy - not quite half of what their target is.
Foreign investment is fleeing. The real estate market is undermining the economy. Fear of deflation.
Then layer on the demographics issues and China has a major problem. There is a very real possibility they get stuck in the middle income trap like so many countries before them.
In no possible way are they still "kicking our ass".
There's a good chance that the China-pessimists will be proven wrong, just as they have been every time they've predicted their collapse. It's baseless rumors, no different from people predicting that there's always a recession around the corner in the US.
The collapse straw man doesn’t equal an economic slow down/middle income trap prediction, but it works well as a straw man. Remember, the prediction was 2026 but that was pushed back to 2035 where china might get parity with the USA in terms of GDP.
>In 2011 Goldman Sachs projected that China’s GDP would surpass America’s in 2026 and become over 50% larger by mid-century. No peak was in sight. At the end of last year the bank revisited its calculations. It now thinks China’s economy will not overtake America’s until 2035 and at its high point will be only 14% bigger (see chart).
>China’s peak looks similar in an influential forecast from last year by Roland Rajah and Alyssa Leng of the Lowy Institute, an Australian think-tank. Others see an even lower summit. Capital Economics, a research firm, argues that China’s economy will never be number one. It will reach 90% of America’s size in 2035 and then lose ground. In so far as the Peak China thesis can be captured in a single projection, this is it.
China GDP for 2026 is expected to be $22.2 Trillion. So even if the US achieves 0% growth during all that time (unlikely), then China wouldn't be able to surpass the US, albeit they'll get very close.
2023 is a bad year for China. Their GDP (nominal) will decrease because of the exchange rate. I don't know how the predicted return to growth is justified but from my limited experience these predictions are made by people with limited experience.
You can also get there by leeching money from the hapless rich. The Emperor’s new clothier was sure to be cashing in on the emperor’s vanity, not unlike many startup founders have done here.
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[ 4.8 ms ] story [ 142 ms ] threadI’m confused - I don’t see evidence that China’s GDP has overtaken the US’s at any point in time.
But because they have so many more people average standard of life is still much lower
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
PPP is relevant when you want to look at say military budgets or the relative costs of infrastructure projects. Nominal GDP is more relevant for things like government debt.
Yes, all these things are real and googleable
[1] specifically that on the world market, it doesn't really matter what the value of your goods PPP adjusted is. In the end buyers only care about the absolute value of the goods. The fact that it was made in China (and therefore gets a PPP adjustment up) is irrelevant.
It's "fake news" insofar as playing fast and loose with definitions. "GDP" without any qualifiers means nominal GDP, not PPP adjusted GDP. It'd be like claiming the unemployment rate is 6.7% (U-6 rate) when most people agree that "unemployment" refers to the U-3 rate, which currently sits at 3.6%.
Look at the GDP growth rate at the bottom of this page: https://www.macrotrends.net/countries/USA/united-states/gdp-...
If you take year X * growth rate you don’t get next years number. IE: 20,460.47 in 2020 * 1.0595 = 21,677.87 but 2021 actually shows 23,315.08 showing a growth rate is calculated in constant dollars not nominal ones.
Nowhere do they say they aren’t directly using the GDP figures on the page to calculate growth rates, it’s just assumed because that’s the way they are generally calculated.
US Produces 1,000 pounds of butter, sells at $1/unit China Produces 1,300 pounds of butter, sells at $0.7/unit
Nominal: The US economy is bigger, because they produce more US dollars. PPP: The Chinese economy is bigger, because they produce more goods.
It's obvious to me that PPP is the more accurate metric.
PPP is the real metric of GDP. Nominal is the metric you get after you adjust for the market price in dollars.
If the US dollar lost half of its value internationally, yet the US economy still produced the same quantity and quality of goods, did the US economy shrink by half? I think not.
If you want to compare actual economic growth rates you want to remove currency fluctuations from your numbers.
