30/10/2018

Well under way

Ranking topics: Biggest economies by purchasing power

When scholars of international relations predict that the 2000s will be a “Chinese century”, they are not being premature. Although America remains the lone superpower, China has already replaced it as the driver of global change.

There is one economic metric on which China already ranks first. Measured at market exchange rates, China’s GDP is still 40% smaller than America’s. However, on a purchasing-power-parity (PPP) basis, which adjusts currencies so that a basket of goods and services is worth the same amount in different countries, the Chinese economy became the world’s largest in 2013. Although China is often grouped with other “emerging markets”, its performance is unique: its gdp per person at ppp has risen tenfold since 1990. In general, poorer economies grow faster than rich ones, because it is easier to “catch up” when starting from a low base. Yet in other countries that were as poor as China was in 1990, purchasing power has merely doubled.

China’s record has exerted a “gravitational pull” on the world’s economic output. The Economist has calculated a geographic centre of the global economy by taking an average of each country’s latitude and longitude, weighted by their GDP. At the height of America’s dominance, this point sat in the north Atlantic. But China has tugged it so far east that the global centre of economic gravity is now in Siberia.

Because China is so populous and is developing so quickly, it is responsible for a remarkable share of global change. Since the start of the financial crisis in 2008, for example, China has accounted for 45% of the gain in world GDP. In 1990 some 750m Chinese people lived in extreme poverty; today fewer than 10m do. That represents two-thirds of the world’s decline in poverty during that time. China is also responsible for half of the total increase in patent applications over the same period.

For all its talk of a “peaceful rise”, China has steadily beefed up its military investment—even as the rest of the world cut back after the end of the cold war. As a result, the People’s Liberation Army accounts for over 60% of the total increase in global defence spending since 1990. And all of this growth has come at a considerable cost to the environment: China is also the source of 55% of the increase in the world’s carbon emissions since 1990.

This article is from our print edition.