According to the Conference Board, China could pass the U.S. to go on and become the world’s largest economy by 2012. China’s economy is expected to rise by 9.6% in 2011 from 10% this year, compared to the U.S. economy which is expected to grow by just 1.2% from 2.6% this year. When considering purchasing power parity (PPP) which looks at goods and services a country’s currency actually buys from their own country, also measuring the prices of the same goods and real purchasing power people have in both these countries, China is predicted to have a larger economy by 2012.
The Conference Board sees the U.S. economy slowing 1.5 percentage points in 2011 due to less spending by consumers, companies, and the government. With the U.S. looking to grow by only 1.2 %, it would be behind Japan and Western Europe, which are expected to grow by 1.5 %. With the overall global economy growing by 4.2% in 2011, much due to China and India.
Looking further down the road, China could account for almost 25% of the global economy by 2020, compared to the 15% from the U.S. and 13% from Western Europe. With India expected to contribute 8% to global output in the coming decade. But comparing The gross domestic product per capita, China is far behind the U.S. According to the International Monetary fund, China’s GDP per capita in 2009 was less than $4000, compared to the U.S. with around $46, 000 GDP per capita.
Chief economist at the Conference Board, Bart Van Ark, says the main risk of this projection is if China is hit by uncontrolled inflation or asset bubbles. The main point to get across is that China and…