A US resident might be able to afford a lot of Chinese goods and services but can't get many of them. For a Chinese consumer, the average price of goods or services is less relevant than the price of the subset of goods and services that are actually accessible to them.
It attempts to address the very real problem that a Chinese resident can buy a Chang Li truck for around $2,000 but an American consumer spends over $9000 once the realities of international shipping are factored in.
A theoretical economist might abstract these differences away and just claim that arbitrage will eventually balance out these price differences but empirically we can see that's not what actually happens.
According to the OECD data, the US ranks #1 in mean PPP household disposable income at $62,300. China doesn't even crack the top 35.
For PPP Median dispoable income, US ranks #2 at $46,600 (barely below #1 luxembourg), China ranks 42 at $4,900. So in median terms an American somehow has 9.5X more disposable income than vs a Chinese person.
Source; https://en.wikipedia.org/wiki/Disposable_household_and_per_c...
I don't really see the GDP PPP per capita as relevant, it's based on so many assumptions. The average American has way, way more money to burn when they travel for example vs the average Chinese person.
The US dollar is the world's reserve currency. There's 0 chance of China taking over the US in this role (population may shrink by half by 2060), I don't see the party that values control over all else ever allowing a free floating currency, and the concept of a bric currency is a joke, like expecting China and India to put aside their differences and make a common currency with an independent central bank... yeah right.
PPP is the same adjustment as listing historic GDP in constant dollars. If you want to living standards you might want:
Per capita GDP (nominal), Per capita GDP in constant dollars, Nominal per capita GDP PPP (nominal), Per capita GDP PPP in constant dollars.
Per capital GDP PPP in constant dollars is the most useful for living standards but nominal numbers are more appropriate when looking at debt loads etc etc.
By the 2030s the US national debt will reach about $50T. Interest payments could be up to $2T per year if rates stay high. That would be unsustainable. The US would have to either cut government expenses or increase inflation to deal with the debt, both of which would hurt GDP.
Both countries probably have negative outlooks in the short/medium term but I wouldn't bet against China simply due to their much larger population. Their population could start decreasing and aging but they will continue to have vastly more working age adults than the US for a long time to come.
It's entirely possible given how the current Chinese government has forsaken its previous commitment to economic liberalisation and is moving towards more and more state control of the economy. If it moved close enough to the approach of Maoist China (or current North Korea), it could go decades without seeing any meaningful growth in GDP per capita, much as North Korea doesn't see any significant GDP growth.
So somewhat ironically, if the USA/West wins their political battle to liberalise China, China would almost certainly become the dominant nation within the "Western/Modern" coalition.
What are the consequences of default?
It would also mean $33T in assets disappearing from the economy. That's a massive amount that would bankrupt tons of individuals/companies that lent the money. $2.8T of that amount is the social security trust fund which means we need to also instantly cut social security too. $7T of the debt is held by other countries who wouldn't be happy with us either.
Is the US so broken brained on taxation that we can't even imagine it as an option? You know that's still how we collect revenue, right?
Alas, as all three of those very simple narratives are mutually incompatible, we find that year after year, China keeps growing.
Maybe all these smart money know something you don't.
See: any cut-off-your-nose-to-spite-your-face trade rules. This isn't like dealing with the USSR, where the manufacturing infrastructure was admittedly a fair bit further back. We already taught them everything they know! Even if we can say "No new toys from ASML or nVidia", it just means it takes them a few years longer to develop comparable tech... and we don't get a cut of the deal.
I feel like the real interesting angle is what happens if the US loses its "aspirational" status, more so than any specific military or economic goal. How long will the world continue to look to Washington for leadership? I think they're already losing a lot of the developing world, with lack of a compelling alternative to Belt And Road and the BRICS-etc. organization.
In the time it takes for China's population to fall this low, the US population is expected to grow significantly, assuming the current rate of immigration continues.
>Look at Japan, their 100m dwindling to 80m still so dominant
Innovation and GDP growth has basically completely stopped in Japan due to the burden of the aging population. What's the last piece of innovative software or hardware you used that was made in Japan?
