China has been reporting annual growth rates of 8-10 percent for as long as anyone can remember. Those are the highest growth rates in the recorded history of economics, and while they have been met with some skepticism at the Federal Reserve Board and in financial markets, they are duly recorded and notched by the International Monetary Fund and World Bank. China was able to keep up the pace during the global Great Recession of 2008-2010 even though about 40 percent of its Gross Domestic Product is exports.
In August 2010 the Japanese Cabinet Office reported for the first time that the Chinese economy had surpassed the Japanese economy to become the second largest in the world. That made the Chinese economy about one-third the size of the U.S. economy. (http://www.bloomberg.com/news/2010-08-16/china-economy-passes-japan-s-in-second-quarter-capping-three-decade-rise.html)
Now the Peterson Institute for International Economics, a respected think tank, has calculated the Chinese economy has reached the same level of output as the U.S. economy, based on a purchasing-power parity analysis of the two nation’s currencies. That would make China approximately 25 percent of global GDP, and tied with the United States as the largest economy in the world. (http://www.iie.com/realtime/?p=1935)
Maybe China’s peculiar combination of export-driven growth and state capitalism really has produced an economic miracle. If so, it’s interesting to speculate where the Middle Kingdom goes from here. Assuming a continuation of 10 percent annual compound growth over the coming decade, it won’t be long before China’s economy represents a majority of global output. In fact, at the rate it’s going China’s economy will be almost all of global output around 2025. Now that really would be a miracle.
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