How China's Economy Became the Largest in the World
With an over 3,000-year written history, China is one of the world’s oldest civilizations. China was a global economic superpower as early as the period between 1100 and and the early 1800s. Following its conquest by European colonizers and subsequent economic decline in the 19th century, the People’s Republic of China was established in 1949. Since then, China has fully re-emerged as a dominant economic power.
China’s gross domestic product in current or nominal dollars is $14.22 trillion, second only to the United States’s GDP of $21.34 trillion, according to the latest figures published by the International Monetary Fund. On a per capita basis, China is behind more than 100 countries. Here are the 25 richest countries in the world.
China’s gross domestic product measured in purchasing power parity is $27.33 trillion, by far the largest in the world. The United States, India, and Japan follow, with a GDP (ppp) of $21.34 trillion, $11.47 trillion, and $5.75 trillion.
Nominal GDP uses market exchange rates to set the nation’s GDP — the value of all goods and services produced in a country. GDP on a PPP basis takes into account cost of living differences, and is favored by many economists for more accurately capturing quality of life. For developed countries, the differences between the two measures tend to be smaller. For developing economies, the differences tend to be larger, and most often, PPP is higher than nominal GDP, as is the case with China. Because everything is measured in U.S. dollars, the U.S. GDP in both measures is the same.
How did China become the global economic force it is today? In light of the 70th anniversary this week of the founding of The People’s Republic of China, 24/7 Wall St. reviewed events in China’s history, including each of its 13 five-year plans. We also considered several features of China’s economy, including having for decades by far the world’s largest labor force.