E China PPP, Asian Infrastructure Investment Bank & Powerhouse Economics

Largest economies by PPP GDP in 2019. According to International Monetary Fund estimates. "Report for Selected Country Groups and Subjects (PPP valuation of country GDP)". IMF. Retrieved 24 October 2017. 

 

Purchasing Power Parity is another way of measuring Gross Domestic Product. This measurement of GDP puts China in the lead as the most powerful economic engine in the world. The chart above was calculated in 2017, and is a projection, which is turning out to be close to accurate, especially in predicting the gap between the US and China PPP. That gap is in the 4 to 6 trillion dollar range for recent estimates from the IMF, World Bank, and CIA. 

Adding India to the total PPP for just two nations in the region dwarfs any other region! The chart hints at the rising Chinese GDP and Asian dominance, economically, on the world. As Wikipedia says:

GDP comparisons using PPP are arguably more useful than those using nominal GDP when assessing a nation's domestic market because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates which may distort the real differences in per capita income.[3]

We know that manufacturing makes up about 40 percent of the Chinese economy. 40 percent of 27.4 trillion dollars is 10.96 trillion dollars of goods being manufactured. While some of these goods are shipped abroad and some of those lose the advantage of PPP, we can see that China's manufacturing base is roughly 5 times the value of US manufacturing.

We know the US manufacturing base produces about 2.0 trillion dollars of goods per year. Compared to 10.96 trillion dollars, it is baby steps. We can see that General Liang of China pegged it pretty correctly when he said that the real economy in the US had a GDP of 5 trillion dollars:

Liang says that only 5 trillion dollars of GDP in the USA is from the real economy, while 13 trillion is from the financialization of our economy. So, we aren't very strong as to our real economy, massively smaller than China. People should be informed of this. Unfortunate that a communist has to tell us! 

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Disclosure: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment ...

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Gary Anderson 6 days ago Author's comment

Update 2: If Donald Trump does not grasp the economic concept of purchasing power parity he will embarrass himself and our nation. We trail China in ppp and that is a crucial weakness facing the USA in a trade war with China.

Gary Anderson 1 week ago Author's comment

Update 1: purchasing power parity coupled with a manufacturing base 5 times larger than the USA means China can make what it needs. We cannot and therefore, we could lose a trade war.

Daniel Robertson 4 weeks ago Member's comment

Unfortunately, it's not a surprise that China is the strongest. America is still a power to be reckoned with, but they are no longer the world leader.

Gary Anderson 4 weeks ago Author's comment

We have lost real security, global respect, and traded it for military hardware.