Now, Interpreter readers have been hearing about China's rise for years, so they might be a bit jaded to such news. But try to shake off your lethargy and breath in the history of these 13 words from the FT's report:
The US has been the global leader since overtaking the UK in 1872.
1872. That's the year the overland telegraph was completed in Australia. Ulysses S Grant was elected US president. The first FIFA-recognised international football match was played between England and Scotland. Bertrand Russell was born and Samuel Morse died.
In other words, this is at best a once-in-a-century event. Or to put it in Joe Biden's language, it's a BFD.
Now, a few caveats: first, as the FT reports, the new estimate is based on a recalculation of World Bank statistics. Previously, the Bank thought this shift would happen in 2019 but the date has now been brought forward; of course, the numbers could be recalculated again in a way that does not favour China.
Second, this measure of economic size is based on purchasing power parity (PPP). As my former Lowy Institute colleague Mark Thirlwell explained in 2008, 'Crudely put, PPP is a means of adjusting for differences in purchasing power across countries. To do this, it compares prices of the same good. In other words, it compares the price of a bowl of rice in Peru with the price of a bowl of rice in Paris.' But PPP is not the only way to measure national wealth. In fact, it is a measure that tends to flatter emerging economies. (See the comments from JPMorgan's David Hensley in this regard.)
Third, this does not mean Chinese people are soon to be richer than Americans. Not by a long shot. It just means that, by one measure, the overall size of the Chinese economy will be larger than America's, though in China that pie has to be shared between 1.3 billion people, versus 314 million in the US.
Photo by Flickr user Andreas Wecker.