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Business / Economy

China facing long way from world's No 1 economy

(Xinhua) Updated: 2014-05-05 13:57

BEIJING -- As the speculation over when China will overtake the United States as the world's largest economy rumbles on, China is more aware of the quality of its economy, rather than the sheer size.

China's GDP was nearly 87 percent of the United States in 2011 based on so-called purchasing power parity (PPP), said a World Bank report in the past week, and headlines across the globe duly began trumpeting that more than a century of American economic dominance was all but over.

China has dramatically outpaced the?US in economic expansion in recent years, with their latest GDP growth rates in the first quarter of 2014 standing at 7.4 percent and 0.1 percent respectively.

But in real terms there remains a tremendous gap. Last year, China's GDP was estimated to be $9.3 trillion? while the?US reached $16.8 trillion.

The PPP measurement takes into consideration the purchasing power of a country's currency rather than market exchange rates, but is a hypothetical calculation that assumes one price level across all countries.

PPP is widely seen as of secondary relevance for most business and financial market purposes, and it is worth noting that China's National Bureau of Statistics has expressed reservations about the methodology used, refusing to publish the headline results for China, according to the World Bank report.

Per capita GDP is more relevant to the Chinese people, 1.3 billion of them. By that measure, China is still far, far behind the industrialized world in economic output and all other economic indicators.

Absolute figures reveal little of the differences between the Main Streets of China and others. This country has come a long way, but it remains undeniably a developing country with too many fish to fry.

Some challenges confront China enough, threatening its development sustainability and compelling the country to think less about growth.

For example, in the iron and steel industry, once the country's backbone, overcapacity is severe and filthy foundries are eating up energy and polluting the environment. It is simply no longer viable to prop up production in the name of good output numbers.

Indeed, China has arrived at the conclusion that it is time to part with GDP obsession - something worth drawing a lesson or two from, for those who have yet to take notice.

China facing long way from world's No 1 economy

China facing long way from world's No 1 economy

Economy shows 'optimistic changes': Li

Manufacturing under lingering pressure? 

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