China or the U.S.: Which economy is on top?

The U.S. is the top economy -- for now.
The U.S. is the top economy -- for now.
Remember the good old days when President Donald Trump and China’s President Xi Jinping talked shop over chocolate cake?

    That friendly meeting between the two leaders was a dizzying 12 months ago. But in recent days, Trump has threatened tariffs on Chinese goods. And China, for its part, has promised to counter with tariffs on U.S. goods.  
     For now, and just for now, the U.S. has the upper hand as the world’s largest economy. But economists say that could change -- and soon. Here’s the rundown, along with links for further study:

The background: The U.S. has been the world's largest economy for more than a century, according to the World Economic Forum. As such, the U.S. accounted for more than 24 percent of the world’s gross domestic product in 2016.

What is the gross domestic product and what does it include? This is the “total final value of goods and services produced in a national economy over a particular period of time, usually one year,” according to Barron’s Business Guides Dictionary of Business Terms by Jack P. Friedman (Barron's Educational Series; 2007). “The GDP growth rate is the primary indicator of the status of the economy. The U.S. GDP includes the private and governmental sectors and foreign business operations within the confines of the United States; it does not include overseas operations of domestic corporations.”

Not so fast: China has a population of approximately 1.4 billion, according to the The World Factbook on the website. The U.S., on the other hand, has a population of 327 million
    In 2016, China was the world’s largest economy based on “Purchasing Power Parity,” according to World Bank figures. Purchasing Power Parity is “a measure that adjusts countries’ GDPs for differences in prices,” according to the World Economic Forum  website. “In simple terms, this means that because your money stretches further in China than it would in the US, China’s GDP is adjusted upwards.”

China will take the top spot: The Centre for Economics and Business Research predicts that China will overtake the U.S. as the top economy in other measures by 2029 roughly 10½ years away.


     Did NAFTA take jobs from U.S. workers?
If you would like to comment, like us on Facebook and tell us what you think.