China’s Not the World’s Largest Economy… Yet

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May 1 (Bloomberg) –- On today’s ‘Global Outlook,” Bloomberg’s Mike McKee discusses when China might surpass the U.S. as the world’s largest economy. He speaks with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Outlook.

China could surpass the u.s. of the world's largest economy this year.

That is an attention grabbing headline.

Comes from a new world bank study.

The trouble is, michael mckee says it is ridiculous.

Everyone talks about 2027 as the key year they take over as the world's largest economy.

The key is how you measure it and whether it means anything.

Gdp obviously is the sum of all the goods and services, the value sold in a year.

Something else called purchasing power header -- parity.

This is what it cost to live in a country given the differences for what you buy in what you pay for it for exchange rates.

The world bank compared ppp to gdp.

They recalculated the numbers this week and updated it, saying it could happen this year.

The problem is, that is nonsense at this point.

No one believes the chinese economic data are any good, not even the chinese leadership.

A cousin that, hard to use the numbers.

Even if they were good, they do not use them for a couple of reasons.

We buy a lot of things that come from overseas.

Also, in the case of china, not fully convertible.

You are guessing at what the value might be and what you buy internally may vary from what you buy in the united states and variety and quality.

You are really left with gdp.

By the traditional measure, chinese economy only half of hours.

I the traditional measure, twice the size.

Can we anticipate 2027 is still the year?

You look at the growth rate in china, and whether you trusted or not, still probably better than what we are growing at.

Growth rates very.

It is true, they will pass this.

20% of the world population.

No reason to believe they would not pass it.

Only a question of when, not really if.

Looking at a different measure, and that is national wealth.

Not just what we produce in a year but what we have accumulated.

The chinese have all of the people but not very much national wealth.

You do not care really about what the country's gdp is, you care about what you're part of it is.

What are you getting out of it?

By that measure, the chinese are still well behind us.

Kind of like who cares if the economy is growing fast or if it eventually is bigger?

If the standard of living cannot rival ours, you would still rather live in the united states.

That is what the chinese are focusing on.

They said we do not agree with the methodology and will not publish it in this country and do not think it is an official statistic because they are focused on trying to raise the living standards of the individual people.

They have fast defenses.

Another report of the inequality level is greater.

This text has been automatically generated. It may not be 100% accurate.

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