4 Responses to “ Is China The Fastest Growing Economy In The World? ”

1. Christopher C on August 23rd, 2009 5:46 pm

   For the past several years (2000-2005 are covered in my dataset) China has consistently posted annual GDP growth in excess of 8%, making it the fastest growing economy in the world today. Note that for a few of these years, another country might report an even higher growth figure, sometimes 10% or more, but these are one-off performances that result from special circumstances (e.g. Iraq’s GDP grew at 11% in 2005, but after a decade of negative growth culminating in a destructive war). Overall, it is certainly fair to say that China is the fastest-growing economy in the world.
   Several years of unbroken 8%+ growth is an amazing achievement, undoubtedly, but before we get caught up in a “China is the new United States” fad, we should put the growth rates in perspective by looking at absolute GDP figures. GDP is measured in two ways: the traditional “market rate” method, which focuses on the value of a country’s output relative to global markets (using the value of the exchange rate), and the purchasing power parity (PPP) method, which tries to compare countries based on the ‘purchasing power’ of their currency at home, that is, how much stuff citizens can buy, given that prices are usually much lower for basic goods in developing countries.
   By market rate GDP, China currently has the sixth largest economy in the world, just ahead of Italy and behind France, with a figure around $1.7 trillion US. In comparison, the US economy currently weighs in at around $11.8 trillion, nearly seven times the size of China’s by this measurement.
   By PPP GDP, on the other hand, China suddenly has the second largest economy in the world, this time around $6.4 trillion to America’s $11 trillion. We should remember, however, that PPP is intentionally biased toward developing countries, since it tries to account for the fact that basic goods like food are much cheaper in these nations. It’s a useful tool for development economists, but its significance for measuring a country’s power potential (i.e. military expenditures, R&D, etc.) is much more limited.

2. Peter F on August 23rd, 2009 10:52 pm

   China is not the fastest growing economy in the world- but its sheer size and trade surplus means it has the potential to be colossal. It overtook the UK in this years second quarter.
   The Chinese trade balance is +$128bn- which has been coming over the last 12 years
   The Russian trade balance is +$124bn, from an economy which was in crisis upto 8 years ago, and with a population 1/5th as big.
   Vietnam is growing at 10% per year- probably faster soon. Once Vietnam joins the WTO this will expand; while China is trying to apply the brakes. It has $1 trillion in reserves- ie so much it couldn’t spend it without ravaging the world economy.

3. k3bul6ss on August 24th, 2009 4:19 am

   Yes obcourse china right now is the fastest growing economy in the world.

4. Explorer on August 24th, 2009 6:21 am

   he economy of the People’s Republic of China is the 4th largest in 2005 with approximately US $2.22 trillion which is approximately 18% of the US economy. It is the second largest in the world when measured by Purchasing Power Parity, with a GDP (PPP) of US $9.412 trillion in 2005. It is the world’s fastest growing major economy, and its continued growth is critical to the overall health of the world economy and to the welfare of its population of 1.3 billion (most of whom have yet to enjoy western style affluence). Its per capita GDP in 2005 was approximately US $1,709 (US $7,204 with PPP), still low by world standards, but rising rapidly. As of 2005, 70% of China’s GDP is in the private sector. The smaller public sector is dominated by about 200 large state enterprises concentrated mostly in utilities, heavy industries, and energy resources
   wikipedia.org

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