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By Andres Oppenheimer
May 9, 2011
A forecast by the
Judging from the headlines on the Web, it sure looks like something that's bound to happen shortly. "IMF Bombshell: Age of America nears end," screamed an April 25 column headline in Marketwatch.com. "The age of America ends in 2016," read another headline in the Dailymail.co.uk website.
Granted, the U.S. economy is in a mess. The
And then, the newly released IMF World Economic Outlook forecast shows that, measured in purchasing power parity (PPP), China's economy will grow from $11.2 trillion this year to $19 trillion by 2016, surpassing America's by that year. The U.S. economy will increase from $15.2 trillion to $18.8 trillion over the same period, it says.
Curious about this projection, I called Nicolás Eyzaguirre, the head of the
Do the new figures mean that America's days as the world's biggest economic power will end in 2016, I asked him.
"No, the U.S. economy will continue to be bigger than China's for quite some time, despite the fact that we are moving from a single economic superpower world to one of two economic superpowers," Eyzaguirre said.
But haven't you predicted that China will surpass America in 2016, I asked.
"That's measured by purchasing power parity, which isn't the most relevant measure for international comparisons," he said.
He explained that while that measurement takes into account domestic economic activities that can't be traded globally, such as haircut services, a better way to compare the size of economies is by taking into account the market value of their goods and services that can be traded with the rest of the world.
By the latter measurement -- in market-rate terms -- the U.S. economy is worth about $16 trillion, while China's is of about $9 trillion, he said.
And how much longer will it take for China to overcome the United States in market-rate terms, I asked.
"Since the Chinese economy is growing at about 8 percent, and America's by about 3 percent, it may take more than a decade, assuming things continue as they are," he said.
And do you think that China will continue to grow at its present rate, I asked. "Well, economics is a relatively accurate profession to foresee the next two or three years, barring crises that nobody predicted," he answered. "Farther ahead in time, it becomes pretty speculative."
My opinion: While I was amazed by China's development in my recent trips to that country, I don't see China overtaking the United States over the next five, or even 10 years.
First, the U.S. dollar still doesn't have a credible rival as the world's reserve currency. The day after
Second, we are living in an information economy, and while China is producing more engineers and scientists than the United States, it has a long way to go to match U.S. scientific output.
Even in
Third, we cannot rule out an economic downturn in China. In recent days, we saw an unusual picture out of China -- a truckers' strike to protest inflation. And even if China's dictatorship manages to avoid a social explosion, demographers are projecting that nearly 70 percent of China's population will have moved to the cities by 2019, crowding out urban areas and bringing the country's construction boom to an end.
There's no question that China's rise is the biggest story of our time.
But it's too early to predict the demise of the United States -- especially as early as within five years.
Available at Amazon.com:
Aftermath: Following the Bloodshed of America's Wars in the Muslim World
Displacement and Dispossession in the Modern Middle East (The Contemporary Middle East)
The End of History and the Last Man
The Clash of Civilizations and the Remaking of World Order
The Tragedy of Great Power Politics
The End of the Free Market: Who Wins the War Between States and Corporations?
Running Out of Water: The Looming Crisis and Solutions to Conserve Our Most Precious Resource
Bottled and Sold: The Story Behind Our Obsession with Bottled Water
Water: The Epic Struggle for Wealth, Power, and Civilization
At War with the Weather: Managing Large-Scale Risks in a New Era of Catastrophes
Friendly Fire: Losing Friends and Making Enemies in the Anti-American Century
Dining With al-Qaeda: Three Decades Exploring the Many Worlds of the Middle East
Uprising: Will Emerging Markets Shape or Shake the World Economy
Copyright ©, The Miami Herald Distributed by Tribune Media Services
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World - China No. 1 in Five Years? Not so Soon | Global Viewpoint