When the history of 2014 is written, it will take note of a large fact
that has received little attention: 2014 was the last year in which the
United States could claim to be the world’s largest economic power.
China enters 2015 in the top position, where it will likely remain for a
very long time, if not forever. In doing so, it returns to the position
it held through most of human history. Comparing the gross
domestic product of different economies is very difficult. Technical
committees come up with estimates, based on the best judgments possible,
of what are called “purchasing-power parities,” which enable the
comparison of incomes in various countries. These shouldn’t be taken as
precise numbers, but they do provide a good basis for assessing the
relative size of different economies. Early in 2014, the body that
conducts these international assessments—the World Bank’s International
Comparison Program—came out with new numbers. (The complexity of the
task is such that there have been only three reports in 20 years.) The
latest assessment, released last spring, was more contentious and, in
some ways, more momentous than those in previous years. It was more
contentious precisely because it was more momentous: the new numbers
showed that China would become the world’s largest economy far sooner
than anyone had expected—it was on track to do so before the end of
2014.
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