Photo (cc) by SF Brit
Move over, America. It’s time to surrender your position as the world’s leading economic power.
MarketWatch columnist Brett Arends writes that the Chinese economy has officially surpassed the U.S. economy to take over the No. 1 spot, a standing America has held since 1872, when Ulysses S. Grant was president.
Arends says new data from the International Monetary Fund reveals that China will produce $17.6 trillion in goods and services this year, compared with $17.4 trillion for the U.S. This is a significant change, especially when you consider that the U.S. produced nearly three times as much as China as recently as 2000.
The IMF’s figures are based on purchasing-power parity, which doesn’t account for fluctuations in exchange rates when assessing economies.
“To put the numbers slightly differently, China now accounts for 16.5 percent of the global economy when measured in real purchasing-power terms, compared with 16.3 percent for the U.S.,” Arends wrote.
So, what does this shift in economic power mean for the U.S.? It’s too early to tell.
“This will not change anything tomorrow or next week, but it will change almost everything in the longer term,” Arends wrote.
He went on to explain:
Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power.
In other economic news, the U.S. is headed for its best year of job creation since 1999. According to The Wall Street Journal, employers added 321,000 jobs in November. The unemployment rate is at 5.8 percent, its lowest level in six years.
What do you think about the U.S.’ loss of the No. 1 spot among the world’s economies? Share your thoughts below or on our Facebook page.