Page last updated at 08:56 Asia/Manila, Wednesday, 02 July 2014 PH
If one considers the real purchasing power of the renmimbi, the Chinese currency, in acquiring the basic needs of a Chinese family compared to the purchasing power of the U.S. dollar to meet similar needs of an American family, the Gross Domestic Product of China converted into U.S. dollars will already be bigger than the U.S. GDP by the end of 2014. The Financial Times announced this so-called "sorpasso" or surpassing during the first days of May 2014. Until now, most people assumed that this inevitable event would happen in 2019 still. According to a report released by the International Comparison Programme under the auspices of the World Bank, China would have a bigger GDP in terms of purchasing power parity before the current year is over. With 1.35 billion people, however, compared with a little over 300 million in the United States, China's per capita income would still be way below that of the U.S. China will continue to be a relatively poor country. In fact, some 800 million Chinese still continue to live in absolute poverty.
The Financial Times also reported (May 2, 2014) that some Chinese officials did their best to prevent this information from being made public. Instead of being triumphalistic about this new set of information, the Chinese leaders wanted to suppress the data. China has become a reluctant giant. The FT speculates that "the main reason for China's lack of triumphalism is that leaders do not want exposure to the international pressure that comes with being the world's largest economy...Taking the title as the world's largest economy, held by the US since 1872, might be seen as a crowning achievement after three decades of rapid economic growth. China's leaders are wary of the added national responsibility that could come with it."
The reluctance to be in the spotlight is understandable, considering that China is still a poor country. In per capita income terms, the US is five times richer. There is a wide gap between the social well-being of the average American citizen and that of the individual Chinese. There are vast differences in health, education, and the environment--the impact of pollution being particularly poor in the large industrial cities of China. Using a more accurate measurement of human welfare than GDP, the UN's Development Index (HDI) places China 101 of 106.
Because its leaders know that they have a great deal of homework to do in order to uplift 800 million people from dehumanizing poverty, China does not want to be at the center of attention as the "most powerful economy" in the world. Too much may be expected of it in addressing such global problems as climate change, terrorism, mass poverty, etc. Furthermore, in great contrast with the U.S., China faces a serious food security problem. Increasingly, as more of its population is liberated from mass poverty, its demand for food imports will be astronomical. It does not have the vast agricultural resources of the US or South America. And finally, as an editorial of the FT states, "As recent events have shown, military might is still an important source of power. While China is investing heavily in its armed forces, the US annual defence budget is three times that of China. And while China has the largest army in the world, the US stock of hardware and technological prowess is a league apart."
The Chinese are very realistic in not trumpeting their being the biggest economy in the world. They still have to employ most of their resources to address the basic economic and social needs of the hundreds of millions of their citizens who have not been benefited by 30 years of high growth. In fact, the income disparity between the coastal cities and the inner provinces is already provoking a great deal of social unrest. Much more resources have to be poured into these poorer regions. Such domestic requirements make it unlikely that China will do anything untoward in antagonizing its neighbors by engaging in military adventurism. As the FT editorial ends, "That the Chinese dragon is spreading its wings is undeniable. While recent economic news shows the pace of change, China is still an incomplete superpower. The task of managing the rise of this great nation will be the work of this and the next generation. But for now there is, on many measures, much catching up ahead." For comments, my email address is email@example.com.