IMF Says Chinese Economy on Pace to Eclipse America

AmericanMonetaryAssociation.orgA recent announcement by the International Monetary Fund declared that by 2016 the Chinese economy would be $200 billion larger than that of the United States, effectively ending a 235 year of American global economic dominance. Alrighty then. What do we do now? Sit down and wait for Mr. Hu Jintao to show up in the Oval Office and start measuring for new curtains?

Not quite. As you might expect, the story, though sensational, is not so cut and dried. While China's economy might, in five years, grow to surpass the United States in sheer bloated size, no person with a legitimate thought in their head would claim quality of life in China is yet, or will be by 2016, equal to that enjoyed in the United States. Despite all the complaints we may have about inflation, unemployment, and pending national bankruptcy, keep in mind that the average Chinese citizen, per capita, exists on about 10% of what the average American does.

An economy where so many people work for pennies per hour for minimum wage and go home at night to a cramped apartment or dormitory does not a globally dominant economy mak

e. The other problem we see with this IMF “news” is that they figure the size of each nation's relative economic size in a straight up dollar to dollar comparison, which makes no sense. Price Purchase Parity is reached by adjusting Gross Domestic Product to local prices. In China, a communist economy, currency value and prices are HEAVILY manipulated.

Compare economies straight across and the Chinese economy is nowhere near the size of America's. Claim sour grapes if you will. The fact is that the IMF is simply another America-hating international organization that takes every opportunity to denigrate the United States with one hand while eagerly waiting to cash the next check from us with the other.

This is not to say China will never eclipse America in economic power but, rest assured, it's not going to happen any time soon, and when it does, we won't need a memo from the IMF to realize it.

Think our assessment is off base? Tell us about it…

The American Monetary Association Team

American Monetary Association

Flickr / abarndweller

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