Geo-political power shifted from America to China
China will overtake the US as the world’s biggest economy by 2012, or within two years.
In terms of purchasing power parity, according to the Conference Board’s latest world economic outlook, China is already nearly there, and by 2020 will have reached a size of output which is nearly half as big again as the US.
Broadly speaking the idea of “purchasing power parity” (PPP) is to measure output according to the volume, not the price of goods and services produced. In PPP terms, the Conference Board’s projections show China as 24.1 per cent of world output by 2020, and the US at just 14.8 per cent.
We all knew that the weight of economic growth had skewed dramatically since the crisis from advanced to emerging market economies, but many in the West don’t yet seem fully to appreciate the speed with which economic and geo-political power is shifting. This is a truly seismic change.
How these once irrelevant economies choose to use their new found power is the overarching question of our times.