China's economy compared to that of the world in the last 2000 yearsMd Noman Siddique (Author) Published Date : Oct 13, 2014 02:03 IST
She came back to be the largest when measured in terms of the parity of purchasing power, says the Economist chart: a position he has held for almost its entire history
This week, the International Monetary Fund has released new estimates on the global economy. For the first time the Gross Domestic Product (GDP) of China, if measured in terms of the parity of purchasing power, has become the largest in the world. The weekly Economist published a chart that includes estimates of GDP at constant purchasing power of the most important nations of the world in the last two thousand years. The graph shows that the first place is a kind of reconquest of a record that China has held for most of its history (and it should be noted that up to 1500 there was also third in Italy) .
In absolute terms, however, China's GDP is still the second in the world behind that of the United States won the first place is counted only if, in fact, in terms of the parity of purchasing power, that is, taking into account the fact that with a certain amount of money in China and the United States, for example, you can buy the quantity of goods and services are very different. The simplest example to explain how the purchasing power parity is to use the so-called Big Mac index, made popular by its weekly Economist.
Take a Big Mac, which is a sandwich more or less the same all over the world. Let's look at what it costs in the United States, in dollars, and then in China in yuan. We hypothesize that the Big Mac costs a dollar in the United States and one yuan in China. Now imagine that serve to buy a dollar ten yuan. With regard to the purchasing power parity of the Chinese Big Mac cost much less than the Big Mac in the United States. In fact, if a hundred dollars in the United States can I buy a hundred Big Macs, if I changed those hundred thousand dollars into yuan and I went to China I could buy a thousand Big Mac. According to IMF estimates, if extend the Big Mac index to the entire China's economy (by a very complex calculation) it turns out that, although in absolute terms, China's economy is still behind that of the USA. By measuring it in terms of what actually is true (ie, what you can buy in China with the Chinese GDP) then the Chinese economy appears to be the largest in the world.
China's economy compared to that of the world in the last 2000 years