China’s GDP May Exceed US GDP by 2017

When measured in purchasing power parity terms (PPP), China’s GDP stood at $7.9 Trillion in 2008, compared to 2008 US GDP of $14.4 Trillion. If China’s GDP growth exceeds US GDP growth by 8% for the next 8 years, then China’s GDP will exceed US GDP by 2017 [1].

China need not continue growing at a 10% clip to surpass the US – it simply needs to exceed US GDP growth by 8%, which it has done for most of the last 3 decades. If the US recovery from the Great Recession is prolonged, it’s quite possible that US GDP growth will hover between 0 and 1% for some time. In that scenario, China need only maintain 8% GDP growth over the next decade. They appear likely to accomplish this feat in both 2008 and 2009, during the heart of the recession!

In nominal (exchange-rate) terms, China’s 2008 GDP was only $4.4 Trillion, still less than a third that of the US. But that will change with a weakening dollar and an appreciating yuan, and this may be accelerated if key commodities like oil eventually begin trading in currencies other than the USD. The NextBigFuture blog takes into account the historical trend of US-Chinese exchange rates, and concludes that even in nominal terms, China’s GDP will surpass US GDP in 2017.

Don’t be surprised if eight hence, China has the world’s largest economy. After all, China and India were the world’s largest economies for most of the last few millenia [2]. The world economic order appears to be reverting to norm.

[1] The US economy was 82% larger than the Chinese economy in 2008, when measured in PPP terms. 8% growth compounded over a decade yields 85% growth (1.08^8) – which means that the Chinese economy will just barely surpass the US economy in eight years if China’s growth continues to exceed US growth by 8%. In concrete terms, assume that China grows at 10% per year over the next eight years, and that the US grows at 2% per year. In 2017, China’s GDP would be $16.9 Trillion, compared to US GDP at $16.85 Trillion.

[2] See the chart on pdf page 4 of this paper presented to the International Conference of Commercial Bank Economists:

Click to access ICCBEChinaIndia.pdf

2 thoughts on “China’s GDP May Exceed US GDP by 2017

  1. We at Seeking Alpha think your blog is great and would love to have you join our team. Please contact me at


    About Us
    Seeking Alpha ( is the premier financial website for actionable stock market opinion and analysis. Handpicked from the world’s top blogs, money managers, financial experts and investment newsletters, Seeking Alpha publishes more than 250 articles daily. Seeking Alpha gives a voice to over 2500 contributors, providing access to the nation’s most savvy and inquisitive investors. The award-winning site is the only free, online source for over 3,000 companies’ quarterly earnings call transcripts including all of the Russell 3000 Index. Seeking Alpha has 40 million page views each month and combined with their distribution partners (Yahoo Finance, Google Finance, Reuters, Bnet, Etrade and others) has a total reach of 50 million unique monthly readers. Seeking Alpha was named the Most Informative Website by Kiplinger’s Magazine and received Forbes Magazine’s ‘Best of the Web’ Award.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s