Less than a week after U.S. President Barack Obama declared jobs and work orders were no longer “moving to China or other countries,” the International Monetary Fund, or IMF, announced that the Chinese economy has surpassed the American economy in one key measure.
The Daily Mail reports the latest IMF figures, released Wednesday, show the Chinese economy is worth $17.63 trillion compared to the $17.42 trillion U.S. economy.
The new numbers mark the first time the U.S. hasn’t appeared as the largest economy since 1872, when it surpassed Great Britain.
The report also indicates that China’s economy is expected to continue growing at a greater clip than the U.S. By 2019, China is expected to boast a $26.9 trillion economy. That will be 20 percent greater that the projected $22.3 trillion for the U.S., the IMF said.
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“About 10, 15 years ago, everybody said American manufacturing is going downhill, everything is moving to China or other countries,” Obama said at an Oct. 3 event at an Indiana steel plant.
“But because folks invested in new plants and new technologies, and there were hubs that were created between businesses and universities and community colleges so that workers could master and get trained in some of these new technologies, what we've now seen is manufacturing driving economic growth in a way we haven't seen in about 20 to 25 years,” the president added.
White House Press Secretary Josh Earnest stuck to that line Wednesday, seemingly ignoring the new IMF report, when he answered reporters’ questions about the nation’s economic health.
“The United States is showing the kind of resilience that other countries are desperate for,” Earnest said. “And a lot of that is due in no small part to the policies that this administration put in place.”
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“There is no doubt that the economic policies that this president put in place are the envy of the world,” he said.
Some might agree with Earnest as they argue that the new numbers from the IMF don’t paint a true picture of the relative sizes of the two economies. An article from Business Insider points out that the IMF adjusts for what is called purchasing power parity, meaning it takes into account that products in China actually cost far less than they might in U.S. cities.
Columbia University economics professor Marcos Troya told Time magazine that factoring in the parity adjusts Gross Domestic Product, or GDP, figures and accounts for the difference in purchasing power in the two countries.
Therefore China has not surpassed the U.S. in terms of unadjusted GDP, the traditional measure of the the world’s largest economy.
However, Troya said, the measure does indicate that China’s standard of living is increasing.
That could spell good news for China in the economics race, but it will take some time before the growth topples the U.S., potentially upsetting the world’s geopolitical balance, Troya said. He said he expects to see China continue to take care of itself rather than flexing economic muscle on the world stage.
“What China has been doing is consolidating an economic base that allows for prosperity over time,” Troya said. “It’s going to take a long time for China to be the geopolitical alternative many would like.”