Remember how China’s economy was supposed to surpass the U.S.’s sometime in the next decade or so? Turns out it may have already happened. The World Bank’s International Comparison Program takes account of international prices to give a more accurate measure of a nation’s real output. The statisticians have just completed the exercise for 2011, and they found that China’s economy was 87 percent as large as the U.S.’s—not 47 percent, as output converted at market exchange rates would have you believe. Since 2011, China has grown much faster than the U.S. According to the World Bank’s numbers, China’s economy will be the world’s biggest before 2014 is out, if it isn’t already.
The figures don’t mean that China is now rich. Its living standards won’t approach those in the U.S. for many decades—and the closer those standards get, the harder it will be for China to maintain its faster growth. While output in the aggregate rather than per capita incomes is the foundation of military strength and geopolitical power, technological supremacy counts for plenty, too, and the U.S. is still far ahead.
Nonetheless, history will deem China’s surpassing of the U.S. economy a milestone. The map of the global economy is changing faster than many suppose. The sooner the U.S. and Europe—whose relative weight is diminishing even faster—get comfortable with this idea, the better. And here’s a small, easy step to start with: Reform appointments to global economic policy institutions such as the International Monetary Fund and the World Bank. It has been insulting for the U.S. and Europe to appoint the heads of these bodies as though they own them, with a European running the IMF and an American running the World Bank by mutual agreement. The new map of global output makes this presumption of authority insupportable.
In the long span of history, Chinese may see the new figures as heralding a return to normality: Their economy was the world’s biggest until 1890, when the U.S. outgrew it. The new rankings are a moment for reflection. The West’s century-long economic preeminence can no longer be taken for granted.>