IN 1978, AT THE outset of its economic reform, China was the world’s tenthlargest
economy, with a GDP of about $150 billion, or less than 6 percent of
U.S. GDP at the time. By 2005, however, China’s economy, at $2.2 trillion,
had grown to become the fourth largest in the world, behind only the United
States at $12.5 trillion, Japan at $4.5 trillion, and Germany at $2.8 trillion.
The above figures, which come from the World Bank, evaluate GDP at
current exchange rates and do not take account of differences in the purchasing
power of currencies. When measured instead at purchasing power
parity (PPP), China is already the world’s second-largest economy, with
almost $9 trillion in output, nearly three quarters that of the United States.
It has been suggested that, at current growth rates, China’s GDP stated in
PPP terms could exceed that of the United States as early as 2010.