Nintendo is the only company left that knows how to actually make good games, so Japan at least has that going for them.
And by this measure, China's advantage vs the US will shrink even more.
uhh so? X% of those are American of East Asian descent, and, regardless, East Asian != Chinese
Granted, you see plenty of wealthy Chinese at the graduate level at Ivies because they have $$ and want the social currency, but that's not the substance of true educational domination.
I don't necessarily disagree with your overall thesis; I'm not qualified to say one way or the other. Just pointing out this alleged datum doesn't support it.
> You look in ANY American colleges, you will find "East Asians" a lot even more so in Ivy Leagues.
Why are they in US instead of China?
That was considered a remote possibility a mere decade ago, but nowadays some scientists consider it more likely than not.
because the US still has the reputation of better higher education. but also, many of the chinese students will go back to china and bring their experience with them. this will benefit china, but also the experience of living in a foreign country will promote a better understanding between china and the US and create a better future for the world
The college numbers have been changing too https://www.axios.com/2023/05/08/chinese-students-us-educati...
In that time they have overtaken Japan's former #2 GDP spot, secured the seas in their corner of the world, gotten most of the third world strangled with purse strings, and not give a single damn about economic and diplomatic sanctions.
So, excuse me while I file every single one of those "China is going to fall over." claims in my Bullshit folder while I witness the west and particularly the US continue to lose the cold war we westerners/Americans decided to wage.
If you're not going to pay attention to current events, you should at least see what the smart money is doing. And right now, the smart money is climbing over each other to get out of China.
The west is in a lose-lose situation. Sanction China and they give no fucks and proceed to give even less fucks, if that's even possible, on the next round of sanctions. Cooperate with (read: sell out even harder to) China and they will eat us raw before selling the excrement back to us. Be so fucking stupid as to wage war and we violate the Age Old Rule(tm) of Never Fight a Land War in Asia; which we will lose by the way, the US hasn't won a single war in modern history despite being the most powerful military force ever known to mankind.
The fact we're even here discussing the eventuality of China overtaking America economically speaks for itself. Whether China will overtake and become #1 isn't being questioned, the question is simply when they will overtake. Could be in 5 years, or 10 years, or 20 years, or 50 years, but it's happening.
Have you not be keeping track of how the Chinese economy is doing? A hair over 5% growth the next 2 years. That's terrible for a developing economy - not quite half of what their target is.
Foreign investment is fleeing. The real estate market is undermining the economy. Fear of deflation.
Then layer on the demographics issues and China has a major problem. There is a very real possibility they get stuck in the middle income trap like so many countries before them.
In no possible way are they still "kicking our ass".
This summary would beg to differ: https://en.m.wikipedia.org/wiki/List_of_wars_involving_the_U...
https://www.economist.com/briefing/2023/05/11/how-soon-and-a...
>In 2011 Goldman Sachs projected that China’s GDP would surpass America’s in 2026 and become over 50% larger by mid-century. No peak was in sight. At the end of last year the bank revisited its calculations. It now thinks China’s economy will not overtake America’s until 2035 and at its high point will be only 14% bigger (see chart).
>China’s peak looks similar in an influential forecast from last year by Roland Rajah and Alyssa Leng of the Lowy Institute, an Australian think-tank. Others see an even lower summit. Capital Economics, a research firm, argues that China’s economy will never be number one. It will reach 90% of America’s size in 2035 and then lose ground. In so far as the Peak China thesis can be captured in a single projection, this is it.
This chart is quite interesting though: https://www.statista.com/statistics/263770/gross-domestic-pr...
2023 is a bad year for China. Their GDP (nominal) will decrease because of the exchange rate. I don't know how the predicted return to growth is justified but from my limited experience these predictions are made by people with limited experience.
You can also get there by leeching money from the hapless rich. The Emperor’s new clothier was sure to be cashing in on the emperor’s vanity, not unlike many startup founders have done here.